I find it useful to think of a free economy market economy—or a partially free market economy—as an ecosystem. Animals can reproduce in the right places. Similarly, as long as people find their own place in society, they can also be very successful.
—- Charlie Munger
The multiple thinking model is a very important tool for analyzing and evaluating business by Charlie Munger , and [biological thinking] is a very important part of the Charlie Munger’s multiple thinking model.
I reviewed my biological thinking last weekend. There are new thoughts on how to use biological thinking to look at business and business opportunities.
Ecosystem thinking model
1.1 Model
Living resources . The conditions on which an ecosystem depends for establishment and continued prosperity are the sum of the survival factors of a species, including but not limited to food resources, space resources, relationships with other species, and all other living conditions.
Differentiate . The key element of the existence of an ecosystem is its characteristics of diversity. From the perspective of competition, the most intense competition often occurs between biological populations occupying the same niche, and corresponding to the business perspective, different companies that provide the same or similar products or services also compete for incentives. Therefore, for a company to survive in the ecosystem for a long time, it is to be separated from the niche of other companies. Establish sufficient differentiation from product, technology, marketing, brand, business model, etc.
Natural selection . This is the core of evolution. Natural selection in the biological world eliminates individuals or species that are not adaptable to the environment, and those individuals or species that are most adaptable to the environment can survive. In the commercial field, in the incentive competition, companies must evolve their core capabilities to adapt to the market environment to ensure that they are not eliminated. At the same time, we also need to be able to iterate continuously and constantly strengthen our core capabilities to make ourselves more suitable for the environment.
Transform the environment . The natural selection and evolution of ecosystems develop to a certain degree, which will in turn affect ecosystems and even cause major changes to the entire ecosystem. From a business perspective, companies adopt new technologies to interact positively with the ecosystem and form symbiotic relationships. Promote healthy growth of the entire ecosystem.
1.2 Features
The ability of the ecosystem to regulate itself, or its own stability, is a concept that we need to focus on when we look at the business world using ecosystem thinking. He can be divided into two levels of stability:
Resistance stability . The ability of the ecosystem to resist external disturbances is the stability of resistance, and the stability of resistance is positively related to the ability of ecological self-regulation. The ecosystem with strong stability and stability has strong self-regulation ability, and the ecological balance cannot be easily broken. The characteristic of resistance stability is that the more complicated, the more stable .
Resilience stability . Resilience stability refers to the ability of the ecosystem to return to its original state after it has been destroyed. The relationship between the stability of resilience and the self-regulation ability of the ecosystem is subtle. The stability of the resilience of overly complex ecosystems (such as tropical rain forests) is not high because the complex structure requires a long time to rebuild Ecosystems with low self-regulation capabilities (such as tundra and deserts) have little resilience stability and low resistance stability; only ecosystems with moderate regulation capabilities have higher resilience stability, for example The stability of the grassland’s resilience is relatively high.
1.3 The first impetus for the business ecosystem of science and technology
Once an ecosystem, especially a complex one, is formed, because it has strong resistance and stability , if there is no significant external influence, the ecosystem will often solidify like this. The ecosystem of the business world has a large number of participants, and the circulation of funds, information, and logistics is very responsible. Therefore, it is itself a super complex ecosystem with strong resistance and stability .
But from the general perception of everyone, the ecosystem of the business world is not so stable. In contrast, the ecosystem of the business world iterates very quickly. 10 years Hedong, 10 years Hexi. Even if it takes less than 10 years, just a few years, the ecosystem of the entire business society will undergo subversive changes. Why is this? There is only one answer. The development and application of new technologies, which are the first driving force of the business ecosystem, are fast and constantly accelerating.
The new technology replaces the original product or service by providing better functions, higher efficiency and lower cost. The ecosystem of the entire business world is in a fast and accelerating iterative process. Therefore, in modern business society, whether to be able to master the latest technology and apply it to products or services has become the key to business success.
2. [Efficiency / cost ratio] model based on ecological thinking model
Based on the analysis and discussion in the first part, I found that whether the product or service can be successful in the ecosystem of the business world is dominated by the following two factors:
- Function (function, efficiency)
- cost
We can use an equation:
From this equation we can see that the success of a product or service depends on whether its product or service’s cost-effectiveness ratio is better than its competitive product.
I further found that the meaning expressed by this power / cost equation can be usedInterpretation of the second curve principle .
Everything in the world has its own rules to follow. The “second curve” theory of Charles Handy, a well-known European management master, tells us that any growth curve will slip through the apex of the parabola (the limit of growth). The secret of continuous growth is in the Start a new S-curve before a curve disappears. At this time, time, resources, and motivation are enough to make the new curve go through its initial struggling process of exploration.
The X in the above figure represents : the efficacy of products and services
Y represents : cost (in order to be more simple and clear, it is expressed as 1 / Y), that is, the higher the cost of products and services, the lower the cost.
Dotted upward oblique line : This curve represents the critical point of the power / cost ratio of the products and services purchased by the user.
Here is my interpretation of the second curve model of the [power cost model]:
The S curve on the left in the figure is the current mainstream product or service. Its cost efficiency ratio is already in the upper half of the S curve.
The S curve on the right in the figure is a new product or service. Compared with the old product or service, the new product or service has higher efficiency, but the cost is relatively high.
With the continuous iteration of new products or services, its efficiency is further improved, and its cost is further reduced. When the S curve crosses the efficiency / cost ratio critical point curve from the bottom up, high-end users have begun to use the product or service.
When the new product or service continues to iterate, its cost is further reduced, its efficiency is further improved, and its cost is close to or lower than the old product or service, the new product cargo service will replace the old product or service on a large scale.
To make it easier for everyone to understand, here is a teared-out case:
The icon’s first S curve (left) represents a traditional packaging carton
The second S curve (right) represents a torn product
Obviously, after tearing out, its efficacy is better than traditional carton, but its cost is relatively high. When the current cost is still at the level of 3-4 yuan, To B users who are extremely sensitive to cost will not adopt a tear-off solution.
As soon as it was torn down through its internal innovation, its cost was reduced to 1 yuan or less from the three dimensions of materialization costs, accessories and manufacturing costs, more and more users began to use its products
Obviously, when a tear is lifted further along the S curve, a teared product will replace the traditional carton on a larger scale.
3. Summary: Looking at the business world from an evolutionary perspective
- New technologies and their applications are the driving force of the business ecosystem
- Through new technologies and their applications, people will continue to upgrade the entire ecosystem, and the boundaries of the ecosystem will continue to expand-the
new technology will make the ecological resources we have almost unlimited expansion
3.2 A few words for entrepreneurs
- Focusing on new technologies and applying them properly is a force that can disrupt existing business ecosystems.
The winner will be the one who pushes the efficiency / cost ratio to the extreme
Brisk walking
- Fast iteration
- Chain innovation
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