The Selfish Organization: How Internal 'Selfish Genes' Sabotage Organizational Success

The second law of thermodynamics tells us that entropy drives systems toward equilibrium and disorder. In his final shareholder letter as CEO of Amazon, Jeff Bezos referenced Richard Dawkins' "The Blind Watchmaker" to illustrate how natural selection counters entropy by building complex life through energy-driven processes. Bezos urged Amazon to resist the entropy-like pull of complacency by staying in "Day 1" mode—continuously growing, innovating, and dynamically adapting to trends rather than following predetermined designs.

While this advice resonates for maintaining corporate vitality, a deeper examination through Dawkins' evolutionary lens reveals a more insidious challenge lurking within organizations themselves. The very mechanisms that help companies survive external entropy may be generating internal evolutionary pressures that undermine efficiency and threaten long-term survival.

The Gene's-Eye View of Organizations

Richard Dawkins' revolutionary insight in "The Selfish Gene" fundamentally reframed our understanding of evolution. Rather than organisms evolving for the "good of the species," evolution operates at the level of genes—replicating units that maximize their own propagation regardless of consequences for the organism or group. This gene-centered view has profound implications for organizational behavior.

Just as genes function as "selfish" replicators, organizational practices, procedures, and institutional behaviors operate as organizational "genes" that prioritize their own survival over corporate efficiency. These organizational genes replicate through company culture, training programs, standard operating procedures, and informal networks. Once established, they develop sophisticated mechanisms to ensure their persistence, often long after their original purpose has become obsolete or counterproductive.

Consider how financial institutions evolved "too big to fail" characteristics that ensure organizational survival through taxpayer bailouts while engaging in systemically risky behavior. Healthcare systems develop byzantine administrative structures that justify large bureaucracies while creating barriers to efficient care delivery. Even the most innovative companies—Amazon, Google, Microsoft—have evolved similar self-preserving mechanisms over time.

 

 

Three Evolutionary Forces Within Organizations

Organizational Memory and Routines

Organizational routines serve as institutional genes, acting as corporate memory that stores knowledge and procedures across time and space. Nelson and Winter's groundbreaking work [1, 2] demonstrated how these routines become the fundamental units of organizational evolution. However, many routines become "selfish" by optimizing for their own persistence rather than organizational performance.

The extended phenotype theory applies particularly well here. Just as genes can influence environments beyond an organism's body, organizational "genes" manipulate corporate environments to ensure their replication. Meeting cultures generate more meetings to justify their existence. Reporting systems collect data that serves no decision-making purpose but validates the reporting function's importance. Approval processes expand their scope to demonstrate their value while slowing organizational responsiveness.

Recent research identifies "institutional parasites" [1]—entities that depend on organizations for survival while undermining institutional effectiveness. These parasites thrive in complex, opaque environments, developing sophisticated mechanisms to avoid detection while replicating harmful practices across organizational boundaries. They often disguise themselves as necessary oversight, risk management, or quality assurance functions. 

Group Dynamics and Concentrated Interests

Mancur Olson's [1, 2] seminal work on collective action reveals how concentrated interests successfully organize to extract benefits from diffuse, unorganized groups. This dynamic mirrors how selfish genetic elements persist in populations despite harming overall fitness.

Within corporations, specialized groups—whether unions, professional associations, geographic divisions, or functional teams—can develop behaviors that prioritize group survival over organizational efficiency. While these groups often provide legitimate value, they can also become extraction mechanisms when organizational oversight weakens.

Public choice theory, developed by James Buchanan and Gordon Tullock, demonstrates how individual rationality in group contexts produces collective irrationality. Group members pursue strategies that maximize their benefits while imposing costs on the broader organization. This manifests in various ways: technical teams over-engineering solutions to demonstrate their sophistication; sales divisions pursuing revenue at the expense of profitability; compliance functions expanding their mandate to justify larger staffs.

The challenge intensifies when leadership attempts to manage competing group interests through accommodation rather than clear prioritization. Well-intentioned efforts to balance stakeholder concerns can create situations where organized groups with concentrated interests successfully lobby for policies that benefit them at the expense of unorganized stakeholders—including customers, shareholders, and the organization's long-term health.

Individual Incentive Gaming

The tension between gene-level and group selection in biology directly parallels conflicts between individual and organizational incentives in institutions. Individual-level selection often favors behaviors that benefit specific actors while harming overall organizational performance.

William Niskanen's budget-maximizing model illustrates how individuals behave like selfish genes—seeking to maximize their personal resources (salary, prestige, power, job security) rather than optimizing for organizational welfare. This creates systematic oversupply of services, persistent growth beyond optimal levels, and resistance to efficiency improvements that might threaten individual positions.

Any incentive system can be gamed to maximize individual benefit rather than organizational value. Sales commissions drive revenue regardless of profitability. Performance metrics encourage hitting targets rather than achieving underlying objectives. Promotion criteria reward visible activities over essential but less glamorous work. Stock options can incentivize short-term stock price manipulation over long-term value creation.

The sophistication of this gaming increases with organizational complexity. In startups, survival depends on staying close to power centers—the CEO, founder, or board members. In larger corporations, individuals develop elaborate strategies to demonstrate indispensability while avoiding accountability for organizational outcomes.

The Persistence of Organizational Inefficiency

Why do inefficient practices persist despite apparent irrationality? Because they're often highly adaptive—for themselves. Inefficient practices ensure survival by creating dependencies, reduce individual ownership risk through accountability-diffusing complexity, maintain power by excluding outsiders, and generate resources by demonstrating apparent necessity.

The fundamental insight: evolution operates on replicators that maximize their own survival regardless of consequences for larger systems. Organizational inefficiency is not a bug but a feature of how institutional systems evolve.

This explains why startups often outcompete established corporations despite resource disadvantages—they face direct survival pressure that eliminates organizational parasites. Established companies, insulated by market position or regulatory protection, can sustain significant inefficiencies before facing selection pressure. 

Designing Evolution-Resistant Organizations

Understanding evolutionary dynamics suggests two design principles which can help to mitigate these risks:

Constitutional-level solutions: Sunset clauses forcing periodic re-evaluation, separation of powers creating competing evolutionary pressures, and internal competition allowing successful practices to displace inefficient ones.

Operational-level solutions: Performance measurement aligned with customer value, transparency reducing information asymmetries, and competitive elements creating selection pressure for efficiency.

The challenge: reform efforts themselves face evolutionary pressures. Oversight mechanisms become bureaucratic ends in themselves and often hijacked by the same groups with higher bargaining power.

When Internal Revolution Overcomes Evolution

Dramatic internal intervention can overcome evolutionary forces—but requires extraordinary circumstances and decisive leadership willing to endure disruption.

Elon Musk's Twitter acquisition demonstrates this. Cutting 75% of workforce eliminated organizational "genes" evolved for self-preservation rather than platform function. Despite chaos and bad press, the smaller team ships features at unprecedented speed.  Trump's DOGE initiative represents a similar attempt—using political pressure to overcome entrenched governmental "selfish genes" accumulated over decades.

However, reform becomes exponentially harder during profitability. Amazon's Andy Jassy exemplifies this challenge—pushing to eliminate middle management empire-building (redundant L7-L8 layers) while generating massive profits. Middle managers will resist elimination because their survival depends on demonstrating indispensability. They'll manufacture dependencies, justify roles through visible cost-cutting like offshoring, and exploit networks for survival.

The Market as Evolutionary Selection Pressure

In capitalist systems, like democratic societies, the most effective self-correcting mechanism remains external selection pressure. When customers reject products, investors withdraw capital, or talent leaves for competitors, organizations face existential pressure that overcomes internal evolutionary inefficiencies. A certain amount of creative desctruction is important in nature and in markets.

In authoritarian economic systems where market signals are suppressed, this correction mechanism operates poorly, allowing inefficiencies to persist and grow more elaborate.

Conclusion

Corporate inefficiency often represents successful adaptation—not for the organization, but for the practices, groups, and individuals within it. Organizational evolution produces outcomes that benefit institutional components rather than the enterprise itself.

This demands a fundamental shift in organizational thinking. Rather than assuming good intentions produce good outcomes, leaders must recognize that every organizational element will evolve to maximize its own survival. Success requires designing systems that align organizational benefit with component benefit, maintaining external pressure that prevents internal selection from dominating, and accepting that the war against organizational entropy is ongoing.

Only by understanding and working with these evolutionary forces can organizations counter the selfish tendencies that lead even the most successful enterprises toward internal dysfunction and eventual decline.