Evolution and Invention

How can we make sense of all the changes taking place aroundus?More importantly, how can wecreate the change necessary to attack our most pressing societal problems?

Short answer:building blocks.I willreturn to this theme again and again in other posts.But for now: a preview.

Eric Beinhocker’s Originof Wealth leans on the theory of complex systems to show how, little bylittle, a small thing like a wheel gets incorporated into increasingly complexcomponents and systems.First wesee carts, then bikes, then the Audobon.More building blocks mean morecomplex combinations built from them.And these combinations give rise to greater variety, greatersophistication, and greater wealth.

Brian Arthur’s TheNature of Technology provides a related account, up to a point, but emphasizeshow change is not always gradual and continuous.For instance, piston-powered propeller airplanes began asrather simple machines and performed well for short flights.But when these planes began to fly athigher speeds at higher altitudes, their limitations became evident.To address them, engineers began makinga series of increasingly complicated modifications until, finally, an entirelynew means of powering a plane appeared:the first jet-engine.This invention was not further evolution ofthe piston-propeller arrangement but, instead, was based on entirely differentprinciples.It was much simplertoo, the original prototype of the jet engine having just one moving part!

In my book, DesignYour Life, Change the World: Your Path as a Social Entrepreneur, I haveexamined how similar ideas apply to social enterprises.Often, social enterprises evolvegradually, becoming increasingly effective as they become ever morecomplex.As an illustration:Once, local banks were as much fixturesof communities as mom and pop grocery stores (been to one of those recently?).Over time, they began to add remote branchesand, as regulation allowed, expanded their reach to increasingly distantlocales.These changes wereintended to create more efficiency, more competition, and more choice.

Overseas, a similar evolution began to include poorer andpoorer customers as first, nonprofit organizations and later, for-profit banksbegan to offer microcredit and other microfinance offerings.Still, microfinance excludes ten timesas many customers as it serves.Poor clients are expensive to serve, even more so when they are at adistance.Branches are tooexpensive in many parts of the world.

Yet in Kenya, an inventionhas dramatically changed the situation.Much like the jet-engine, which overcame the deficiencies of propellerplanes by incorporating a completely new principle, M-Pesa overcame financialexclusion, especially created by distance, by creating an alternative form ofmoney.Kenyans buy this currency,which is installed on their cell phones.This e-currency can then besafely, conveniently, and affordably transferred to someone else by sending afinancially secure text message.Urban workers can remit money to relatives in the countryside.Micro-entrepreneurs can buy trinkets oragricultural products to resell without the insecurity of relying on busdrivers to transport their payments or the inconvenience of taking the bus tomake payments themselves.

How successful is M-Pesa?Over half of all Kenyans use it, nearly three times as manyas have bank accounts.M-Pesa has createdsimilar services in Tanzania, Afghanistan, and South Africa.It recently created a partnership withWestern Union that allows funds transfers to Kenyan M-Pesa customers from 45countries.

Is this a “one-off,” relevant only to citizens without readyaccess to banking services?Not atall.Mobile wallets (as they areknown) are moving “up market” to the United States and the rest of thedeveloped world.Tech stalwarts(Apple, Google, and others), mobile carriers (including Deutsche Telecom, ChinaUnicom, Verizon), and financial institutions and credit card companies (amongthem Chase and Visa) are all exploring how they can capture this huge,potential market.

What was created by the invention of alternative currencyhas begun to evolve.

Let’s consider this illustration from an evolutionaryperspective.

The banking system changed in ways that resemble biologicalevolution.New variations (say, bank branches) are tested for their performance (wouldpeople use them?) and, when successful, they proliferate.

Producing societal-level change isn’t under the control of anysingle organization.Consider the environment.  No company orgovernment, of course, “controls” efforts to address climate change.Yet there are many ways organizations playroles in striving to stem our environmental problems.

How can we stack the odds so that they are successful?

By encouraging variation, creating fair and effective tests,and ensuring that winning ideas truly proliferate.These are not abstract ideas without application.For instance, the tests performed inthe marketplace (profit, sales) give distorted results that fail to account forenvironmental (mis-)behavior.Asthe adage goes, you get what you measure, and we are measuring the wrongthings.Similarly, proliferationcan come from replication, but exposing winning ideas to others providesanother means to increase their scale.

But we must be cognizant, too, that invention is sometimes necessaryto spark progress when we are at an impasse.Methods like recycling, just like propeller-powered planes, can’tevolve far enough to achieve our environmental ambitions.Recycling is better than tossing, but asa practice it still fails to promote better, inherently green methods of creatingproducts in the first place.Thatis where invention becomes critical, to create “jumps” in evolution rathersmooth, gradual refinements.Markets in carbon avoidance, for instance, are built on the premise thatyou can buy the benefits of others’ good behavior.From this new premise various ways to create and operatethese markets emerge, themselves subject to variation, testing, and proliferation.Invention begets evolution.

These two forms of change – gradual, continuous; andradical; discontinuous – operate by creating and re-organizing buildingblocks.We can think of buildingblocks as fundamental elements that underlie the process of creatingchange.To be architects of change,we must learn to recognize and harness them.I intend this blog entry itself to be a conceptual buildingblock which we return to, and build on, as we understand how to improvesociety.


PLUS stay updated with news and tips from my latest book, Becoming a Social Entrepreneur: Starting Out, Scaling Up, Staying True, which explores lessons learned from more than 100 social entrepreneurs. 
Learn how to create social impact in these trying times.

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