WORLD MARKETS - DARWIN DID PROVE HIS POINT

In a world where a harsh, unforgiving environment creates scarce resources and fierce competition between its inhabitants, minute changes can mean the difference between dominance and death. Amidst the chaos, former behemoths find themselves hurtling toward extinction, while scrappy underdogs get the opportunity to reach new heights. Thus we can say that the notion of "survival of the fittest" as given by Darwin is not only something attributable to the development of species, but, in a more contemporary sense, to world markets as well. In the world market, which is faced with fierce competition, it’s a fight for survival. The capitalist structure of economies world wide leave no space for inefficiency. The markets are widely consumer driven and the aware and demanding consumer today has no qualms in switching loyalties if his demands are not being met with. As a result, over the years we have seen various new players establish their footing in the world markets, owing to their competence, while a lot of big players have had to crash out of the markets simply because in this race for survival, they weren’t left fit enough to run. If we observe the market behavior in general, we find striking facts that hold the Darwinian Theory right in the light of the world markets. We can draw amazing similarities between the theories propagated by Darwin and the functioning of the markets. The former propagates that mutations and recombinations provide a variety in the population of organisms in which the lesser are ruthlessly culled by the process of natural selection and only those that are fit to survive are rewarded by Mother Nature. The latter follows the same rule where individuals come up with a variety of ideas and implement them in the markets where only those which are fit to survive are retained and rewarded while the others are punished ruthlessly.
This rat race in the markets is all the more conspicuous now as we are in the midst of the financial mayhem tormenting the world’s economies. Now, the cycle of natural selection is more prominent than ever. Those who weren’t at the top of things are gone or going. In the past, governmental regulations in various countries created barriers that protected regional and national firms from the more efficient and competitive adversaries that operate in more capital efficient and less regulated environments, where capital is allocated to the most productive parts of the economy. This is increasingly changing today. Today, the concept of altruism or protection of the weaker does not find a place in the markets, or more appropriately “cannot” find a place in the markets because in a poor economy, only the strong survive.
If we objectively make an overview of the performances in various industries over the world, we will find that the story has been the same everywhere. The downslide in economy world wide has led to a slump in the performance of various sectors. From manufacturing to retail and everywhere in between, the economy is taking a toll on businesses. But as they say “there are always two ways to handle change. You can rail and fight against it, or you can embrace it and use it to position yourself ahead of the competition”. If we observe the performances objectively, giving attention to the individual players as well, we will find that in majority of the sectors there have been players which have outplayed the others and emerged as profit making entities even when the world around them was crumbling. These players have been the ones that are proactive about incorporating new technology, new equipment and new processes into their operations and have thus risen above their competition .To illustrate the point, let us have a look at the performance of the automobile industry in India. While the performance of the industry as a whole has been dismal, with a huge loss of 20% sales, one player by the name of HONDA actually managed to register a growth of 15% in sales. Confounding, aint it..?? Well we’d like to call it competence. Honda consistently worked upon their core competence, technology, and have efficiently converted technology into deliverable value and become among the top auto sellers of the world in even the dismal market conditions. Today when even burgers are costlier than last year, Honda has not only managed to increase its sales, it has also emerged as the frontrunner in the race for survival in these lowly market conditions.
As we mull over the success of certain key players in the market, we cannot ignore the major players that have crashed out of this race for survival. Major organizations like Lehman brothers have filed for bankrupts while the others like Woolworths have had to pack their bags and close trade, leaving behind legacy of many years. So why wasn’t the legacy and expertise of almost a century behind them, not able to bail them out of the crisis? The answer is simple. It is the Darwinian theory of natural selection at work. It is said that nothing is permanent except change. This is definitely holding true in case of the corporate world. The market dynamics are fast changing and the newer and efficient firms are taking over the older and not so efficient firms.
Critics often find it hubristic to presume that Darwinism is even remotely related to the way markets function. They insist that today’s markets and economy are like the breed “Maltese terrier” ruling the world. These lapdogs have retained the cunning features and apparent innocence that actually make us dependent on their whims while they themselves just pose as fashion accessories in the hands of their masters. They insist that just like in this case, the evolutionary process in the corporate world too has been selective of the cunning and seemingly unfit people. They believe that the new law of evolution in the corporate world has been “survival of the unfittest”. The fact that massive bailouts were provided by the American government to some of the firms on the verge of bankruptcy while leaving behind the others to bite the dust , in a way served to reinstate the idea in the minds of these critics.
But, what these critics do forget is that, neither evolution nor Darwin ever promised anything like perfection. Evolution is not about creating perfect or optimal creatures, which would require forethought, but only about the fact that the genes of creatures with modest advantages ("fittest" among those that happen currently to be alive) tend to spread throughout the population. This seemingly subtle difference between "fittest among the choices that happen to be lying around" and "fittest imaginable” makes all the difference in the world. In the same way elections are not won by the best of the candidates but by those who are able to win them, the markets too reward not those who make the best and the cheapest products but those who are best at making money and giving value to the customer. You can have the best technology available with you; it is of no use if you cannot use it to give the customer what he wants. Just like in evolution, business processes too are context driven. In evolution, the question is not weather, say, scales are better than wings, but what is better for the organism. If a sparrow was born with scales instead of wings they would have been redundant for it. Similarly in businesses, the decisions that are made are purely context driven as to what process will suit in the business in the given set of conditions. And when it comes to survival of the most cunning we can only say that in capitalist economies and fiercely competitive markets around the world, altruism does not find a place. In the markets that are facing almost a perfect competition, businesses have to compete fiercely for a limited market space; it is inevitable that cunningness and tact should creep in strategy making. That it is ethical or not is a different question altogether but the fact is that in a market where all players are cunning, the theory of natural selection will rule again and the one who applies his cunning in the best manner will be the fittest to rule. It’s just like they say “Natural selection, as it has operated in human history, favors not only the clever but the murderous.”
Summing it all up, one can only say that no other theory fits more aptly in the model of function the world markets have adopted. In the long run only those businesses sustain themselves which provide value, efficiency and satisfaction to the customer. As we have seen over the years, it is not about the big players or smaller ones, it is always about the better ones, just like the old saying goes “The most successful people don't necessarily have the best of everything, they just make the best of everything that comes along their way.”