Michael Rothschild frames the economy as an ecosystem rather than a machine, drawing on his book Bionomics. He explains competition through ecological analogies like sibling rivalry and ant species, introduces his Profit Velocity concept as a business application, and demonstrates how disruptive innovation creates market niches.
Chapters
Good morning. Good morning. It's great to have such a lively group. So when Tim asked me to do this, he originally asked me to talk about my book Bionomics. And I said, you know, it's been a long, long time since I've given a talk about that. I used to do it actually professionally, speaking all over the world about the ideas that came out of the book. And I got kind of tired of that. Doing the same songs every night in the performance. I wanted to do something a little different. So I wanted to turn theory into action. I wanted to take ideas and make real change happen in the real world. Probably like a lot of you guys. And so I wanted to talk to you and just share with you the journey that started with a book, in my case, a little different than a lot of entrepreneurs' experiences, and has turned into a fledgling business. And I say fledgling because we're still in the fail, fail, fail, fail, maybe succeed phase. And before I get rolling, I want to introduce my colleague, Blake Pennington, who's our director in our customer support group. And Blake and I are gonna tag team from time to time, and he's gonna throw some comments into this discussion. And let me see if we can get started here. It's a little bit different than the devices I've used, but it'll probably work. Well, you can see from the title, you know, we're using our our slide format from our Profit Velocity Solutions company, but we've done a completely different presentation than we would normally do, obviously, when we're pitching to potential customers or investors or what have you, because I wanted to do something real different for you guys. And the concept we came up with was disruptive innovation. I know you guys know what that is about. when your customers don't want to change. So we've been in the midst of a long slog, a terrible pitch battle that has gone on year after year because we're trying to make a really big change in the world, but the people who are affected by that for the most part are quite content to keep going the way things have been going. So how do you get a business going when The people who are going to benefit from your great idea maybe don't see things quite the way you see them. And so I'll tell you as we walk through this, I want to give you obviously what is Profit Velocity, and I'm going to give you a little bit of background to history, the book, et cetera. What is the problem that I identified some time ago? That I felt just needed a correction. There's, you know, if you're gonna build a business, you wanna make a change to the positive, so there better be a problem or an issue that needs correcting. If everything's fine, you can't add any value. So what's the concept of profit velocity? I know this is the— is this the money and resources thread? Yes. Okay, so this is on the money and the resources, and then the metric. What is the measure we use? What is technically, if you will, what is Profit Velocity. And then Blake's going to do a real quick demo because we do have a very robust software application that we've built over the years. And then as we get into it, okay, so fine, so you got this application, some people are using it, what's it worth to them? What's the value proposition? And then even after you get that, how do you actually flow this change into organizations that for the most part do not want to change, no matter how smart you think your idea is. And so that's the outline. And I'll try to charge through it and make sure I hit the timeline. Again, I haven't given this talk before, so I'm gonna rush along a little bit, hopefully to give us enough time left over to have some Q&A and discussion. Okay, so as per the introduction, you probably, maybe some of you, I doubt anybody's read it, but it's in your packet of books as I understand it. Don't feel embarrassed if you haven't. Maybe you crack it open. If you do crack it open, I would urge you, skip the introduction. It was written by a guy who didn't know what he was doing. And if he knew what he was doing, he would rewrite all that. But start on chapter 1. a lot more interesting. Introduction's just too dense to get through. But you can see from the subtitle, the basic theme is that the economy is like an ecosystem. You could think, in my view, the idea that I introduced now 25 years ago last month, hard to believe, was that the economy is not like a clanking machine. We've all heard the economy's picking up speed or— Picking up steam. Picking up steam or slowing down. Et cetera. All these kind of images of the economy as kind of a locomotive or something. And my view is that the economy is really much more like a rainforest. And there are all these different businesses, organizations that fit into market niches. You have to find your market niche. You have all heard that phrase. It's very similar to the way an organism fits into an ecological niche. And there's a vast food web in nature for those of you who've studied ecology or biology, vast food web. Well, we have in the business world a value-added web where there are suppliers who sell to upstream suppliers who then sell to distributors and ultimately to customers. And they're very complex relationships. Some are competitive. Many are cooperative. So you've got this incredibly diverse, rich, capitalistic, free market system. And guess what? There's no big designer. There's no one who engineered the thing. There is no central plan. Soviet Union tried that. Didn't work out too well. And a lot of people always want to fix the economy as if it were a machine that could be fixed. That's like trying to fix the rainforest. You can't do it. You just mess it up. So without getting into a lot more of that 350-page book, it's just a very different view of how the world works than what I certainly learned when I took economics in school. It's not a mechanistic view. It's a biological or ecological view. And one of the big takeaways I got from that, all that learning that I did, because I spent 6 years of my life on my own without a university or anything, using my own money to write this book, not because anybody asked me to, but because I was curious and I wanted to figure it out for myself. Whether anybody else read the book or not, I didn't really care. I wanted to solve the problem for my own intellectual satisfaction. And one of the things that I learned was that— about competition. And it turns out that in nature, the most severe form of competition is what we call sibling rivalry. I suppose most of you have brothers or sisters. That needing the same food in the same space at the same time of day, the same love and care from the parents. I used to fight with my immediate younger brother all the time. You're not supposed to, but the most severe form of competition is when you're identical. You'd think that you'd get along better if you're identical, but it turns out it's quite the opposite. If you eat at a different time of day or you sleep in a different place or one species lives at one altitude on the hillside and another species lives on another altitude, you don't mess with each other. And what nature does over time— and if you look at the rainforest, there's something like 12,000 different species of ants. We think of ants, maybe 3 or 4 kinds we might have come across. There's 12,000 different kinds of ants. And sometimes you'll find 1,000 different kinds of ants in the same patch of forest in the Amazon. And they're all eating something a little different. They're all coexisting. So the lesson I took from that is I don't want to start a business that's going to compete directly with what's already out there. I want to do something that's very different. Because only by doing something very different do you get that little open space where nothing's there and you might be able to get a chance at starting. So you're saying that the best businesses are the ones that are So that drove me to try to find something that really would be different and a contributor, a real value contributor. So just keep that thought in mind of being really different. And I also wanted to do something that was, make a big difference, really make an impact on the economy. So those 2 ideas of doing something very different and yet having a big kind of global impact if possible. On the economy. Because I wanted to see, you know, if you spent a number of years writing a book like this, you wanna see, can I take it out into the real world and move a mountain?
