TECHNOLOGY AND EVOLUTION

ESCAPING THE RED QUEEN EFFECT

The same laws may govern the evolution of organisms and organizations Rugged tness landscapes determine the rate of innovation Breaking your company into patches to balance order and chaos

Stuart A Kaufman

T FIRST GLANCE, the adaptive evolution of living organisms and the development of human artifacts seem worlds apart. When a gene mutates, it does not do so intentionally. The mutation may be helpful, harmful, or neutral as far as the survival of the species is concerned. By contrast, human artifacts like tools, products, and even organizations are the fruits of a conscious struggle to invent and improve.

Stuart Kaufman is an MD, biologist, and MacArthur Fellow; he is on the faculty of the Santa Fe Institute. This article is adapted from Chapters 9 and 10 of his forthcoming book, At Home in the Universe: The Search for Laws of Self-Organization and Complexity, to be published in the US by Oxford University Press in September, and in the UK by Viking in October, 1995. It appears here by special arrangement with Oxford University Press, New York and Viking, London. Copyright 1995 Stuart Kaufman and George Johnson. All rights reserved.

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What can biology and technology possibly have in common? Perhaps nothing, perhaps a great deal.

The Cambrian explosion

In the Cambrian period of the Paleozoic era, some 500 million years ago, a burst of biological creativity took place that nds an echo in the development of many technologies. Over a relatively brief period of time, a vast diversity of fundamentally diferent life forms appeared. What was extraordinary about the Cambrian explosion, as it is known, was that the emergence of new organisms happened top down. In the taxonomy of living creatures, the highest categories, kingdoms and phyla, capture the most general features of a very large group of organisms. The phylum of vertebrates, for instance, includes sh, birds, and mammals. There are 32 phyla today, all dating back to the post-Cambrian period. Evidence suggests, however, that as many as a hundred phyla may have existed during the Cambrian itself, most of which quickly became extinct. These phyla are thought to have been established by the rst species to emerge hence top down. These radically diferent creatures then branched into daughter species, slightly more similar to one another but still distinctive enough to become founders of the next category in the hierarchy, classes. The process replicated itself to produce daughter species somewhat more similar to one another which in their turn founded orders. Next were families, and nally genera. The pattern is one of explosive diferences among the species that branch early in the process, with progressively less dramatic variation in successive branchings.

Technological innovation
The way in which technology evolves is strikingly similar to the Cambrian explosion. Diverse forms branch out bushily at the beginning, then the rate of branching declines, extinction sets in, and, like todays phyla, only a few major alternative forms persist at the end. Early on, the diversity of forms is more The way in which technology radical; later, it shrinks to a ne-tuning of evolves is strikingly similar details. Development is top down.

to the Cambrian explosion

In any basic innovation, it is common to nd a wide range of early experiments with radically diferent designs that branch further, then settle down to a few dominant lineages. Take the bicycle. The nineteenth century saw a plethora of forms: bicycles with no handlebars, versions with small back and large front wheels, forms with more than two wheels in a line, and even bicycles with two wheels of equal size. An early leader, the pennyfarthing, branched further. The class of

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bicycles eventually settled to todays dominant genera: street, racing, and mountain bikes. Equally apt illustrations can be found in the development of the automobile early in this century, from its highly diverse origins in primitive steam and gasoline vehicles, or in the design of aircrat or motorcycles. Ater the emergence of a fundamental innovation, people experiment with radical modications to nd ways to improve it. As better designs are found, it becomes progressively harder to make further improvements, so variations become more modest. The process closely resembles the evolution of living creatures on what biologists describe as a rugged tness landscape (see the boxed insert overleaf), in which the rate of nding improvements slows exponentially as peaks of tness are approached.

Conicting constraints
Why should developments in technology so resemble the emergence of species in the living world? One answer is that similar processes of evolution may operate in both spheres. In both biology and technology, adaptation can In both biology and technology, be seen as the attempt to optimize systems adaptation can be seen riddled with conicting constraints. A foraging creature, for instance, must spend time on its search for food. But its need to browse is in conict with its need for speed over turf to evade its predators. These conicting requirements must somehow be reconciled and optimized if the creature is to survive. Similarly, suppose we are designing a supersonic airplane. The fuel tanks must go somewhere; the plane must have strong but exible wings to carry the load; wires are needed to control the ight surface; the seating must be put in place; we need room for the hydraulics, and so on. Unfortunately, the best solution to one part of the design problem conicts with optimal solutions to other parts of the overall design. Thus we must nd some compromise solution that satises the conicting constraints of the diferent local problems. This common factor is precisely what makes it possible to compare the evolution of organisms and technologies. Both evolve on tness landscapes made rugged by conicting constraints.

as the attempt to optimize systems riddled with conicting constraints

Learning curves
Evidence that technology, like biology, is susceptible to the process of evolution also manifests itself in the phenomenon of the learning curve. One

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FITNESS LANDSCAPES AND THE NK MODEL

volution is sometimes characterized by biologists as a metaphorical uphill struggle across a tness landscape in which mountain peaks represent high tness, or ability to survive, and valleys represent low tness. As evolution proceeds, a population of organisms in effect takes an adaptive walk across such a landscape. The NK model described below is essentially a model of genetic interactions. In terms of our landscape imagery, it helps explore the effects of local features on the ruggedness of an entire tness landscape.

where each of the possible peptides is at one of the 16 corners of a four-dimensional cube, or hypercube. (A two-dimensional projection of this hypercube is shown in Exhibit A.) Suppose that we measure the affinity with which each of these 16 different peptides binds with a particular cell receptor, and that these affinities then map out as described in Exhibit B, with 1 being the lowest affinity and 16 the highest. An adaptive walk on this landscape can begin at any of the 16 corners, and involves a series of uphill moves from one corner to its neighbor along one edge of the hypercube. Each move leads to a change at one and only one of the four amino acid sites, and, because the walk is adaptive, results in an improved tness. The adaptive walk ends when a corner is reached which has no immediate neighbors with better tness. Exhibit C gives a clearer mapping of all possible adaptive walks in this peptide space. In a sufficiently rugged landscape, such as this one, some adaptive walks will result in suboptimal tness because a local, non-global maximum is reached (such as the peptides here of tness 14 and 15). This ruggedness is quantied by the K parameter of the NK model. In the NK model, each node makes a tness contribution to the landscape that depends
2 6

In the NK model, a landscape has N sites (in the case of a tness landscape of proteins or peptides, a site would be an amino acid), with each site contributing to the overall tness of the landscape. Each of the N sites has one of A possible states. The total number of possible landscape states is thus AN. Even for simple proteins this would be an enormous gure. Let us consider a tness landscape for peptides that are only four amino acids long (N = 4). Each site in the string of four amino acids is comprised of just one of only two different amino acids (A = 2). The number of possible peptides upon this tness landscape is 24, or 16. Each of these peptides could be represented by a four-bit string (for example, 0101). Since N is 4, this tness landscape can be mapped in a four-dimensional space,
0100 0000

1100 0110

1000

0101 0010

4 0001 15 14

11 16 13

1101 1110 1010 0111

1001 0011 1

8 9 5

12 7

1111

1011

10

Exhibit A All 16 possible peptides of length four composed of amino acid A (0 in the diagram) and/or amino acid B (1 in the diagram) as mapped onto the corners of a hypercube. Each corner (peptide) differs from its neighbor by just one site (amino acid).

Exhibit B Each peptide has been assigned, at random, a rank-order fitness, ranging from 1 (least fit) to 16 (most fit). Moves allowed in an adaptive walk are shown by arrows, all of which are pointing uphill toward higher values, represented here by smaller, darker circles.

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on the relationship between that node itself and the state of K other nodes. K thus reects the degree to which the nodes on the landscape are interconnected in determining the overall tness of the landscape. When K = 0, each node is totally independent of all other nodes. When K = N 1, the highest possible value of K, the tness of each node depends on itself plus all the other nodes taken together. As K increases from 0 to N 1, the NK model generates increasingly rugged and multipeaked landscapes. When K = 0, the landscape will have a single, smooth-sided peak like Mount Fuji. An adaptive walk uphill on such a landscape will lead to the global maximum (or highest peak) without getting stuck at a local, non-global optimum (lower peak) along the way. The higher K is, the greater the density of interconnections between the nodes. With
Global maximum 16 15 Local optima 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Exhibit C A flattened mapping of possible adaptive walks given in Exhibit B. Walks may only go upward, and so cannot go beyond one of the three local optima, two (those with fitnesses 14 and 15) being suboptimal.

K at its maximum value, N 1, the tness landscape becomes completely random: very rugged, with many peaks. A walk here tends to reach a local peak quickly, getting stuck there and never reaching the highest peak. Only a small fraction of peaks can be reached by uphill walks from any given starting point. Neither of these extremes the random landscape or Mount Fuji represents the real tness landscapes on which organisms (and by analogy, technological systems) evolve. These landscapes are rugged, but not random. They are correlated meaning that neighboring sites on the landscape have similar heights, or tness values, making it easier to spot and head for the high peaks. Once K is modestly large or larger, at every step uphill the number of directions uphill tends to fall by a constant fraction, and the waiting time or number of tries required to nd that way uphill increases by a constant fraction. This means that the higher one climbs, the harder exponentially harder it becomes to take the next step up the hill. In other words, the rate of improvement slows down exponentially in rugged landscapes. This feature of evolutionary development has parallels in technology for instance, in the phenomenon of the learning curve.

Editors note: Glenn Cornett, a consultant in McKinseys Cleveland office, adapted this explanation of the NK model from Stuart A. Kauffman, The Origins of Order: Self-Organization and Selection in Evolution, Oxford University Press, New York, 1993.

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kind of learning curve arises in production, where the greater the number of items that are produced, the more ecient production becomes. Economists have noted that at each doubling of unit output in a factory, the cost per unit falls by a constant fraction, oten about 20 percent. The other kind of learning curve arises on what are called technological trajectories. The rate of improvement of a technology oten slows exponentially with total industry expenditure. Improvement in performance is rapid at rst, then eases of.

At each doubling of unit output in a factory, the cost per unit falls by a constant fraction, oten about 20 percent

The shapes of these learning curves are important factors in growth in technological sectors of the economy. Investment in new technology, for instance, yields rapid improvement in performance at rst. These increasing returns attract investment and drive further innovation. Then learning begins to slow exponentially, and less improvement occurs per investment dollar. The mature technology centers on a few dominant forms in a period of diminishing returns. Attracting capital for further innovation becomes dicult. Growth of that technology sector slows and markets become saturated. Further growth will depend on a burst of fundamental technological innovation in some other sector. Despite the importance of these learning curves, there is no theory to account for their prevalence in technological innovation and economic growth. Perhaps the analogy with adaptation on tness landscapes (see the boxed insert) can shed some light.

The struggle uphill

On a rugged tness landscape, for every step you take uphill, the number of directions uphill declines by a constant fraction. Conversely, ater each improvement is made, the number of attempts needed to nd another improvement increases by a constant fraction. The rate of nding improvements thus shows exponential slowing. Technological development seems to follow a similar pattern. The rst type of learning curve with a technological trajectory exhibits a power law slowing in cost reductions with units produced. According to rugged landscape theory, this power law slowing reects both the exponential slowing in the rate of nding improvements, and an exponential decrease in the amount of improvements at each step as successive improvement steps are taken. The second type of technological learning curve features exponential slowing in output performance as improvements to the fundamental design become

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TECHNOLOGY AND EVOLUTION: ESCAPING THE RED QUEEN EFFECT

ever more modest. In both, the number of routes uphill toward further progress dwindles by a constant fraction following each improvement. These remarkable parallels suggest that it is worth taking seriously the idea that biological evolution and technological development may be governed by similar general laws. Both are forms of adaptive evolution, exploring vast spaces of possibilities on more or less rugged tness landscapes. If the structures of the two types of landscape are broadly similar, it follows that the branching processes of adaptation should also be similar.

Coevolution
In real ecosystems, species change as they interact with one another. They coevolve, one species living in the niches aforded by others. Flowers coevolved with the insects that pollinated them and fed upon their nectar. Plants manufacture the oxygen we breathe; we produce the carbon dioxide they use to photosynthesize. And as species change, so too do their niches in the ecosystem. Hostparasite systems coevolve too. The agent of malaria alters its surface antigens to evade detection by the host, while in its turn the host immune system evolves to try to catch and destroy the malaria. A molecular game of hide and seek ensues. Coevolution also occurs between predator and prey species. The shells of certain marine creatures exhibit spur-like calcied fortications, presumably an adaptive response to the ability of starsh to capture and open their shells. Responding in kind, starsh have gotten bigger, developed sharper beaks, and strengthened the suction that grasps their prey.

Chaos and order

This form of persistent coevolution has been dubbed an arms race, or the Red Queen efect, ater her comment to Alice: You have to run faster and faster just to stay in the same place! Where this efect applies, all species keep changing in a never-ending race simply to sustain their current level of You have to run faster tness. Chaos prevails. In contrast, an evolutionary stable strategy is one where each species is better of not changing its survival strategy so long as the other species with which it is coevolving continue to follow their current strategies. The result is an equilibrium, an ordered regime in which there is no incentive for any species to alter its strategy. Indeed, if a species were to deviate, its own tness would be harmed.

and faster just to stay in the same place!

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In real ecosystems, some processes of coevolution may lie in the chaotic and some in the ordered realm. An ecosystem deep in the ordered regime of an evolutionary stable strategy will be too rigid, too frozen into place, to coevolve away from low local peaks. Under the chaos of the Red Queen efect, on the other hand, species climb and plummet on heaving tness landscapes, never staying at a peak. But between these two extremes of low tness, in the transition between chaos and order at the edge of chaos, peaks are high but can be attained. Here, tness can be optimized.

Niches in a web
Coevolution can be seen at work in our economic and cultural systems too. An economy, like an ecosystem, is a web of coevolving agents. The mutualism of the biosphere nds its echo in the relationships within the vast web of goods and services, each living in its economic niche. When the car came in, it drove out the horse. With the horse went the smithy, the stable, the saddlery, the harness shop, buggies, and the Pony Express. But once cars are around, it makes sense to expand the oil industry, build gas stations, and pave the roads. Once the roads are paved, people drive everywhere, so motels are useful. When cars get faster, trac lights, trac Goods and services exist only if cops, and parking nes make their way into they are useful whether in their the economy and our behavior patterns.*

own right or as an intermediate good, in the creation of other goods and services

Goods and services exist only if they are useful whether in their own right or as an intermediate good, a component in the creation of other goods and services. An intermediate good like the engine for a car may have inputs from a variety of sources, from tool makers to iron mines to computer assisted design to the manufacturer of the computer and the expert who wrote the CAD sotware.

Changing landscapes
Novel goods create niches for still further new goods. The process is truly one of coevolution: the goods and services that emerge must always make sense in the context of those that already exist. But as economic activities alter, the coevolutionary tness landscape is deformed, attacking the tness of existing goods and services. This provides the opportunity for a family of new, neighboring technologies to proliferate, climbing uphill on the deformed landscape. As aircrat design improved and engine power increased, the xed-blade propeller became less useful and a new innovation, the variable pitch
I am indebted to my Santa Fe colleague W. Brian Arthur for this example of the way in which economists think about technological evolution.

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propeller, took its place. This invention opened a modest new era of learning how to create better variable pitch propellers. So, as adjacent products and technologies are called forth by the deforming landscape, each generates a new burst of rapid learning, accompanied by a burst of increasing returns that can attract capital and credit, driving further growth in that sector. In addition, the learning by doing that occurs in one innovation spills over into neighboring new technologies, enabling the human capital, The car ushered out many the learned skills, to be widely shared. Some new goods and technologies have a particularly potent efect. The car, as we have seen, ushered out many old technologies, ushering in new ones in vast avalanches. So did the computer. Such avalanches produce enormous arenas of increasing returns, thanks both to the massive early improvements that are won through learning and to the major new markets that are created.

old technologies, ushering in new ones in vast avalanches

Other new technologies, on the other hand, emerge and disappear with scarcely a ripple. It may be that the diference between the automobile and the hula hoop, say, has to do with how central or peripheral the new product or technology is in the economic web, both when it rst emerges and subsequently.

Patches
Human constructs share another property with evolving ecosystems. It can be explained by means of the image of patches in a quilt. Take a hard, conict-laden task in which many parts interact, and divide it up to make a quilt of patches. Try to optimize within each patch. Although the patches do not overlap, there are couplings between parts of separate patches across patch boundaries. This means that nding a good solution in one patch will change the problem to be solved by the parts in the adjacent patches. These parts will themselves make adaptive moves that in turn alter the problems faced by yet other patches. The quilt is in efect a model of a coevolving system. Each patch behaves like a species, climbing toward tness peaks on its own landscape. In doing so, it deforms the tness landscapes of the other species that share its ecosystem. This process of coevolution may spin out of control, changing ceaselessly without ever converging on any good overall solution: the chaotic behavior typical of the Red Queen efect. As each patch selshly optimizes, it deforms

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the landscapes of other patches so drastically that all patches climb toward ever shiting peaks forever. This is likely if the patches chosen are too small. Alternatively, the whole system of patches may freeze up on a low local peak under the ordered regime of the evolutionary stable strategy. This is likely if the patches are too big. Such patch systems undergo a phase transition. As patch size for a given quilt system is turned from small to Breaking down systems into large, the system suddenly switches patches may be a fundamental from chaotic Red Queen behavior approach we have evolved to to settle on a mutually optimal solve dicult problems solution in an ordered way. The best solution for the quilt, as for an ecosystem, is found at this point between these two extremes, poised in the transition between order and chaos. By analogy, a hierarchical company with too much control at the top is likely to freeze too rigidly into poor compromise solutions. A company broken into too many small selshly optimizing departments may churn chaotically. If the entire conict-laden task is broken into patches of the right size, the coevolving system that results will lie precisely at the phase transition position. As if by an invisible hand it will rapidly nd excellent solutions to the hard problems. Breaking down large systems into patches, in short, may be a fundamental approach we have evolved in our social systems and perhaps elsewhere to solve dicult problems.

Performance
Consider the value of understanding optimal patching in the management of complex organizations. Manufacturing, for example, has traditionally used xed facilities of interlinked production processes to make a single end product, like an assembly line for a car. Such xed facilities are used for long production runs. Today, however, it is becoming important to shit to exible manufacturing. Here the idea is to be able to specify a diverse range of end products, recongure production facilities quickly and cheaply, and carry out short production runs to yield small quantities of specialized products for niche markets. The output must, of course, be tested for quality and reliability. But how should this be done? At the level of each individual production stage? Of the entire system? Or of some intermediate chunk? I wonder if there is some optimal way to break the total production process into local patches, each with a modest number of linked production steps: keep partitioning the system into smaller patches. When overall performance degrades, break

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up to slightly larger patches. Then one could optimize within each patch, let the patches coevolve, and rapidly attain excellent overall performance. Patching systems so that they are poised on the edge of chaos may be valuable for two quite diferent reasons. Not only do such systems quickly achieve good compromise solutions under conicting constraints, but they should also track the moving peaks on a changing tness landscape very well if the existing environment changes. If external conditions alter, a rigidly ordered system will tend to cling stubbornly to its peaks. Poised systems, by contrast, should cope better with shits in the landscape. These insights hint at the reasons why atter, decentralized organizations may function well. Counterintuitively, breaking an organization into patches, where each patch attempts to optimize solely for its own selsh benet, can lead, as if by an invisible hand, to the greater welfare of the whole organization. The trick, as we have seen, lies in how the patches are chosen.

It seems clear that at least an analogy exists between the unrolling panorama of interacting, coevolving species each coming into existence and making its living in the niche aforded by other species, each becoming extinct in due course and the way that technological evolution drives the emergence and extinction of technologies, goods, and services. This analogy can ofer intriguing and fruitful insights into the ways that products, organizations, and economies develop, as I have tried to suggest. But I suspect that there is more than an analogy. I suspect that biological coevolution and technological coevolution, the increasing diversity of the biosphere and of the technosphere, may be governed by the same or similar fundamental laws.

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