Diversity and Corporate Resilience: A Business Lesson Taught By Abandoned Farmland

From gurus to case studies, the promise of transformative business advice is everywhere, but perhaps nowhere as unexpected as plots of abandoned farmland in rural Minnesota.  Here, insight to boost your company’s resilience and dynamic competitiveness has been 3.8 billion years in the making, and its success has been empirically documented in the dog-eat-dog environment of one of the world’s the most competitive fields–literally. It’s hard to find more vetted advice, so bear with me as we talk a bit of biology before dispensing the time-tested strategy to boost your businesses’ bottomline.

The Cedar Creek Ecosystem Science Reserve is a 9 square-mile parcel of land 30 miles north of the bustle of the twin cities. What makes this place so remarkable is that it is uniquely positioned at the intersection of three major North American biomes. Owing to its prime location you can find oak savannah, hardwood forest, dense stands of pine, expansive tall-grass prairie, and soggy lowlands all within its tiny perimeter.

In addition to this natural diversity, Cedar Creek consists of parcels of land largely untouched by human activity that stand side-by-side with nearly 100 agricultural fields whose chain of custody, use, and subsequent abandonment in the early- to mid-20th century is well documented.

Taken together, Cedar Creek is an ecological kaleidoscope that offers its scientist-stewards at the University of Minnesota an unparalleled opportunity to study how different circumstances affect each plot’s functioning, resilience, and overall health. In addition to revealing critical principles of ecosystem operation, Cedar Creek also sheds light on practices and principles of governance that will boost your company’s bottom-line.

Specifically, one major research line at Cedar Creek explores the relationship between biodiversity and ecosystem stability and resilience. While there is a natural ebb and flow to ecological processes (e.g. populations inevitably grow and shrink over time), ecosystem stability is often measured by the size of those fluctuations. Ecosystems are considered stable when the population fluxes are predictable and controlled–so-called ‘dynamic equilibrium.’ Conversely, populations that swing wildly from overpopulation to near-extinction to overpopulation are quintessentially unstable.

Superimpose an ill-timed crisis, like a disease or drought, on top of a wild population oscillation, and it is easy to see how unstable populations are also susceptible to hitting that irrecoverable floor called ‘extinction.’ Not surprisingly, unstable populations have little resilience to recover from environmental shocks.

So what role does diversity play in all of this, and how does Cedar Creek help scientists understand it?

It turns out that fields cleared for agricultural use and later abandoned have predictably poor biodiversity when compared to adjacent plots of land left in their natural state. By comparing how the populations of plants on these adjacent parcels of land change over time, scientists discovered that the plots with the greatest diversity were also the most stable.[1] [2] [3] [4]

Additionally, periodic wildfires or other human manipulations across these plots provided researchers further insight into how biodiversity affects an ecosystem’s response to a disturbance. Once again, the value of diversity was reinforced when it was revealed that the plots with greater diversity suffered less initial disruption and recovered more quickly from ecological shocks than their less diverse counterparts. Additionally, those disruptions that hit biodiversity the hardest also triggered the greatest ecosystem instability.[5] Given these bidirectional effects, biodiversity clearly yields protection against instability and vulnerability, prompting scientists to refer to this linkage as the “insurance hypothesis.”[6]

But what does the relationship between biodiversity and ecosystem stability and resilience have to do with business success? Simply substitute “business operations” for “ecological functioning” in the above findings, and it is plausible to imagine that businesses which embrace diversity are more likely to be stable, resilient, and high-functioning than their less-diverse peers.

Given the importance of the hypothesized relationship between diversity and stability, it’s important to determine the appropriate corporate correlate for biological diversity.

While businesses can be operationally diverse by producing multiple products, servicing multiple industries, sourcing raw materials from multiple suppliers, and having distributed production centers, that approach to diversity often necessitates larger research and development investment, increases overhead, and can overstretch businesses.  On the other hand, businesses can be organizationally diverse by developing a heterogeneous workforce, soliciting and genuinely considering myriad perspectives, widening the net of key decision-makers, and, in general, spreading power and control across a larger cast of characters. This approach to diversity is less cost intensive, and can often be brought to fruition with modest management adjustments.

Actively promoting diversity to improve corporate stability and to guard against inevitable market perturbations isn’t just theoretical. A 2016 study published in the journal Group and Organization Management examined the volatility of a company’s stock price in times of crisis in comparison to the amount of decision-making power concentrated in the CEO[7]. Akin to the ecological research at Cedar Creek, the researchers in this study were asking whether business environments which lacked diverse decision-making mechanisms performed better or worse than their more diverse peers when faced with an industry downturn.

To answer this question, the researchers examined the stock price performance of 2,097 firms in Standard and Poor’s Execucomp database from 1992 to 2009. After extensive statistical analysis, the researchers concluded that innovative firms with more powerful CEO’s suffered greater devaluation during periods of industry shocks when compared to less powerful CEOs. Or, in the words of the authors, “our results highlight the benefits that accrue to firms from having a more dispersed decision-making structure (e.g., receiving independent advice from the board or an independent chairman), especially during industry-wide downturns.”

The parallels between ecosystems and businesses are uncanny. Each is a multi-faceted and complex system with a goal of survival and growth. Both face stochastic internal and external factors which makes static, perfectly predictable performances impossible. Both are at the greatest risk when they erratically and energetically swing from boom to bust and back again, and they are both especially susceptible to failure when an unexpected shock strikes during a natural downturn.

Given these similarities, the finding across independent ecological and organizational research that diversity provides critical ‘insurance’ against perturbations and promotes security and stability is especially important.

While abandoned farmland seems an unlikely place to look for guiding principles of corporate governance, the findings from the Cedar Creek Ecosystem Reserve go a long way toward identifying a universal principle that simultaneously holds true in natural and corporate environments. Ultimately, take a lesson from nature’s time-tested playbook and promote diversity to ensure your company’s longevity and continued competitiveness.

Kurt MacDonald, a former teacher and administrator, is currently the Director of NatureSays, a consulting firm specializing in biomimetic strategies to help organizations and institutions thrive in the 21st century (NatureSays.org), and his most recent nature-inspired TEDx Talk can be viewed here.

[1] Tilman, D. & Downing, J. A. Biodiversity and stability in grasslands. Nature 367, 363– 365 (1994). | Article |

[2] Tilman, D., Wedin, D. & Knops, J. Productivity and sustainability influenced by biodiversity in grassland ecosystems. Nature 379, 718 –720 (1996). | Article |

[3] Tilman, D. Biodiversity: population versus ecosystem stability. Ecology 77, 350–363 (1996). | Article |

[4] Schapfer, F. & Schmid, B. Ecosystem effects of biodiversity: a classification of hypotheses and exploration of empirical results. Ecol. Applic. 9, 893–912 (1999).

[5] Hautier, Y et.al. Anthropogenic environmental changes affect ecosystem stability via biodiversity. Science 348, 336-340 (2015)  | Article |

[6] McCain, K. S. The diversity-stability debate. Nature 405, 228-233 (2000). | Article |

[7] Gupta, V.K., et al. When crisis knocks, call a powerful CEO (or not): Investigating the contingent link between CEO power and firm performance during industry turmoil. Group and Organization Management 1-28 (October 2016) | Article |

 

What do ISIS and Antibiotic Resistant Bacteria have in common? A lot.

How the battle against antibiotic resistant organisms should inform our approach to ISIS.

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“While all these efforts are encouraging and important, it is clear that much more effort to fuel the…battle is needed. Progress has been made, but it is still piecemeal. Efforts are too often uncoordinated, targeting only specific [threats] or only specific countries. Funding is too often narrow, project-specific and time-limited. Perhaps most importantly, strong…leadership is lacking. Real leadership, at all levels—national, regional and global—is critical and necessary now.”

This quote could certainly describe current sentiment about efforts to combat ISIS and other radical jihadists, but its authors had no such intention. Instead, it was written about another threat; an ongoing menace that kills 23,000 Americans annually and has led experts to predict global, near-future death tolls of 10 million people per year.[1] The quote is from ReAct[2], and the assailants they are describing are antibiotic resistant bacteria. Beyond the phraseology of the quote, however, there are marked similarities between multidrug resistant organisms (MDROs) and the self-described Islamic State. Recognizing the uncanny parallels between these two is critical to defeating them both.

 

1.  Both MDROs and ISIS are living entities dependent on population growth.

Bacteria reproduce by binary fission (dividing). In optimized conditions, a lone bacteria becomes 2, 2 doubles to 4, 4 to 8, 8 to 16, and so on until the bacterial population crests 1 million after 21 generations and 16 million 4 generations later. It’s this propensity for reproduction that can lead a patient’s small skin infection to become lethally systemic in a few days. Of course ISIS doesn’t yet rely on biological reproduction to propagate (although I suspect future jihadists are now being born), but its aggressive recruitment and radicalization efforts have led to a similarly exponential rate of growth. Knowing that both bacterial pathogens and ISIS only pose a threat when they reach a critical mass, curtailing growth is essential to combating both. With respect to ISIS, this means that it is imperative that we stop aiding and abetting their growth strategies. We must refrain from using incendiary language, the us-against-them rhetoric that indiscriminately bleeds over to include all followers of Islam or residents of the Middle East. Our military maneuvers and economic policies cannot ignite resentment in otherwise neutral parties, and we must continue to shine as a beacon of opportunity for, and champion of, innocent people trapped in oppressive regimes.

 

2.  MDROs and ISIS take hold and proliferate in areas previously weakened.

Staphylococcus aureus is a bacterium commonly found on the skin and in the nasal passages of healthy people. In small numbers and held in check by intact barriers like the skin and immune system, these bacteria don’t pose a major threat to health. However, when tissues are injured or the immune system is compromised, these previously controlled populations proliferate and generate a life-threatening staph infection. Similarly, terrorism thrives in failed states where recruitment, training, and planning operations occur outside the reach of effective law enforcement and other stabilizing conditions. Returning the whole ‘body’ to health is necessary to tackle the challenge of ISIS and MDROs, and this is why military engagement cannot be the sole strategy to attack ISIS. The use of diplomacy and economic instruments to provide opportunity, equality, health, resilience, and hope in the region in-and-around ISIS is imperative to stemming the spread of their infection. It’s probably the only long term solution, as well.

 

3.  When threatened, MDROs and ISIS both seek new defenses from unlikely partners.

Bacteria aren’t willing to go down without a fight. When faced with environmental threats, including antibiotics, bacteria actively seek out new adaptations to overcome the assault. Bacteria cleverly gain these new defenses by uniting with other bacteria and exchanging packets of genetic instructions called plasmids (this process of horizontal gene flow between two distinct bacteria is called conjugation). In bacteria, desperate times lead to desperate plasmid exchange, and it’s a way for embattled bacteria to share strategies in an effort to survive and thrive. Similar utilitarian partnerships have emerged between ideologically distinct terrorist groups. First an uneasy alliance for purely practical purposes arose between ISIS and Al Qaeda, and more recently ISIS has sought cooperation with Al-Nusra Front to resist military pressure from the Syrian government and its Russian allies. Then there are the rumors of ISIS’ attempts to secure bomb-making material from disenfranchised groups in eastern Europe. Understanding these seemingly unlikely sources of assistance and blocking the exchange of strategies and resources is as necessary in defeating ISIS as it is combating disease-causing bacteria.

 

4.  The problems posed by MDROs and ISIS can be made worse by the weapons we have to combat them.

Ever since Sir Alexander Fleming serendipitously discovered penicillin in the 1920s, antibiotics have been our chief weapon in the fight against bacterial infection. However, widespread misuse of antibiotics—namely their inappropriate prescription, widespread prophylactic use in livestock, patients’ premature cessation of treatment, and an uninformed arrogance that antibiotics would forever be a panacea to infectious disease—contributed to the emergence of drug resistant bacteria. The logic is simple: expose a population of bacteria to antibiotics and the first to die are those that are the most susceptible to the drug’s mechanism of action. With each subsequent exposure, only the most disguised, defended, and resistant organisms survive. Stop short of complete annihilation and you have inadvertently helped create a population of super bacteria, and, to make matters worse, you have eliminated their main microbial competition. After incomplete-treatment, the remaining bacteria are free to reproduce and give rise to super resistant colonies, far harder to defeat than their predecessors.

Attacking the Islamic State has proven eerily similar. Western experts gleefully advertised the fall of radical jihadists as American boots marched out of Iraq in 2011, but their victory speeches proved premature when surviving factions emerged, expanded into newly uncontested territory, and adopted strategies even more resistant to defeat. Moving forward, the military hegemon that is the United States and its allies has a diverse arsenal of weapons to combat ISIS. Everything from drone-enabled targeted killing and Special Ops-led assaults to resource embargoes and economic isolation exists as tools to combat ISIS. Relying on a single, unchanging approach, or giving in to hubris or politics to prematurely declare victory, and all that will remain will be the most fortified and strategically evasive terrorists. From these select ashes, they will again rebound and rise stronger than ever. We are at the unfortunate place in the progression of the disease where the only success is complete success; it’s time for us to take our medicine until the ISIS infection is gone for good.

 

5.  While no one is immune from MDROs or terrorism, prevention is better than any treatment.

While this advice falls into the too-little too-late category given that both ISIS and MDROs exist, the idea that ‘an ounce of prevention is worth a pound of cure’ still bears mention. After all, history has a funny way of repeating itself, and it’s true that the lessons learned in one arena (say, the fight against antibiotic resistant bacteria) can often provide insight into seemingly distant affairs (like the international fight against terrorism). In such a curiously analogous world, let’s learn from our mistakes and adopt a forward-looking, predictive mindset guided by science and an understanding of our past mistakes. Such prevention-minded approaches will always trump reactionary steps to problems in full bloom. Ultimately this reminds me of another thing I learned in Biology 101, “The Precautionary Principle,” but that’s a lesson for another time.

 Want to read more stories of science-inspired products and strategies? Follow@SaysNature on Twitter, an account established and maintained by Kurt MacDonald. Also check back here for original content. Thank you

 

[1] http://amr-review.org/home

[2] http://www.cgdev.org/article/it%E2%80%99s-time-revise-book-infectious-diseases