Red Queen Effect
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Overview

You're improving, learning, getting faster, achieving more and getting ahead? No, you're not. Because everyone else is as well. 

The Red Queen Effect is a reminder that even though you might be moving fast — or faster — so is your competition, so you’ll need to get smarter to adapt and survive.

BIOLOGY TO BUSINESS. 

The Red Queen Effect originated as a biological hypothesis that proposes that survival is dependent on a species ability to constantly evolve, adapt and proliferate, in the face of a competing species that also will continue to evolve.

The mental model has been adopted in business to explain why some organisations fail despite past successes and early rapid growth. It represents the ongoing pressure to innovate, optimise and improve your business with an understanding that your competitors will ‘catch up’ to your current success by learning from and/or copying your approach. 

IMPLICATIONS. 

The Red Queen Effect is reminiscent of Marshall Goldsmith’s famous warning: “What got you here, won’t get you there.” It is a call to action to invest in continuous improvement, innovation and to work smarter, rather than simply relying on past success and your current rate of progress. 

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Actionable takeaways
  • Research your competition

You cannot become better than your competitor if you are not aware of their strategies. In order to prevent your company from taking the same course of action as similar organisations, first, you need to know what they are doing in order to move forward.

  • Invest in areas that ensure competitive advantage

Ideas to make your business stand out from the crowd to include focusing on new product development, creating unique content that offers value to customers, building learning communities, ensuring high service quality, using highly skilled labour, having access to new technology, being able to manufacture products at the lowest costs, etc.

  • Learn how to use negative feedback to increase efficiency

Sometimes,  failing to outsmart competitors could be caused by your own actions and not by external factors, so you need to look inside the system.

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In Practice

The evolutionary ‘arms race’. 

In the Selfish Gene, Richard Dawkins describes the “unequal cost of failure” in the evolutionary ‘arms race’. He describes the life/dinner principle captured in Aesop’s fables: “The rabbit runs faster than the fox, because the rabbit is running for his life while the fox is only running for his dinner.” There is a linked push to evolve and improve, with better adaptation in one species driving the other to make its own ‘leap forward’ to survive. 

Buffet and developments in the textile industry. 

The Farnam St Blog outlines the Red Queen Effect in some detail and includes the story of Buffett's approach to investing in the textile industry. Buffet wrote: 

“Over the years, we had the option of making large capital expenditures in the textile operation that would have allowed us to somewhat reduce variable costs. But the promised benefits from these textile investments were illusory. Many of our competitors, both domestic and foreign, were stepping up to the same kind of expenditures and, once enough companies did so, their reduced costs became the baseline for reduced prices industrywide. 

“Viewed individually, each company’s capital investment decision appeared cost-effective and rational; viewed collectively, the decisions neutralized each other and were irrational (just as happens when each person watching a parade decides he can see a little better if he stands on tiptoes). After each round of investment, all the players had more money in the game and returns remained anemic.”

Limitations

Being aware of the Red Queen Effect is not enough to guarantee success. Once you have come up with a concept that is foreign to your competition, you need to make sure you can move the new product or service past the idea phase, which usually requires capital, know-how, and the willingness to take risks. 

Build your latticework
This model will help you to:

While the Red Queen effect arose from biology, it can be applied to competition and innovation in other domains. 

Use the following examples of connected and complementary models to weave the Red Queen effect into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above. 

Connected models: 

  • Mutually assured destruction: the Red Queen effect can be seen as a lens to understand the cold war. 
  • Blue ocean strategy: to consider changing the game rather than running faster. 

Complementary models: 

  • Catalyst: in identifying rapid change opportunities over progressive development.
Origins & Resources

The name of this concept originated from Lewis Carroll’s famous sequel to Alice’s Adventures in Wonderland, Through the Looking Glass, where Alice observes that she needs to run faster and faster just to stay in the same place; the Red Queen’s reply to Alice’s perplexity is ‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’

Evolutionary biologist Leigh Van Halen proposed the Red Queen hypothesis in 1973 to describe the constant race that co-evolving species engage in order to survive in a constantly changing environment populated with opposing organisms.

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