We all seem to thoroughly enjoy looking for new and emerging Gorillas so we can get in early on the next big thing. But we should also use the latest discussion of the Gorilla nature of INTC and the potential game changing aspects of the Internet fault line to rexamine the enduring power of those companies we have already identified as Gorillas.
The discussion of the past few days has given me some added impetus to think through how we might be able to use the science of complexity to better understand the Gorilla Game. Many of the basic concepts of complexity theory are already familiar to Gorilla Gamers such as path dependence (positive feedback), law of increasing returns (network effects), “agents” acting in parallel (value chain), and levels of system organization (architecture). What was really helpful to me was the realization that a post-tornado Gorilla Game represents what complexity theorists describe as a complex adaptive system where:
· Innovation creates the building blocks of system organization
· Each new innovation serves as a building block for further innovation
· With each new innovation comes the opportunity for reorganization of the building blocks
· Agents work in parallel to rearrange the building blocks to fit their environment
· Rearrangement of the building blocks creates niches which can be exploited by the agents
· Fulfilling one niche enables new niches to emerge which can also be filled by the agents
· The process of system adaptation and emergence is continuous and unending
The Gorilla Games represent a special case in complex systems where a single agent has significant control over the system and possess the ability to both enter and control the new niches created by the on-going process of system adaptation and emergence. As one example, consider CSCO’s domination of the enterprise router niche which adapted and emerged into the hub, switch, remote access, wireless, and optical niches. For a second example, consider QCOM where dominance in CDMA continually opens new opportunities in cellular, telematics, wireless data, video, etc. As many on this thread have recently pointed out, Monkeys and Chimps can make some inroads on Gorillas (particularly when supported by the desire of the market to keep the Gorilla honest by spreading a little market share). However, lower primates have great difficulty using their position to create and dominate other niches.
As identified by Moore in TRFM and LOTFL, the Internet has created an immense new set of building blocks - some of which could result in a Gorilla killer in the form of a discontinuous innovation. But by the same token, many of these new building blocks will create whole new opportunities for existing Gorillas to reaffirm and extend their dominance through further system adaptation and emergence. Furthermore, the number and size of these emergent opportunities will accelerate with each new innovation. Best of all, at least for Gorilla Game investors, the continual emergence of new niches has been and will continue to be missed or underestimated by the vast majority of the general investing public.
The takeaway on complexity theory is not too complex after all – don’t underestimate the enduring power of a Gorilla.
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Anybody interested in further summer reading should consider: Complexity - The Emerging Science at the Edge of Order and Chaos by M. Mitchell Waldrop. |
