IEX 182: The Two Faces of Evolution

Evolution can be fabulous but also messy. What does that mean for innovation?

Flagship Pioneering may not be a household name, but one of their offspring most certainly is. Flagship Pioneering is a company that creates "breakthrough bio platform companies", and is the parent of Moderna, one of the stars of the Covid19 mRNA vaccine development. Flagship lists 31 companies that they have set up in healthcare on its website, all of them between 2009 and 2019.

The Sep-Oct 2021 issue of the HBR magazine carried a thought provoking article titled "What Evolution Can Teach Us About Innovation". As it happened, I read this almost back to back along with another book titled "Human Errors: A Panorama of Our Glitches, From Pointless Bones to Broken Genes". The two together present 2 sides of the same coin and much food for thought. Let's start with the HBR piece first.

The article was co-authored by Noubar Afeyan, the Founder and CEO of Flagship Pioneering (and the Chairman of Moderna), and Gary Pisano, of the Harvard Business School. As the title suggests, the article talks about using evolution and natural selection as the framework for building breakthrough innovation. Here are the key principles:

Breakthrough innovation is about discontinuity, a step change forward and creating significant value.

Traditional breakthrough innovation models often use a portfolio approach, on the basis that if you have the right number (and set) of good ideas, one of them will create a breakthrough model. One of the most significant drawbacks of this model is capital allocation kills ideas too quickly, similar to the fast fail problem below.

The Flagship approach, which is called 'emergent discovery', uses 2 key components of evolution - 'variance generation' and 'selection pressure'. As you know this is pretty much how evolution works. But in the context of Flagship's model - the variance generation is all about asking the right 'what if' question, and selection pressure is about ensuring that creating a path for the best ideas to move forward. What I found particularly counter-conventional about the thinking was captured in the 3 mistakes the authors cite. First, the fail fast myth or the need to get quick results. The best ideas may actually fail early but they need to be morphed, not killed. Second the need to address a specific problem - this typically leads to incremental thinking according to the authors. And third, creating a fuzzy hypotheses. The authors recommend being very specific about this. For example one of the group companies, Incredible Foods, uses the hypothesis "It’s possible to eliminate waste by creating new foods with edible packaging inspired by the skins of fruits and vegetables?" I personally found this contradictory, but you probably want to read it for yourself. Suffice it to say that the method seems to work for Flagship Pioneering judging by their recent success. Or is it the case that the runaway success of Moderna is giving the rest of their portfolio a sheen and the methodology looks good in hindsight?

Let me tell you about the flip side of evolution first, though. The book 'Human Errors', which I also mentioned earlier, basically says that evolution has given us some fabulous capabilities, and amazing physiological and cognitive capabilities. But it's also riddled with mistakes and has created things you would never design the same way if you had to design it from scratch today. Here are a couple of my favourite examples from the book:

Unlike most animals, human bodies do not produce vitamins. This is why we have to ingest them in our foods. Most animals are able to manufacture their own vitamins within their physiological processes. Vitamin C is a good example and this is because somewhere along the way the GULO gene has vanished from the human genome. Why did evolution allow this mutation to survive? Well, the earliest examples of this took place amongst primates, our prehistorical ancestors, and they mostly lived in tropical regions where their diets had plenty of citrus fruits, so their vitamin c was adequately supplemented. It was only when humans moved away from access to citrus fruits that the lack of vitamin c started to manifest itself via diseases such as scurvy.

Another example: the sickle cell disease, which is a genetic mutation that causes the cells to become misshapen, which in turn causes folding problems and constrictions within the body. Why did this mutation survive? First because these genes are recessive genes, so they can skip generations, and second because you can have one but not a pair of the genes. This means that people who have parents, both of whom have the half gene care the most susceptible. But those who have the half gene, will not suffer from the disease. Moreover, this mutation is apparently very useful as a protection against malaria. So the very places where the sickle cell disease is rampant, are the areas where malaria has also been a problem. So the mutation protects you against malaria (a much larger population) but subjects you to the probability of sickle cell disease.

The underlying and very critical point is that the way evolution works, it's particularly good at reacting to and fine-tuning the species for immediate survival, but quite useless for long term implications. Because it is largely a responsive process, it has no long term model or capability. It's simply a sequence of short term measures.

Does that sound familiar for how businesses got to now? The reality is that most businesses have, in effect evolved. Over time, little reactive changes in response to environments, requirements, problems. And this is equally true of systems. I've even been in discussions where a descriptions of a companies systems is like a quick walk through the history of the organisation. That's when we acquired that business, this is where so and so person designed that patch which we never got rid of, and this is where we migrated all of that data but we lost those records... I'm sure you've all seen these patterns.

So evolution is both wonderful and messy. It would be amazing if we could cherry pick the best bits. Which is what the folks from Flagship Pioneer are seeking to do. But what's the option to evolution? Well, design of course. If you didn't want things to evolve organically, you would step in and design them. A glaring flaw in human design is that our respiratory and gastronomic systems share a common pipe. You would never design something like that. In most businesses, we lean more towards design than on evolution. Systems, processes, structures, strategy - are all the outcome of active thought and specific decisions. Aka design. But of course, from the time they are put in, evolution (or entropy) kicks in soon. All those errors that Nathan Lents talks about in his book are really examples of entropy from a systems perspective. To an extent this is unavoidable.

As far as innovation is concerned, though, evolution and design both play a strong role. What I particularly noted about the flagship model was the idea of disconnecting people from ideas. A great idea is a communal asset, not an individuals pet project. So the success, failure, or pivoting of the idea is not a reflection or judgement of the individual. Ideas need to morph, be combined, and build on each other. The mRNA vaccine had no individual aha moment, but a series of breakthroughs for the central hypotheses - 'what if we could create engineered mRNA that, when introduced into patients, would turn their own cells into miniature factories, that make any biotherapeutic drug we want?'. According to the authors, just solving the problem of preventing the body from attacking the foreign RNA took years to solve.

Not everybody is looking for breakthrough innovation. But if you are, then evolution certainly provides strong examples of dramatic leaps in the journey from single celled entities in the primordial soup to human beings. The trick is to avoid the entropy, the messiness, and the short vs long term tradeoffs that come bundled with the evolutionary process.

Reading This Week

We all know that what’s happening in Ukraine puts a lot of things in perspective about the world. This section this week is focused on ways in which we can educate ourselves about the situation:

Did the west move too late and too little? (New Yorker)

Is ‘de-platforming’ an option? (Steven Johnson on Substack)

Here’s a live map of news and events.

Financial systems sanctions have their impact (FT)

Why the hardest sanctions are hard (NYT)

Ongoing coverage by the Economist

See you next week. Pray for peace.