Mendelian Executive

A “Mendelian” executive is proposed as an image of strategy-making that lies intermediate between the grand strategist suggested by rational choice approaches and a Darwinian process of random variation and market-based differential selection. The Mendelian executive is capable of intentional design efforts in order to explore possible adjacent strategic spaces. Furthermore, the argument developed here highlights the role of intentionality with respect to selection processes within the organization, and the culling and amplification of strategic initiatives. The firm is viewed as operating an “artificial selection” environment in contrast to selection as the direct consequence of the outcome of competitive processes. Examining the nature of the processes generating these experimental variants and the bases of internal selection, and how these selection criteria may themselves change, is argued to be central to the formation of strategy in dynamic environments.

Selection

Firms receive profits and losses, while individuals and initiatives generally only receive awards as mediated by an organization’s accounting system and reward structure. In that sense, a firm can be considered to be a credit assignment mechanism. Three basic challenges are considered: the problem of diversity of selection criteria, the challenge of the timing of selection relative to developmental processes, and the issue of units of aggregation and selection. Selection inevitably must be made on the basis of various imperfect indicators of broader objectives. The diversity of these selection criteria is argued to be an under-appreciated facet of diversity as prior work has tended to focus attention on the degree of diversity of underlying initiatives and activities. Further, it is recognized that the environment, or contexts, in which the organization operates, is itself an object of selection, which in turn influences the feedback processes the organization experiences.

Punctuated Change

The pace of change is a central question regarding evolutionary dynamics. Some management theorists have pointed to processes of punctuated change; however, it is argued here that such accounts have generally under-attended to the multi-level nature of these processes and in particular to the critical role of speciation. By recognizing the multi-level nature of these dynamics, we can reconcile our often conflicting sense of organizations and technologies as undergoing periods of rapid change, while still conforming to a gradualist perspective with regard to the underlying elements of organizational capabilities and technologies. This argument is developed to consider change processes in three different contexts: the pace of technological change, shifts in organizational strategy and capabilities, and changes in the scope of firms.

Path-Dependence

The intertemporal linkages that both constrain and enable an organization are central to its adaptive properties. The most narrow expression of path-dependence is the process of state-dependence—having a particular asset stock at one point in time impacts the distribution of asset stocks that can be reached at a subsequent period. Development, how an organizational form unfolds over time, can change those dynamics. A considerable literature has sprung up around the idea of “dynamic capabilities.” This broad idea is broken down into five distinct facets: accessibility of organizational states, robustness of organizations to changes in the state of nature, capacity to influence future states of “nature,” cost of accessing future sets of attributes, and capacity to value the set of organizational attributes. However, this discourse tends to treat “capabilities” as isolated attributes and not to view the organization as a complex adaptive system, a perspective developed here.

Choice, Selection, and Learning

The chapter examines the relationship among processes of choice, selection, and learning. The notions of choice and selection differ with respect to the degree of intentionality that they suggest. However, if “choice” is viewed as the identification of preferential action over some set of latent alternatives, then processes of choice and selection can be seen as differing primarily by their level of analysis. Another critical distinction among these processes is their temporal orientation. In the case of rational choice, selection is driven by a projection of the future consequences of alternative actions. In contrast, evolutionary selection processes are driven by the contemporaneous relative fitness of alternatives. A third perspective is that of learning. Here, the preferential attraction to different alternatives is backward looking, with actions that are perceived to have been associated with more successful outcomes more likely to be enacted than those associated with less successful outcomes.

Exploration and Exploitation

While traditionally processes of exploration and exploitation have been understood with respect to the novelty of the associated behavior and the a priori beliefs of the promise of these behaviors, the perspective developed here highlights the possible contestation regarding the merit and promise of a given action or initiative. An action may be viewed as exploratory from an observer’s perspective, while that same action may be considered exploitive from the perspective of the focal actor. The argument highlights the alternative beliefs and cognitive schemas by which promising behaviors and initiatives are evaluated. Validating actions to others, either ex ante or ex post, requires either the validation of particular dimensions of performance or the casting of “shadows” on the dimension of performance valued by others.

Modern Mendels and Organizational Adaptation

There has been recent interest in an important mechanism of intentional, designed learning efforts: random controlled trials. We situate this mechanism within an evolutionary framework and then consider some modest propositions for our Mendelian executive. RCTs tend to suffer from a lack of consideration of context dependence, and in that regard pose an interesting contrast with processes of imitation and recombination. The Mendelian executive as envisioned here goes beyond experimentation in a narrow RCT sense and plays a broader role in nurturing organizational adaptation. Three fundamental roles of the Mendelian executive are identified: encouraging adjacencies and identifying ways in which the organization can leverage its existing strengths into new possibilities, agnostic selection reflecting the challenge of selecting out less promising pathways and amplifying more promising ones, and engaging the variegated environment in which the organization operates to both enhance the set of possible adjacencies and the diversity of feedback.