Economy Simulations are Never Perfect

In ecology, there can be various mathematical models attempting to explain observed phenomena. Such models are not meant to be perfect, but can help us in understanding and predicting reality.

Similarly, in the business world, it is possible to construct ever more sophisticated mathematical models to simulate the dynamics of the economy. Such models are never perfect yet they do help us in understanding the dynamics of the economy and help us in prediction and thus decision making.

Upon How Many Should you Divide your Charity Money?

What is better? To give your charity money to ten families or instead distribute the amount on one hundred families?

In ecology, when the number of organisms in a certain area increases beyond a specific limit, the population tends to naturally regulate itself and the number ceases to increase either by increased deaths or decreased births or a combination of both. If nature allowed such population to grow in that specific area indefinitely, the size of each individual will keep shrinking and its fitness will keep decreasing since the finite amount of resources in that area will be divided on more and more individuals from that population.

If the amount of charity money you have will be too little when divided on a very large number of individuals, then it is better to divide such charity money on a smaller number of people in need. This will help them survive, grow and develop and perhaps become self sufficient as they develop and some of them may even reach a development stage where they can help others who are still in need.

Two Factors Affecting Business Growth

The potential of an organism to grow and a population to increase increases by the increase of needed resources in a given area in which such organisms are living and decreases with the competition over resources in such area.

In the business world, a similar relationship exists between businesses and the size of a given market and the amount of competition present in such a market from other businesses.

Why Investors Seek to Invest in Startups?

In natural systems, when a population grows in size and number so that the resources available to it are not enough for survival, growth, development and reproduction such population then experiences a a natural decline in the rate of growth and reproduction. The more crowded the population initially is the faster such population reaches the decline in rate of growth.

In the business world a similar phenomenon is observed. The more crowded a specific market is the sooner it reaches saturation and thus business growth rate starts to decline in such market. In such occasions, in order for a business to grow, it seeks fresh new virgin markets to exploit.

This models also gives us insights into startups. Startup companies tend to have a high failure rate yet they grow so rapidly. The potential of growth in such companies is phenomenal. This is what can attract many investors to seek investing in startups, despite their high risk they do at the same time show a high potential of rapid growth and thus exceptionally high return on investment.

Market Share Transfers

If a population of animals that had been occupying a certain territory suddenly perishes the same territory is quickly occupied by other animals that were previously unable to penetrate or come close to such territory due to it being occupied and defended by the previous population of animals that has now perished.

In the business world a similar phenomenon is observed. If for some reason a large organization collapses that has previously had a sizable market share within a certain market then such share becomes available for other businesses to claim quickly.

Territoriality in Business

Territoriality in Animals

Territoriality is a common animal behavior where a group of animals from the same species defend their territory against intruders usually of the same species as well. This phenomenon helps such groups of animals maintain control over resources present in such area and thus be better able to survive, grow and reproduce. Territoriality is one form of competition among members of the same species.

Franchising

In the business world, competition is a norm and so is territoriality. Territoriality in the business world can manifest in a number of different forms. One of the most popular ways in which territoriality is practiced in the business world is through the concept of franchising. A franchisor may offer geographic master franchises to larger franchisees which then may 'slice' them down into smaller franchises also separated location wise. This concept helps the franchisor, the master franchisees and the smaller franchisees under them thrive each within its own territory without competing with its sister franchisees.

Free Trade

The franchising system is one manifestation of the concept of territoriality in the business world. Another manifestation of territoriality can be seen on a higher level in the economy of nations. A country may decide to protect itself from the invasion of cheap merchandise from other countries by adding customs. This practice, although still practiced, is now being reduced. The fight for the so called free trade and open borders for the exchange of goods and services without restrictions has been lead by developed countries that have the power to compete with their advanced products and services.

Territoriality in Business

Aside from franchising, there are formal and informal ways for enforcing the practice of having a territory for a business. An example of a formal practice is for instance mandating a minimal distance between pharmacies. Other informal ways for protecting a territory also exist. A large business may defend its 'territory' by a sudden drastic reduction of prices to collapse a new small fledgling business trying to enter the market within the territory of that large business. In some places, even force can be illegally used to 'convince' competitors to back off from a business's long established territory.

Why New Small Companies need a Virgin Market Niche

In cases of great competition over available resources, the distribution of size and fitness of individuals within a particular population tend to be skewed. There tends to be a few very large, and highly fit, individuals within such population and a large number of over-dwarfed individuals. It is interesting to note that individuals who are able to set foot early and establish themselves first tend to have a chance to grow first and thus preventing the other individuals to grow well. This gives a sort of age advantage, those who come first get an 'unfair' edge.

In the business world a similar phenomenon shows in cases of high competition. The first comer tends to get an advantage over the alter comer. A business that starts in a new relatively virgin market tends to have time to build itself and establish itself there within such market. A later comer business would find it difficult to compete in such market, if the resources of such market are limited, and if such new coming business is still young and small. Therefore, for a new small business to have a chance to grow it should only try to target a relatively virgin market hence the talk about a market niche.

Why is the Middle Class Vanishing?

In nature, when there is a high degree of competition over available resources, the population tends to diverge giving rise to a few very large sized individuals and plenty of very small ones. This phenomenon observed in nature is paralleled in societies that experience increased competition. There tends to be a few individuals in the population that have grown filthy rich while the great majority of the population become very poor. The middle class tends to disappear in such situations. If, for any reason, competition over resources loosens up with time, a gradual naturalization of the wealth curve starts to take place and the middle class shows a second rising in the presence of such new conditions.

Fierce Competition Skews Distribution of Company Sizes

When competition over resources sours in a population, the size distribution of its individuals tends to become skewed, giving rise to a large number of small size individuals and a few large ones.

In the business world, fierce competition may result in a similar pattern. A large number of small size businesses working in a specific over-saturated market tend to show up while a few very large players emerge.

Building Mathematical Models to Understand the Dynamics of the Economy

In ecology, as with other sciences, it is useful to attempt to build mathematical models of the real world. One can start with very simplistic models, compare them with real life stats and see how closely they comply with results in the real world then refine the model to more closely reflect results observed in the real world. The mathematical model after several rounds of refinement still does not have to be perfect and does not have to provide us with the ability to create a perfect simulation of the real world yet is still useful in making us understand the dynamics of the real world and grasp a great part of its complexity. It can also help in prediction and to some extent in control.

Similarly, in the business world, even if it was not possible to create perfect models of the economy and the markets in which businesses are working, it is still useful to attempt to create mathematical models for them that reflect the real world dynamics of businesses as closely as possible and as much as the data available would allow. Such mathematical models can be used for decision making and help one understand the economy and dynamics of the business world much better thus aiding in effective decision making once again.

The Huge Informal Parking Business in Cairo

In the streets of Cairo, a huge informal parking business is thriving. The parking business is pretty informal and can fluctuate widely with time and place. A person just goes and stands near a parking lot, which is actually nothing but a normal pavement in any busy street, and employs himself as the valet of that portion of the pavement. In Arabic, the word for valet is "sayes" سايس or "monady" منادى.

Some informal valets like to select pavements that are in front of supermarkets or other shops. The frequency of cars parking, staying for a short period of time to shop from the store, then leaving is high thus guaranteeing the informal valet a high stream of cars parking during the day. As the car owner parks or leaves from the parking area he gives that informal valet 2 EGP. The exact amount might vary from one place to the other. The valet himself usually does not specify the exact amount but it is left to the car owner. It could be 1 EGP only or it could be 3 EGP. In some higher class areas it might jump up to 5 or even 7 EGP such as in front of City Stars in a busy weekend day on a Friday or Saturday. The amount is usually not tied to the period of time spent but is fixed regardless of how long you stay.

In case of longer pavements, usually there is more than one valet. They work in groups, dividing the long pavement among themselves. Each valet is responsible for part of the pavement and has a defined starting and ending point. The interesting thing about this informal job is that the same pavement may have different people working on it at different times of the day or even different days of the week. The amazing thing about the informal parking business in Cairo is that despite it not being regulated yet you never find valets fighting with one another and it is all run in harmony. The clash if it happens would not be among the valets themselves but between a valet and a car owner that did not want to pay or wanted to pay less than expected.

The huge spontaneous informal parking business in Egypt is worth studying. It is a thriving business that is run by a large number of independent individuals with nothing to hold them together except for informal rules and regulations they create themselves and which have nothing to do with the actual laws of the country!

Oscillation Patterns of Businesses within a Market

The degree by which the size of a population is sensitive to density varies from one population to another. Some populations are more sensitive to density than others. A population that is completely independent from density would keep growing in number till infinity, which is not something we observe in nature. The pattern by which a population grows or decreases in number depends on the effective rate of birth and its dependence on density. A population may oscillate till it reaches a stable size.

In the business world, similar patterns may also emerge. The number of businesses working in a specific market may increase or decrease in an oscillating pattern depending on the degree to which the size of this 'population' is dependent on its density in the market.

When Should a Business Pullout From an Overcrowded Market?

The density of living organisms of the same species living in a specific area may affect the growth, development, reproduction and death of those organisms. The higher the density of such population the higher the death rate and the lower the growth and reproduction rates. The density of a population may thus determine the growth and death rates of such population. The effect of the density is not instantaneous, but witnesses a sort of time lag. The growth, birth and death rates within a population is affected by the density of such population but it takes some time for such effect to appear.

Similarly, in economy, the effect of crowding of businesses in a specific market may not show instantaneously. A time lag can be witnessed between the actual crowding of businesses in a market and the effect of such crowding showing on the growth and death rates of such businesses. This phenomenon can be used to the advantage of some businesses which can make use of this period of time to make profits before pulling out from a market that has become overcrowded.

Mathematical Models of Business Competition

In the science of ecology, it is possible to establish mathematical models to approximate the effect of competition on a population or community of living organisms. Although no mathematical model of competition would be perfect, yet such models can help us understand, and to some extent predict, the behavior of populations and communities of living organisms.

Likewise, in the business world, it is possible to formulate mathematical models to simulate competition within a market or a whole economy. Despite such models never being perfect, yet that can help us get insights about the dynamics of the market or whole economy.

Pursuing a Mathematical Model for Mentoring and Business Coaching

I wold like to develop a model for mentoring or business coaching and how it affects the profit growth curve of the mentee or person being coached. It would be nice to draw two hypothetical profit growth curves, one of them without mentoring or business coaching and the other with mentoring or business coaching included. A third curve can be drawn representing profits of a client after deducting the mentor or coach share. This third curve should be higher, at least on the long term, from that without mentoring or business coaching. The area under the third curve should be greater than that under the first one at least within the first 3 to 5 years.

The question would be how to calculate such numbers, which formula to use and how to come up with a formula for profit growth in the first place? One possible answer is to base this on stats. Mentor or business coach may start collecting stats for those being mentored or coached. Such stats can serve as a way to construct the profit growth curves. It still would not be possible to compare such curves with those of the same person had he or she not been mentored or coached yet it is still possible at least to compare the aggregate of such profit growth curves with those curves of others who have not been mentored or coached. This could provide a clear indicator of the benefits of mentoring or business coaching and, to an extent, quantify the value of mentoring and business coaching.

Intuition Vs. Modeling in Business Prediction

In ecology and other sciences, mathematical models can be constructed to help in prediction and in understanding observed phenomena. No model is perfect. A model is just a way to explain the observations available and squeeze them into a coherent generalized form.

In the business world, no model would be perfect to. If it was possible to construct a perfect model in business, then all we had to do is create a computer program, provide it with such model and feed it with data and it would predict perfectly the stock market and take perfect business decisions for us without our intervention. This is not only not present now, but is not possible to ever reach. The reasons this scenario is impossible to reach is because we can never create a perfect model and we cannot get all the data needed in the real world for a 'perfect' model to operate on. Nevertheless, we can still use models to help us understand the business world and guide our decisions. The feedback we get after applying the model can help us keep refining it. It is the lack of perfect predictability in the business world that makes all the fun. In business, experience and intuition are of very high value that cannot be compensated for with academic or ready models alone.

Competition in Business Can Be Lethal

Competition among members of the same species in a population over resources available in a particular area can become very fierce reaching a stage where not only does growth of the population slow down and even come to a total halt but actually start reversing and the population starts to decrease in number. If such competition becomes even more severe it may reach a point where total destruction of the population takes place and all members of the species in the specified area die.

In the business world, a similar pattern may show up as competition heats up within a specific market. First it becomes tougher and tougher for companies to grow in such market, then growth reverses. If this competition continues it can reach a point where the market ceases to be able to support such fierce competition among businesses and the whole 'population' of businesses operating within such market die completely. It is thus essential to realize the effects of competition and realize that not all competition is equal. The nature of competition and its effects can change depending on the stage at which such competition is relative to the market in which it is taking place.

Will Adding More Cash to your Project Help it?

If you keep adding more seeds within a given plot of land, they reach a point where no matter how many more seeds you add, the final harvest at the end just does not increase any more. This is due to the limited amount of resources present in that plot of land. If more nutrients are added, the harvest may increase further beyond the earlier point when less nutrients were available yet still adding more seeds will not increase the harvest.

In the business world, adding more and more cash to support a project might not always be the wisest idea. a project would reach a point where any additional cash added to support it would just not be increasing the 'harvest' (the profit or even the revenue) of the project at the end. It is thus wise to know when to stop injecting more and more cash into a project because it could have a certain capacity that cannot be exceeded.

Company Growth Slows Down as Company Develops

There is a difference between growth and development. An animal can grow in size after it is born then it reaches puberty. The growth after birth is growth, but advancing to the stage of puberty is development because the organism is qualitatively and functionally different. The same case is with plants. A plant can start growing in size and creating more leaves which is a growth stage. Then it can start giving flowers and then seeds and fruit which are considered stages of development. When a plant transitions to a new stage of development its growth rate is reduced or stops completely.

The same can be said for companies as well. A company can start growing till it reaches a stage where it would develop. This stage would see the halting of slowing down of company growth but the company transitions to a more developed stage that is qualitatively different and has new functionality. The halting of the growth is not something bad, actually, the development into company with further functionality makes the company more able and can thus increase effectiveness and profit after that.

Finding your Market Niche Maximizes your Business Size

The rate at which new companies enter a given market tends to decrease as the number of companies already targeting such market increases till their number finally reaches a top limit (the carrying capacity of the market) above which the number of companies working within this market start to decrease. Besides the number of companies working in the given market, also the size of the companies is also affected. As more and more companies start playing in such market their size tends to become smaller and smaller. A virgin market where few or no companies are yet playing can witness the growth of large companies whereas a market already saturated will more probably accommodate companies of smaller sizes or smaller operations of those companies. It is thus a no brainer to try to market a virgin market or a specific niche in which you can grow without competition in order to reach a large size.

This is the same with living organisms. The size of living organisms tends to decrease as their density within a given area increases.

Businesses Grow in a Sigmoidal Curve Pattern

Many factors affect the growth of a population of organisms. One factor being the competition among members of that species over resources available at a specific area. Other factors may include predators, disease and changes in conditions at the specified area. Competition from populations of other species living in the same area would also be an additional factor affecting the growth of the population under study. A growth rate of a population based purely on competition among its members in a specific area would often follow a sigmoidal curve.

In business, the same sigmoid curve can be observed when observing the growth of businesses within a given market. The competition among those companies targeting the same market would result in a similar growth pattern for such companies as that observed in the case of living organisms of the same species living together in the same area.

When to Invest in a Company?

A company may go through three stages starting with slow growth followed by rapid growth and finally a stage of slow growth once more that may ultimately lead to downsizing and even death of the company altogether. This process may take anything from a few years or a few decades to a few centuries. Ultimately each company dies same as with living organisms.

In nature, a population witnesses slow increase in number at first when the population size is still small, followed by a stage of rapid increase in numbers as the population increases in size and so does the number of births then this is followed by a third stage of fewer and fewer organisms being born and surviving due to lower rate of birth and higher rate of death ultimately resulting in the decrease of the size of the population.

It is thus wise to invest in a company during the period where it is witnessing rapid growth, this is the most fertile period in which the highest returns on investment can be made. It would be wise also to pull out from such company right  before its growth rates starts to dwindle.

Using Carrying Capacity to Reduce Street Animals in Cairo

In the streets of Cairo we may witness an increase in the number of cats and dogs,. Even the number of crows flying about has witnessed a boost. The reason being the increase of garbage in the streets which creates a whole new ecosystem for those and other living organisms to feed and grow on then reproduce and increase in numbers.

Attempting to kill such animals will only make things worse. More wild animals would start coming into the city as a result of such action. Instead, a better approach would be to attempt to decrease the carrying capacity of the environment in the city by cutting down on the garbage available for such animals to feed on. By doing so, their numbers would drastically decrease and we would be safe from invasion of more wild animals into the city.

What is the Carrying Capacity of your Target Market?

As the number of organisms increases in a specific environment, their birth rates may tend to decrease while their death rates tends to increase. This takes place until they reach a point of equilibrium at which the population number remains constant. If such threshold was exceeded, population starts decreasing.

In the business world, the threshold can be calculated to determine if a market still has a carrying capacity for more businesses to enter or if it's saturated enough and would only show diminishing returns for any further attempts to penetrate it by new businesses. By entering a market that has already reached its carrying capacity, the only way to survive in it would be to 'kill' already existing businesses working in it. Like in the natural world, not all environments exhibit a birth rate or death rate dependent on density.

How Many Companies Can a Market Support?

In nature, the size of a population tends to be regulated through various means. For a virgin habitat, a new species occupying it may multiply rapidly till it reaches a point where the population is stabilized and does not see further increases in number. For a habitat that already hosts a number of different species forming a community, some of those species might have reached the stability point where its population is being regulated. Too much crowding of a species in a given area would limit its reproduction and even its growth. The increase in number may also make the population more prone to falling prey to some predator. Other forms of population size regulation also exist in the natural world.

In the business ecosystem, similar forces exist to control the 'population' of businesses in a given market. Too much businesses targeting the same market may witness a decline or a reversal and become weakened due to very high competition on resources (the market) which can no longer sustain them all.

How an Overcrowded Market May Still be Ripe for Business

The further crowded a market is the more fierce competition wold be. Simply counting the number of competitors or the amount of products/services being present in a given market does not give an accurate measure of the competition rate in each part of this market. The market is usually not homogeneous, and thus in the same market competition might be fierce at parts of it while lax at others. It is thus advisable to take a deeper look when targeting a given market, for despite its apparent high rate of competition it might have areas where competition is lax.

This is the same with living organisms. The density or crowding of living organisms in a particular area does not have to be uniform which leads to varying degrees of survival, growth and reproduction within parts of the same area.

Targeting Oversaturated Markets Can be Lethal to Businesses

When density of living organisms of the same species within a given area starts to slightly increase, this does not have any effect on the rate of death of those organisms. When their densities further increases, the death rate tends to increase. In many organisms, if the density keeps on increasing further, it might lead to a very high death rate due to overcrowding which results in extreme competition over resources.

In the business world, similar patterns may show up. A totally virgin market with no players in it could sustain a number of new businesses taking a share in it. As more and more new businesses target such market, the death and failure rate of such companies increases yet still the total number of surviving companies does increase. If the number of companies targeting this same market keeps on increasing further, not only will the rate of death and failure substantially increase but the number of surviving businesses may see a decline till it reaches a point where all such companies fail due to the vanishing of any substantial market share to sustain them.

How Government Subsidies Can Harm the Economy

In living organisms, the effect of competition is more pronounced when there is a crowding of organisms of the same species over a limited amount of resources. Moreover, competition in living organisms affects each individual organism in a different way: the stronger individuals tend to have a greater chance of survival while the weaker ones tend to survive less as they are denied resources.

In the business world, a country providing subsidies and excess 'resources' to businesses might actually be harming the business ecosystem by allowing the weaker competitors to live at a time when resources are actually limited. A better approach would be to take the weaker competitors off life support and leave the more fit ones to take over particularly at times of limited resource availability. A business ecosystem composed of fewer but more fit individual businesses would be better on the long run than a business ecosystem full of weak competitors living on life support provided by intensive government subsidies and support.

Exploiting Africa

Why is Africa so important to the industrialized world? The reason is that Africa has a lot of natural resources as well as human capital. Solar energy and water are two such resources but also the rapidly growing population and the expanding market. Having exploited much of the resources present in industrialized countries and having cutthroat competition in rather saturated markets, businesses in industrialized countries look to Africa for fresh unexploited markets and plenty of resources.

This concept is common in the natural world of living organisms. Whenever a resource is scarce or is being exploited heavily, fierce competition arises. Moving to a new location with plenty of unexploited resources becomes the logical option to consider. This happens in the natural animal world and also in the world of business and politics.

In Business, Closer is Better

Individual living organisms of the same species living together may compete for resources. The competition among them, called intraspecific competition, could be fierce in case of scarcity of resources and may vanish completely in case of abundance of resources. The more distant the resources are, the more energy the organism would expend in order to obtain them. This consequently puts more stress on the organisms and increases competition even further. With living organisms, the closer the resources the better.

In the business world, an important factor is easy of doing business. When a store is close by, or an ATM machine is near a clients home, this makes it easier for the client to use the service provided to him or the product offered to him.

Another manifestation of the principle of closeness is in the manufacturing world. The closer the inputs for a factory the less energy is needed to transport them and thus the more efficient the manufacturing process becomes.

How Long Will Your Business Live?

Every living organism dies. This is a fact of life. Some species have a higher age on average than others. Even within the same species, populations may have different average ages depending on which habitat they are living in. Finally, individual organisms from the same species and living in the same habitat would vary in lifespan due to being predated upon, dying from disease or illness ,or changes in the habitat conditions or competition over resources. In all cases, dying is an inevitable consequence of life.

It is often that people starting new businesses are oblivious to the fact that their business will eventually come to an end and die one day. Yes this day might surpass the lifespan of the founder of the business himself or herself, but still each and every business does have an age no matter how long it is. Like in the living world of living organisms, businesses too vary greatly in lengths of their lives. A business may live over one hundred or even two hundred years while others may survive for 40 or 20 years, still others would not live more than a few years and in some cases a few months.

Success of a business is generally attributed to the length of time it can survive in the marketplace. This concept indeed has a lot of merit to it yet it is not always the case. Some businesses can be very successful financially even though they are designed to be short lived. They make profit in a short period of time and that profit can be funneled into other businesses later on. In some cases, their startup business may even be consumed by a larger organization. It is therefore advisable that when one is designing a new business he or she does not exclude the idea of designing a short lived type of business. Even if designing for a long lived business type, it is worthy to understand that no matter how long this business would survive, there would come a day when it would be over. Therefore, it is advisable to think how this business would be making a difference not only financially but also in the other spheres of life for its owners, employees, customers and the whole ecosystem it is living in on the financial, social and ecological spheres.

An Instant Success Business is Short Lived

The longer the life expectancy of a species the longer it takes it to mature and be able to reproduce. Saying it the other way around: the higher the age of maturity of a species, the age at which it is able to give birth, the longer the life expectancy of that species is.

Mirroring this concept to the business world, an overnight successful business might thus be short lived while one that has taken its time to mature first can live much longer. Google for instance was by no means an overnight success. I remember the days when Google was just another search engine with a terribly looking interface. It took Google quite a while to establish itself as the #1 search engine. Google has survived the test of time and grown to be a powerful search engine and even expanded beyond that.

Has Your Baby Spoken Yet?

Different species of living organisms vary in size, lifespan and age of maturity. The smaller the size of an organism the shorter its lifespan and age of maturity. The larger the organism, the longer its average lifespan and age of maturity. This is an interesting natural phenomenon that gives us insight into how nature normally works.

Some children may start speaking earlier than others yet many of those who have 'delays' in speaking grow up to speak more eloquently as they mature.

Limits on Businesses Adapting to New Markets

In living organisms, the genetic heritage of a species limits its abilities to live in any habitat and confines it to one or more specific habitats to be able to live in. The same species might adapt to a number of different habitats yet still be completely unable to inhabit many other habitats that are not suitable for it.

By the same token, some businesses may survive well in a number of different 'habitats' or markets, others would survive only within a single type of 'habitat' or market. Some businesses can adapt nicely with a number of new markets while being unable to survive in yet some others. It would not be wise for a long standing business to attempt to target a market that it cannot adapt with.

In Business, One Size Does NOT Fit All

Organisms that are genetically similar may exhibit different patterns of behavior when they live in different habitats. A specific species of bird may lay a certain number of eggs at particular dates in one habitat while lay a different number of eggs on other dates if it lives in another different habitat. The optimum number of eggs and date of nesting in one habitat for that species is different from the optimum number of eggs and date of nesting of the same species if it lives in a different habitat.

Similarly, a specific business type should not try to force its practices in the same way regardless of the market it is targeting. A multinational should always pay great attention to local variations and be sensitive to cultural differences within its target markets. By adjusting its practices according to the nature of the target community, a multinational can become successful at a wide range of different geographical regions.

How to Get Creative Ideas!

A virgin habitat can easily be colonized by a newly arriving species that reproduces rapidly giving a large number of offspring that can be relatively small in size and not of high average fitness. A species living in a habitat that already has full 'residence' of organisms faces high competition and thus delays reproduction, producing fewer offspring that are larger in size and enjoy a higher average fitness.

In order to have plenty of creative ideas 'colonizing' your mind and multiplying, you must first cleans your mind from many of the other competing ideas that colonize it. By doing so, your mind becomes fertile land for creative ideas to keep jumping in and multiplying very rapidly. Eventually, they will fill your mind with good stuff. In contrast, if you keep heavy ideas dwelling in your mind, they will be competing harshly and will not give room for creative ideas to enter. In fact, the old dwelling ideas will reproduce new ideas very scarcely and their reproduction will be delayed.

Businesses Competing in the Wild

Organisms that are colonizing a rather empty habitat exhibit high rates of reproduction, smaller offspring size, high mortality rates and very little competition over available resources. Contrastingly, organisms living in a rather crowded habitat exhibit high competition, lower reproduction rates, larger offspring size, delayed reproduction and lower mortality rates excluding that caused by competition.

Businesses show similar patterns in the economy. A business that is 'colonizing' a new virgin market can rapidly dominate it 'reproducing' its product or services all over that fresh market. Its products do not have to be top quality, but they must be large in numbers. In contrast, a business attempting to survive in a highly competitive market needs to provide much higher quality products or services that are fewer in number in order to be able to withstand the fierce competition.

Why Having Twins is Rare in Humans?

How many rabbits does a rabbit give birth in one time? How many kittens does a cat give birth too in one time? The number of offspring in each birth for an organism cannot be too high or else it will consume so much energy from the mother and will also adversely affect the health and fitness of the offspring on the long term. The number of offspring in many organisms also is not too low, so that the organism can have enough offspring to propagate and expand. This is true in the animal kingdom and also in the plant kingdom when plants produce seeds for instance. Attempting to artificially increase the number of offspring per birth in animals or in plants may lead to adverse effects on the long term on the offspring or on the short term on the mother.

It would be interesting to explore how this pattern applies to humans when they produce twins, a single baby or not at all. In some cases humans may produce 3, 4, 5, 6 and up to 8 offspring at once! This would be interesting to examine in light of the above mentioned pattern.

Startup Business Size and Predators

Organisms focus on producing offspring that are larger in size, yet fewer in number, in  habitats where there are high risks of predators on the offspring and also where there is high competition among the same organism for available resources in such habitat. In contrast, organisms living in habitats that lack predators, or lack a high risk of predation, and do not have high competition produce a larger number of offspring that are smaller in size.

By the same token, businesses that are created in a highly competitive market must be born large in size or else they will not be able to survive. A business that is born in a marketplace where there are a lot of 'predators' would not stand a chance of surviving either. In contrast, in a low-competition market, a business that is born small might still be able to survive and flourish.

Businesses Burning their Products

Some organisms reproduce only once before dying. Others reproduce multiple times within their lifespan. Those that reproduce only once before they die use all their resources and energy to reproduce. Others that reproduce multiple times within their lifetime only invest considerably lower energy and resources in reproducing.

In some situations, a company might 'burn' out one of its products in the market, getting enough cash to start other lines of business. This is similar in a way to the organisms that consumes all its energy in reproduction then dies.

What is the Maturity Age of Companies?

Individual organisms of the same species mature at different ages. The age at which an individual organism matures, reaches reproductive age, depends on many factors some of which are genetic in addition to availability of resources such as food.

Similarly, in the business world, companies can 'mature' at different ages. Some companies may take 10 years to reach the stage of maturity where it can confidently start spinning off franchises or opening up branches or going multinational. For other companies this period might be greatly reduced. One factor determining the maturity age of a company can, similar to living organisms, be the availability of resources for such company.

Low Survival, High Reproduction

When there is a low survival rate of offspring, organisms attempt to compensate for that by having a high rate of reproduction. Interestingly, in developing countries and many poor countries in Africa, you find very high reproductive rates and low survival rates at the same time. In contrast to that, developed countries that enjoy a high survival rate tend to move towards lower rates of reproduction.

Unstable Couples do not Give Birth

In order for offspring to survive, they need to be born in a safe, nurturing a stable environment. Lack of such environment would make the bringing up of new offspring non-compliant with the laws of nature.

If a man and woman get married but are living an unstable life, due to lack of stable work for the husband or constant travel of the husband away from his wife, they might find themselves unable to have any children even though medically they are perfectly capable of having babies. In such case, in order for them to have a higher probability of getting children, they must attempt to make their lifestyle more stable such as be securing a stable job by the husband or for him to travel less.

Why Countryside Women did not Need Birth Control

The relationship between growth rate and reproduction ability is dependent on the habitat in which the organism lives. A habitat that is well suited for the needs of the organism and that provides plenty of the resources needed by that organism can maintain the growth of the organism without reducing its reproductive ability except slightly. In contrast, a habitat that does not provide enough resources needed by a specific organism, due to lack of resources or the presence of high competition on those resources, would cause growth rate of an organism to be affected considerably by it's reproduction.

In our modern days in industrialized countries and societies a high birth rate can have an adverse effect on the health of a person. A woman living in a modernized life style might have her health deteriorate if she gives birth to a large number of children. The reason behind this being that food prevalent today for such life style is not nourishing enough and is less nutritious. This mirrors the lack or reduction of enough resources in case of organisms inhabiting a specific habitat.

The above contrasts sharply with other women living in the countryside in the past where food was more nourishing and more nutritious. The high number of births women used to experience at that time did not have a strong negative effect on their health, actually many of them enjoyed great health. It might be argued that at such times the high number of births women experienced did in fact have a positive effect on their health!

Select your Business Habitat Carefully

Some regions have people that live longer than others living at other regions. The fitness of individuals is affected by the habitat in which they live. Likewise, if you open shop at a particular location, the 'habitat' can have an effect on the 'fitness' of your business. It is therefore crucial to carefully select the location where you will start your business and/or do business for location can either make or break the prosperity of your new or expanding business.

Business Fitness

In nature, the more offspring an organism produces the less fit each individual of the offspring is on average. The relationship between number of offspring and their fitness is an inverse relationship.

This could also be true in business. A business that would keep on producing too many new  products or attempting to expand rapidly would suffer from a low average 'fitness' value for its products. Conversely, if a company focuses most of its energy, efforts and resources (R&D, marketing, ... etc) on fewer winner products or services, it would probably get a higher fitness value on average for such well nourished products or services.

Franchising as Reproduction

Organisms grow rapidly at the beginning of their lives and are unable to reproduce during that initial stage of their lives. When they reach maturity and are able to reproduce, their growth rate decreases sharply or even comes to a complete halt. This is true not only for animals but for plants as well.

A company that has been growing along the years may then decide to open up additional branches or even expand through offering franchises. The original branch might not be experiencing further growth at such stage but would have reached maturity and is able to 'reproduce'. This mirrors the natural process which we see in living organisms. However, there might be a different approach to starting a new business and offering franchises right away or planning to start many branches from day one. This would not be the natural method and might not always be successful or sustainable. Many businesses fail when attempting to start and 'reproduce' at the same time. Yet still, some do succeed, the reason behind their success is simply because those doing the planning for such 'new' business probably already have prior extensive business experience and thus are considered mature and able to start 'reproducing' new businesses.