To create the future car–a car that is easily imaginable right now–an entrepreneurial car company can only succeed by spinning together a network of vendors, regulators, insurers, road makers, and competitors to help others to devolve quickly and cross.

For instance, sometime in the early 1990s the Encyclopaedia Britannica company saw that they were stuck on a local peak. They were at the top: the best encyclopedia in print. They had a worldwide sales force peddling a world-recognized brand. But rising fast nearby was something new: CD-ROM. The outline of this dazzling new mountain was clear. Its height was inspiring. But it was a different realm from their old mountain: no paper, no door-to-door salespeople, cheap, little dinky disks on the shelf, and a media that required constant updates. They would have to undo much of what they knew. Still there, clear as could be, was their future. But while the destination was extremely clear, the path that led to it was treacherous. And, it turned out, the route was even longer than they thought. The company spent millions, lost salespeople in droves, and verged on collapse. They entered a scary period during which neither print nor CD worked. Eventually they completed the CD-ROM encyclopedia they had envisioned many years earlier, but only after an outsider (Microsoft) published a better one. Encyclopaedia Britannica’s future is still in doubt. But their travails are common. Says futurist Paul Saffo: “We tend to mistake a clear view of the future for a short distance.”

To scale a higher peak — a potentially greate gain — often means crossing a valley of less fitness first. A clear view of the future should not be mistaken for a short distance.

Today, nearly everyone in business has a clear view of the future of TV. It’s something that comes to you in the same way you get the internet. You choose your shows, from 500 channels. You can shop, maybe interact with a game, or click for more information about a movie you are watching. The technology seems feasible, the physics logical, and the economics plausible. But Future TV looks a lot closer than it really is because the path between here and there winds through a barren desert with little optimal about it. Although the economics may work later, they barely work out now in the alkali flats. It may be that none of the large television or computer or phone companies are sufficiently nimble (or hungry) to make it across the valley of death–even though the shape of success is so visible.

In the highly turbulent, quickly reforming environment of the new economy, the competitive advantage goes to the nimble and malleable, the flexible and quick. Speed and agility trump size and experience. Fast to find the new is only one half the equation; fast to let go is the other important half.

Of all the lessons that biology has to offer us as we begin to assemble a network economy, the necessity of abandoning our successes will be the hardest to practice.

This is a major reason why the network economy is rich in start-ups. Starting new is a less risky way to assemble an appropriate new set of competencies than trying to rearrange an established firm, whose highly intertwined bundles resist unraveling.
In a rugged economic landscape, about the only hope an established company has for adapting to turbulent change is by employing the “skunk works” mode, which reflects another biological imperative. Computer simulations of evolution, particularly those run by David Ackley, a researcher at Bellcore, demonstrate how the source for mutations that eventually conquer a population start at the geographical fringes of the population pool. Then after a period of “beta testing” on the margins, the mutants overtake the center with their improvements and become the majority.

At the edges, innovations don’t have to push against the inertia of an established order; they are mostly competing against other mutants. The edges also permit more time for a novel organism to work out its bugs without having to oppose highly evolved organisms. Once the mutants are refined, however, they sweep rapidly through the old order and soon become the dominant form.

This is the logic of skunk works. Hide a team far from the corporate center, where the clever can operate in isolation, away from the suffocating inertia of success. Protect the team from performance pressures until their work has had the kinks ironed out. Then introduce the innovation into the center. Every once in a while it will take over and become the new standard.

Economist Michael Porter surveyed 100 industries in 10 countries and found that in all the industries he studied, the source of innovations were usually either “outsiders” or else relative outsiders–established leaders in one industry making an entry into a new one.

The problem that IBM faced with the arrival of the personal computer in the early 1980s was not the problem of acquiring technological know-how. As a matter of fact, IBM already knew how to build personal computers better than anyone. But the package of proficiencies the blue suits had honed over the years to make IBM indomitable in the mainframe computer field could not be gradually adapted to fit the new faster-paced terrain of desktop-based computing. IBM was supreme in the old regime because their sales, marketing, R&D, and management skills were all optimally woven into a highly evolved machine. They couldn’t change the size of the computers they sold without also altering their management, forecasting, and research skills at the same time. Changing everything at once is difficult for anyone, anytime.

In addition to the scarcity of leaders willing to disassemble the profitable, and the natural bias of companies toward perfection, there is another reason why letting go is so hard. Economists Paul Milgrom and John Roberts studied the competencies–the winning traits–of a large number of firms in modern manufacturing and concluded that competencies of companies tended to occur in suites, or in a guilds of skills.

This natural bundling of traits makes it very difficult for contenders to challenge a successful firm. As Richard Nelson, an economist at Columbia University says, “Successful firms often are difficult to imitate effectively because to do so requires that a competitor adopt a number of different practices at once.” Companies can buy technology and human skills in a particular area. But gradually acquiring one or two competencies at a time does no good when you are attempting to displace a highly successful firm. The whole suite of mastery has to be acquired simultaneously in order for you to be competitively effective. A firm such as Disney is almost inimitable because of the difficulty of obtaining in one swift swoop its highly integrated mix of skills.

The natural bundling of traits also makes unraveling for devolution immensely difficult. To devolve demands going against all the best qualities of an organization all at once. The organic world offers a number of lessons in this regard. Biotechnology is built on the knowledge that most genes don’t code for anything themselves. Most genes regulate–turn off and on–other genes. The genetic apparatus of a cell, then, is a dense network of hyperlinked interactions. Any gene is indirectly controlled by many other genes.

Thus, most attributes in a biological organism usually travel in the genome as loosely coupled associations. Blue eyes and freckles, say. Or red hair and a hot temper. Two important consequences follow from this. First, to get rid of the redhead’s feisty temperament by evolution may also mean–at least at first–getting rid of the red hair. Animal breeders know this dilemma firsthand. It is difficult to breed out an unwanted trait without breeding out many desirable ones. Chicken breeders can’t get rid of a chicken’s aggressiveness without throwing out its egg-laying proficiencies.

Secondly, the interlocking guild of competencies, which give organisms and organizations their advantages, becomes a drawback during change. The increased interlinkage of the network economy heightens this dilemma. In the network economy, the skills of individual employees are more tightly connected, the activities of different departments more highly coordinated, the goals of various firms more independent. The net brings the influence of formerly unrelated forces to bear upon each potential move.