The Adaptation Economy

When Change Becomes Survival

COVID forced many companies to undergo a rapid transformation in 2020. Employees needed at-home setups, quality webcams were at a premium, offices were empty. Beyond the physical transition, teams needed to figure out how to work together when they can’t peek over each other’s shoulders to see what their teammates are doing and get inspiration from tossing ideas around. Individuals had to learn how to self-motivate when the social pressure of the office environment wasn’t available. Everything had to change rapidly, and some orgs handled this change better than others. It was, simply, survival of the fittest.

Survival of the fittest is sometimes misunderstood as we have an equivocation around the term “fit”. Survival of the fittest is not about survival of the strongest (reading “fit” to mean someone who exercises or is otherwise in good shape). Instead survival of the fittest refers to the fact that the species that survive are those which are the best fit for their environment. Species that adapt to find an ecological niche are the ones that survive into the future, as they fit their niche better than anyone else. At its core, survival of the fittest is about species’ adaptation.

When it comes to organizations, the same logic applies. Those who are able to best adapt to their conditions and environments are the ones that survive and thrive. COVID was a test of that, with some orgs falling apart due to their inability to adapt (though I’ll note that some orgs died due to no fault of their own, they were built on models that fundamentally don’t work in a pandemic, and that’s just bad luck). As generative AI becomes more the norm, I’d argue that we’re moving from the Information Age into the Adaptation Age. Now, the companies that win are those that can adapt the fastest to new conditions, environments, markets, and technology.

Your Moats Are Becoming Traps

Moats are a funny thing. Building a moat around a defensible position generally makes that position more defensible. However, moats also prevent escape (as does any significant fortification) in the case of a siege or battle. Moats work both ways, defending you from invaders, but also entrenching you in a position that is hard to escape from. Moats are useful when your current position is one of strength and one that will last.

As technological progress accelerates, business moats change with that. Your tech stack becomes less of a moat as building competing technology becomes increasingly accessible. An insider's knowledge of an industry becomes less important than their relationships within that industry as AI tools can replace the knowledge aspect. What created a moat a decade ago now might be the thing entrenching you in an indefensible position. In a world of rapid change, traditional business moats become temporary.



We’re also seeing the half-life of skills shrinking. Multiple sources cite World Economic Forum data saying that the half-life of a skill 40 years ago was ten years, that 10 years ago it was five years, and that now it's four years. However, I cannot find the exact citation itself, so take that with a grain of salt. However, the WEF’s Future of Jobs Report in 2023 did predict that 44% of workers’ skills will be disrupted between 2023 and 2028 - up nine percentage points from its previous five-year projection. (https://www3.weforum.org/docs/WEF_Future_of_Jobs_2023.pdf) So we’re seeing an increase in the need for new skills, which at least indirectly implies that either old skills are useful for shorter periods of time, or that we’re expecting modern workers to have larger skill sets than we expected in the past. Either way, the need for adaptation is clear.

The Adaptation Economy

We like to name things because categorizing information makes it easier for us to understand. The internet ushered in what we call the Information Age and thus the Information Economy. What we’re trying to say is that access to information and data ends up transforming the economy in such a way where data becomes a central point in the economy. Your ability to succeed as a company depends on the information and data that you have and how you use it. As tech speeds up and AI becomes a core part of business, I’d argue that we’re entering the Adaptation Economy. In this economy the ability to learn, unlearn, and relearn faster than change occurs becomes the primary competitive advantage. 

The Adaptation Economy has three pillars, I think, and all of which I’ll write more about in later posts: speed of learning, speed of unlearning, and speed to skill. Individuals in this economy are able to succeed when they’re able to adapt rapidly and that means learning new information, unlearning out-dated ways of doing things (aka breaking now out-of-date habits), and applying those new frameworks in their work rapidly. I’m reminded of my favorite essay by my favorite American philosopher, John Dewey, titled “The Lost Individual” where he argues that our path forward as a society isn’t premised on our ability to come up with new innovations and transformations as much as it is on our ability to let go of the out-dated ideas that are holding us back. He thinks that once we’re able to do that, positive innovations and transformations will naturally reveal themselves to us. While that doesn’t fully encapsulate the Adaptation Economy, I think that it’s part of it.

This is more than just being agile. A lot of companies like to tout how they’re an agile company, either in the formal sense of the Agile methodology, or just in the general sense of being quick and flexible. The Adaptation Economy is centered around the recognition that as things move faster, every single person in the company needs to be developing new skills constantly. Beyond the individual, every department needs to be rethinking how they work, not just what their strategic goals are. And beyond the department or organizational unit, the company as a whole needs to think about how changes in technology open up new possibilities for the business as a whole. I’d argue that this kind of adaptation happens best when it's grassroots. The adaptable employee is the one who sees the new opportunity and engages with it because they’re in a constant cycle of learning, unlearning, and applying.

The AI Acceleration Effect

The Adaptation Economy likely wouldn’t have been viable a decade ago. Learning, unlearning, and turning learning into active skills is something that takes effort and time, and no company could meaningfully afford to constantly reskill their entire workforce. Companies invest in training tools, give employees a budget for professional development, and engage in formal training sessions all so that employees stay up to date. However, those activities all take significant time and thus are unable to support the need for constant, rapid, reskilling.

AI, however, can make this possible. AI is both the problem and the solution here. AI triggers the need for constant adaptation while at the same time enabling that sort of adaptation at scale. However, it’s important to note that this isn’t just about AI tools, it’s instead about AI-amplified human learning. The adaptable employee is your moat and AI is just a tool that makes the adaptable employee possible. But this is also a compounding problem and solution. The org that, for instance, can learn faster with AI can then adapt AI faster, which in turn leads to that org being able to learn even faster. The bootstrap dream is real!

Building Your Adaptation Advantage

For leaders, the Adaptation Economy has a few implications, though those implications are different for different roles in the company. First, we should re-think hiring. The successful worker of tomorrow is the adaptable worker. Determining if someone is adaptable is hard, but things like a broad work experience, or success in a variety of domains or positions might be more valuable than someone who has been heads-down working in a narrow space for their career. Generalists will typically be better at learning than specialists. It also might mean really embracing trial periods for employees where during the trial period the real test is how well the person adapts and learns. Challenge the new employee to pick up a new skill or to experiment with a new tool or workflow that you’re considering and see how well they’re able to adapt to the new situation and learn. 

Strategically, companies should embrace an approach that values continuous adaptation over long-term planning. This sort of change requires quite a bit of effort as many of our current processes are tied to things like 5-year plans. But in today’s world, the 5-year plan is either so broad that it’s useless or it’s outdated by the time it gets finalized. Orgs need to build adaptability into their bones. This means being willing to rapidly change company projects and priorities, recognizing that customer needs and product expectations might change quickly, and investing in making your teams more adaptable and agile. A company full of adaptable teams is one that can easily pivot, can embrace new technology, and overall can thrive in the chaos and speed of change. 

Finally, as an overall, we need to promote intellectual humility and curiosity as core values. In today’s workforce many are afraid to say that they don’t know how to do something and so everyone is doing some version of faking it until they make it. Let’s not require anyone to fake it. Not knowing something isn’t a fault, especially in a time when things change so rapidly. Instead, the professional fault should be someone being unwilling to learn new things, unlearn outdated methods, and reskill rapidly. We want to encourage employees to identify areas where they need to improve or learn so that we can help them make that quick transition. When skill attainment can take days or weeks instead of months or years, lacking knowledge in an area is a very temporary problem. Building a culture of constant learning where employees respond to knowledge gaps with, “Interesting, it’ll be cool to learn how this works,” instead of silence is a huge win and a necessity for the Adaptation Economy. 

Conclusion

As a conclusion I’d challenge you to examine how your organization approaches learning, unlearning, and turning learning into active skills. What’s your learning speed like? When faced with new circumstances, technologies, markets, or customers is your team excited to learn and rewarded for their curiosity? Don’t rely on the handful of people in your org that like to learn, having a small dedicated transformation team isn’t enough. You need to cultivate an attitude where learning is embraced and actively encouraged, recognizing that learning always stems from a knowledge gap. 

The Adaptation Economy isn’t just about survival, it’s about unlocking human potential at an unprecedented scale. We now have the tools to make continuous learning not only possible, but actually exciting and engaging. The orgs that embrace this reality won’t just adapt to change - they’ll be the ones creating it. Thus, the future belongs not to the companies with the most resources but to those with the fastest learning teams. That future starts with your next hire, your next training decision, and your next willingness to say (or to encourage your employees to say!) “I don’t know, but I’m excited to learn.”