The Power Laws: The Science of Success

The Power Laws......Page 1
CONTENTS......Page 8
In Order of Appearance......Page 14
Note......Page 17
ACKNOWLEDGMENTS......Page 18
In Search of a Few Universal Principles......Page 21
Insight from Science for Business Success......Page 23
In Praise of the \'Incomparable Mr. Newton\'......Page 24
Weird and Wonderful Twentieth-Century Science......Page 26
A New Gestalt for Business?......Page 27
The Old Régime Has Its Place......Page 29
Escaping Obsolete Mental Models......Page 31
Note......Page 32
PART ONE— THE BIOLOGICAL LAWS: HOW ECONOMIC INFORMATION DRIVES PROGRESS......Page 33
Introduction to Part One......Page 34
The Universe is Run by Selection......Page 35
The Origins of Darwinism......Page 36
Natural Selection: A Simple but Subtle Theory......Page 37
Variation Leads to \'Better Adaption\'......Page 39
Diversity Leads to Efficient Use of Resources......Page 40
Does Evolution Imply Progress?......Page 41
Six Universal Principles Implied by Evolution by Natural Selection......Page 43
Differentiation Emerging from Generality......Page 45
Where Does Evolution by Selection Work in Business?......Page 47
Four Lessons of Economic Selection for Products and Marketing......Page 48
Winners and Their Sex Lives......Page 51
Fisher\'s Fundamental Theorem of Natural Selection......Page 52
Business is a Generation Game......Page 53
The Experience Curve—Explaining Evolutionary Improvement......Page 54
Time-Based Competition......Page 55
Ulam\'s Dilemma—Is Natural Selection Unfair?......Page 56
Evolving to Avoid Failure......Page 57
Summary......Page 59
Action Implications......Page 60
Notes......Page 61
What Darwin Couldn\'t Explain......Page 62
Mendel\'s Laws of Heredity......Page 63
DNA and Its Structure......Page 64
The Selfish Gene......Page 66
The Theory of Memes......Page 67
A River Goes Out of Eden......Page 68
The Theory of Lifelines......Page 69
The Theory of Business Genes......Page 70
How Business Genetics Works......Page 71
Business Genes in a Movie......Page 73
Humans and Business Genes......Page 74
Are there Different Types of Vehicle for Business Genes?......Page 75
A New Perspective on Business......Page 76
Spin-Offs......Page 77
The Hardy-Weinberg Law......Page 78
Business Genetics for Executives—Six Action Rules......Page 79
Summary......Page 81
Action Implications......Page 82
Notes......Page 83
Gause\'s Principle of Survival by Differentiation......Page 84
Coexistence, Dominance, and Bi-Stability......Page 85
Finding Unique Niches......Page 86
Who Can Invade Whom?......Page 87
Bi-Stability is Better than Coexistence......Page 88
Breaking Out of Coexistence and into Bi-Stability......Page 89
Differentiation is a Set of Actions to Take You to Uniqueland......Page 90
Summary......Page 91
Notes......Page 92
Punctuated Equilibrium......Page 93
Man\'s Infrequent Punctuations and the Theory of Evolutionary Psychology......Page 94
The Neurology of Stone Age Man......Page 95
Cooperation, Sharing, Specialization and Friendliness......Page 96
Stereotyping On First Impressions......Page 97
Breast Beating and Mindless Optimism......Page 98
A Taste for Hierarchy......Page 99
Conformism and Herding......Page 100
Hostility to Out-Groups......Page 101
The Avoidance of Risk......Page 103
Mad Scrambling when under Serious Threat......Page 105
The Endowment Effect......Page 106
The Ultimatum Bargaining Game......Page 108
Are We Really Hardwired?......Page 109
Neuroplasticity......Page 110
Transcending Genetic Dispositions......Page 111
How to Manage and Mutate Stone Age Man......Page 112
Action Implications......Page 115
Notes......Page 119
Game Theory......Page 122
Self-Interest Rules OK?......Page 123
The Red Queen Effect......Page 124
The Prisoner\'s Dilemma Revisited......Page 126
Division of Labor......Page 127
Ricardo\'s Law of Comparative Advantage......Page 129
Beyond Baboonery......Page 130
Trust......Page 131
Cooperation and Competition: Twin Cherries on a Single Stalk......Page 132
Corporations and Cooperation......Page 133
The Theory of Co-Opetition......Page 135
The Cathedral Versus the Bazaar......Page 138
The Cathedral and the Bazaar......Page 139
Diamond\'s Principle of Intermediate Fragmentation......Page 140
Higher Still and Higher, the Bounds of Cooperation Rise......Page 141
Selfish Genes Require Humans to Behave Generously and Selflessly......Page 142
Summary......Page 143
Notes......Page 145
Part One Concluding Note......Page 147
PART TWO— THE PHYSICAL LAWS: NEWTONIAN AND TWENTIETH-CENTURY PHYSICS......Page 150
Introduction to Part Two......Page 151
Newton\'s Impact On the World......Page 152
Are Newton\'s Power Laws \'Old Hat\'?......Page 154
A Thought Experiment: A World Without Business Numbers......Page 155
Action and Reaction......Page 156
The Gravity of Competition......Page 157
Corporate Gravity: How Near and Large is Your Competitor?......Page 158
What is Distance?......Page 159
Can We Measure Corporate Gravity?......Page 160
Margin Gravity is Not Linear—Returns Rise Sharply as You Avoid Competitors......Page 161
How Do You Increase Size Relative to Your Main Competitor?......Page 162
Escaping Corporate Gravity......Page 163
Summary......Page 164
Notes......Page 166
Farewell, Clockwork Universe......Page 167
Einstein\'s Special and General Theories of Relativity......Page 168
The Warping of Time and Space......Page 169
Einstein Makes Time Part of the Physical Universe......Page 170
Time: At the Heart of Competitive Advantage......Page 171
Time Heresy: Time Is Abundant, Time Is Available......Page 172
Integrating Time into Your Product and Service......Page 174
A Relative World View......Page 175
Gödel\'s Incompleteness Theorem......Page 176
Relativity in Business......Page 177
The Medium is the Message......Page 179
The Internet as New Medium and New Message......Page 180
Summary......Page 181
Notes......Page 182
The Most Majestic Triumph of Twentieth-Century Science......Page 184
Heisenberg\'s Uncertainty Principle......Page 185
Schrödinger\'s Cat......Page 186
Escaping the Tyranny of Either/or......Page 188
Testing Out Multiple Possible Options......Page 189
Quantum Theory Used as a Battering Ram......Page 191
Does Quantum Theory Sustain a New View of Management?......Page 192
Is \'Quantum Management\' Really Compatible with Valid Insights from Quantum Theory?......Page 194
Summary......Page 195
Notes......Page 197
Part Two Concluding Note......Page 198
PART THREE— THE NON-LINEAR LAWS: INTERDISCIPLINARY SCIENCE......Page 200
Introduction to Part Three......Page 201
The Third Great Scientific Breakthrough......Page 202
Sensitive Dependence on Initial Conditions......Page 203
Most Interesting Things in the Universe are Complex Systems—and \'Chaotic\'......Page 204
What\'s the Connection between Cotton Prices and the Nile?......Page 205
Fractal Similarities......Page 206
Principle of Impotence......Page 207
The Hinge Factor in History......Page 208
Analysis May Not Be the Best Way of Finding the Hidden Order......Page 209
Chance—the Role of Luck......Page 210
Chance—the Need for Multiple Strategies......Page 211
The First-Mover Advantage......Page 212
Business Is Fractal......Page 213
Self-Organizing Systems......Page 215
Complex Systems are Adaptive......Page 216
The Edge of Chaos......Page 217
Simon\'s Theory of Clumps and Lumps......Page 218
Gutenberg-Richter Law......Page 219
Parkinson\'s Laws......Page 220
Cyert and March\'s Theory of Organizational Slack......Page 221
Be Aware that Small Changes Can Transform the Whole Competitive System......Page 222
Look for and Practice Emergence......Page 223
Think Carefully about the Role of Self-Organization in Your Organization......Page 224
View Your Firm as a Living Organism, as a Complex Adaptive System......Page 225
Use the Power of \'Landscapes\'......Page 227
Action Implications......Page 230
Notes......Page 231
More with Less......Page 233
Language, the Movies, and the World Wide Web......Page 234
The 80/20 Principle......Page 235
Juran\'s Rule of the Vital Few......Page 237
Giant Strides in Computing Using the 80/20 Principle......Page 238
The Ubiquity, Universality and Usefulness of the 80/20 Principle......Page 239
Own Less......Page 241
Acquire Less......Page 244
Participate in Fewer Stages of the Value Chain......Page 245
Have Fewer Customers......Page 246
Have Fewer Suppliers......Page 247
Have Fewer Employees......Page 248
The Simple Firm......Page 249
Charm......Page 250
The Power of Weak Ties......Page 251
Von Foerster\'s Theorem......Page 252
Mendeleev\'s Periodic Table of Elements......Page 253
Control Theory......Page 254
Fermat\'s Principle of Least Time......Page 256
Trichotomy Law......Page 257
Action Implications......Page 258
Notes......Page 259
Punctuated Equilibrium......Page 262
The \'Warning Period\' of Embryonic Pre-Change......Page 263
Plague Theory......Page 264
The Tipping Point......Page 266
Crossing the Chasm......Page 267
Exponential Growth......Page 269
What Exactly is Exponential Growth?......Page 270
Fibonacci\'s Rabbits......Page 271
Insights On Growth......Page 272
Say\'s Law of Economic Arbitrage......Page 273
The Successful Entrepreneur......Page 274
The Law of Diminishing Returns......Page 275
Moore\'s Law......Page 276
The Law of Increasing Returns......Page 277
Metcalfe\'s Law......Page 279
Is There a \'New Economy\' and a \'New Paradigm\'?......Page 280
The Theory of Industry Sweet Spots......Page 281
Competitive Advantage, Based on Standards, Not Cost, May be Temporary......Page 282
So What Has Changed in the \'New Economy\'?......Page 283
Are There Two Economies and Two Sets of Economics?......Page 284
Do Marshall\'s Economics Work at All?......Page 285
Different Management Styles for Different Types of Business?......Page 287
Insights on Networks, the \'New Economy,\' and Increasing Returns......Page 288
Summary......Page 289
Notes......Page 290
The Power Laws of Caution......Page 292
The Paradox of Enrichment......Page 293
Swinging Equilibrium......Page 294
Virtuous Cycles......Page 295
When Virtuous Switches to Vicious......Page 296
The Law of Entropy......Page 297
Murphy\'s Laws......Page 298
The Law of Unintended Consequences......Page 299
The Theory of the Second Best......Page 300
System Dynamics......Page 301
Avoiding Unintended Consequences......Page 302
What Happens if Something in the Business System Changes Unilaterally?......Page 303
How Do We Plan New Initiatives that Will Be as Successful as Current Ones and that Won\'t Have Uninte.........Page 304
Summary......Page 305
Notes......Page 306
Part Three Concluding Note......Page 308
PART FOUR— SO WHAT?......Page 310
Introduction to Part Four......Page 311
The Scientific Laws Driving Progress......Page 312
Some Things We Do Know......Page 313
Some Things We Know We Don\'t Know......Page 314
The Power Laws Change Our Perspective......Page 315
The Biological Laws......Page 316
The Power Laws Present a Coherent View of Reality......Page 318
Business Is Driven by Ideas and Information......Page 319
The Value Creation Process Proceeds Via Innovation and Natural Selection......Page 320
Variation Creates Uniqueness; Uniqueness Creates Monopoly......Page 321
Don\'t Build Cathedrals; Do Build Open Networks with Increasing Returns......Page 322
Use Both Reason and Passion......Page 323
Sustain Success by Gaining and Giving Loyalty—and by Continual Improvement......Page 324
The Gospel According to the Power Laws......Page 325
Notes......Page 327
B......Page 328
C......Page 329
E......Page 330
G......Page 331
J......Page 332
N......Page 333
P......Page 334
S......Page 335
T......Page 336
Z......Page 337