The Power Laws

The Science of Success

Richard Koch

Publisher: Nicholas Brealey, 2000, 318 pages

ISBN: 1-85788-249-0

Keywords: Management

Last modified: Aug. 4, 2021, 7:10 p.m.

In this fascinating sequel to the bestselling The 80/20 Principle, Richard Koch explores the sciences to reveal the powerful patterns and universal principles that can be successfully applied to business today: The Power Laws. His new book shows that we must turn to science not simply to understand today's world, but to thrive in it.

In The 80/20 Principle, Koch provided a practical reinterpretation of a single power law drawn from economics. In The Power Laws, he captures many more fresh and exciting insights from biology, physics and non-linear systems that transcend scientific boundaries and cast business in a whole new light.

Koch presents the seventeen key scientific principles that underlie the way the world works, including the famous — Newton's Laws, Darwin's Evolution by Natural Selection and Einstein's Theory of Relativity — as well as such lesser known but key ideas as Gause's Principle of Survival by Differentiation and the Law of Unintended Consequences. Yet in a distinct departure from other writers who extol the virtues of chaos, quantum physics or 'Darwinian competition' as a guide to life, Koch treats the science seriously, in its own terms, before applying it to business.

By understanding and applying the Power Laws we can successfully pilot our way through life in general and business affairs in particular. Without this knowledge we're sitting ducks, bound to pull levers that don't work, and to do things that may lead to precisely to the outcomes we want to avoid. Richard Koch demonstrates that by acting to exploit the Power Laws, we can multiply our effectiveness; better identify and exploit business opportunities; and please the right customers. Further, he sheds eye-opening light on the true nature of competition, revealing the counterintuitive but indisputable fact that it is cooperation with, rather than efforts against, competitors that leads to the most success.

In one of many new slants, he revises the traditional cosmology of business by placing ideas and technologies at the centre of business evolution, concluding that business corporations functions as disposable vehicles for business genes. We see that a struggle for existence is at the heart of business, but that the struggle is primarily between ideas, not between corporations; that corporate competition is marginal to our economies and to our personal success. The Power Laws tell us that innovation is mandatory, but also predictable. following a seamless process of variation, frequent failure, infrequent success, and further variation —a process eerily reminiscent of natural selection.

Writing in a compelling, accessible style, Richard Koch maximizes the special insights the Power Laws give us into markets, competition, organizations, and human behaviour. In this rich and kaleidoscopic synthesis of science and business, Richard Koch has given us a fresh, powerful and unique accomplishment — he has provided something never before codified, the actual science of success.

  • The Power Laws (in Order of Appearance)
  • Overture: On Appreciating a Wonky World
    • In Search of a Few Universal Principles
    • The Progress from Order to Chaos
    • A New Gestalt for Business?
    • The Old Régime Has Its Place
    • Escaping Obsolete Mental Models
  • Part One — The Biological Laws
    How Economic Information Drives Progress

    Introduction to Part One
    1. On Evolution by Natural Selection
      Vary, Reinvent, Multiply, and Vary Again
      • The Universe Is Run by Selection
      • The Origins of Darwinism
      • Natural Selection: A Simple but Subtle Theory
      • Six Universal Principles Implied by Evolution by Natural Selection
      • Darwin's Economic Primer
      • Where Does Evolution by Selection Work in Business?
      • Fisher's Fundamental Theorem of Natural Selection
      • The Experience Curve — Explaining Evolutionary Improvement
      • Time­-Based Competition
      • Ulam's Dilemma — Is Natural Selection Unfair?
      • Evolving to Avoid Failure
      • Summary
      • Action Implications
    2. On Mendel's Genes, Selfish Genes and Business Genes
      Find the Best Business Genes and Vehicles
      • What Darwin Couldn't Explain
      • Mendel's Laws of Heredity
      • DNA and Its Structure
      • The Selfish Gene
      • The Theory of Memes
      • The Theory of Business Genes
      • A New Perspective On Business
      • Business Genetics for Executives — Six Action Rules
      • Summary
      • Action Implications
    3. On Gause's Laws
      Differentiate
      • Gause's Principle of Survival by Differentiation
      • Gause's Principle of Competitive Exclusion
      • Coexistence, Dominance, and Bi-stability
      • Ecological Niches and MacArthur's Warblers
      • Finding Unique Niches
      • Who Can Invade Whom?
      • Bi­-stability Is Better Than Coexistence
      • The Danger of Having One Key to Success in an Industry
      • Differentiation Is a Set of Actions to Take You to Uniqueland
      • Summary
      • Action Implications
    4. On Evolutionary Psychology
      Manage and Mutate Stone Age Man
      • Meet the Flintstones — in the Office
      • Punctuated Equilibrium
      • The Neurology of Stone Age Man
      • Owners and Intruders
      • The Endowment Effect
      • The Ultimatum Bargaining Game
      • Are We Really Hardwired?
      • How to Manage and Mutate Stone Age Man
      • Summary
      • Action Implications
    5. On Resolving the Prisoner's Dilemma
      Cooperate with the Best Cooperators
      • Game Theory
      • The Prisoner's Dilemma
      • Ridley's Theory of Social Coagulation
      • Business Collaboration As a Means to Defeat the Evolutionary Arms Race
      • The Theory of Co­-opetition
      • The Cathedral Versus the Bazaar
      • Higher Still and Higher, the Bounds of Cooperation Rise
      • The Prisoner's Dilemma and Your Career
      • Summary
      • Action Implications
    • Part One Concluding Note
  • Part Two — The Physical Laws
    Newtonian and Twentieth­-Century Physics

    Introduction to Part Two
    1. On Newton's Laws of Motion and Gravity
      Escape from the Gravity of Competition
      • Newton's Impact On the World
      • Are Newton's Power Laws 'Old Hat'?
      • Action and Reaction
      • The Gravity of Competition
      • Corporate Gravity: How Near and Large Is Your Competitor?
      • Escaping Corporate Gravity
      • Summary
      • Action Implications
    2. On Relativity
      Think Service­-Time
      • Farewell, Clockwork Universe
      • Einstein's Special and General Theories of Relativity
      • Can Relativity Be Applied to Business?
      • A Relative World View
      • Summary
      • Action Implications
    3. On Quantum Mechanics
      Pursue Both/and
      • The Most Majestic Triumph of Twentieth-­Century Science
      • Schrödinger's Cat
      • How Relevant Is Quantum Theory to the Non­-Micro World?
      • Quantum Theory Used As a Battering Ram
      • Summary
      • Action Implications
    • Part Two Concluding Note
  • Part Three—The Non­Linear Laws
    Interdisciplinary Science

    Introduction to Part Three
    1. On Chaos and Complexity
      Exploit the Fractal Nature of Business
      • The Third Great Scientific Breakthrough
      • Chaos
      • Insights from Chaos into the Physical World
      • Chaos, Chance, and Business
      • Complexity and Emergence
      • The Edge of Chaos
      • Complexity and Business
      • Summary
      • Action Implications
    2. On the 80/20 Principle
      Achieve More with Less
      • More with Less
      • The 80/20 Principle
      • The Ubiquity, Universality, and Usefulness of the 80/20 Principle
      • How to Use the 80/20 Principle in Business
      • The Simple Firm
      • Charm
      • The Power of Weak Ties
      • Von Foerster's Theorem
      • The 50/5 Principle
      • Mendeleev's Periodic Table of Elements
      • Control Theory
      • Fermat's Principle of Least Time
      • Trichotomy Law
      • Summary
      • Action Implications
    3. On Punctuated Equilibrium, the Tipping Point, and Increasing Returns
      Identify Sweet Spots in Emerging Networks and Dominate Them
      • Punctuated Equilibrium
      • Plague Theory
      • The Power of the Unexpected
      • Crossing the Chasm
      • Exponential Growth
      • Say's Law of Economic Arbitrage
      • The Law of Diminishing Returns
      • Metcalfe's Law
      • The Theory of Industry Sweet Spots
      • So What Has Changed in the 'New Economy'?
      • Summary
      • Action Implications
    4. On the Paradox of Enrichment, Entropy, and Unintended Consequences
      Sustain Success by Creating New Value Every Day
      • The Power Laws of Caution
      • The Paradox of Enrichment
      • The Law of Entropy
      • The Law of Unintended Consequences
      • Summary
      • Action Implications
    • Part Three Concluding Note
  • Part Four — So What?
    Introduction to Part Four
    • Finale: On the Gospel According to the Power Laws
      Practice a Few Routes to Success That Really Work
      • The Scientific Laws Driving Progress
      • The Power Laws Change Our Perspective
      • The Gospel According to the Power Laws

Reviews

The Power Laws

Reviewed by Roland Buresund

Good ******* (7 out of 10)

Last modified: Feb. 27, 2017, 12:27 p.m.

What happens when you look at business thru scientific theories? The answers are not what you would expect. Very interesting.

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