Business Cycles & Bacterial Population Growth: How Businesses and Microbes Share the Strategy for Domination
There are many advantages of learning a variety of seemingly “unconnected” disciplines. The advantages being the ability to have conversations in considerable depth with subject matter experts, the at-times shallow and at-times in-depth knowledge about diverse concepts and perhaps even the remote chance of appearing interesting.
Whether or not knowing many different things is more advantageous or not is a discussion I want to avoid. The classic “generalist”, is-it-better-to-know-a-bit-about-everything, or the “specialist”, “know-everything-about-something” debate.
Rather, I bring to you how knowing different things can sometimes reveal similarities in our world, especially when you’re not looking to reveal anything in particular.
The Business Life Cycle
Given that business knowledge is arguably more popular than bacteriology, I won’t go all-out-nerd on you. Though I never miss an opportunity to “utilize” my corporate jargon muscles (See what I did there?).
“The business life cycle is the progression of a business in phases over time and is most commonly divided into five stages: launch, growth, shake-out, maturity, and decline.” — Introduction to Corporate Finance, Corporate Finance Institute
Well, that was pretty straight-forward.
Now getting into each of the five phases within these cycles.
Phase 1: Launch
The first phase of the business cycle involves a company starting its business by launching a new product or service.
During this phase, sales are low, but hopefully, slowly and steadily increasing.
Businesses focus on marketing to their target consumer segments by advertising their comparative advantages and value propositions.
Phase 2: Growth
The second phase is characterized by companies experiencing rapid sales growth.
As sales increase rapidly, companies start generating profit post the break-even point.
Phase 3: Shake-out
The third phase displays continued increase in sales, however, at a much slower rate than the growth phase. This commonly occurs due to either approaching market saturation or entry of new competitors in the market.
Sales peak in this phase.
Phase 4: Maturity
The fourth phase shows that as the business matures, sales begin to decrease slowly.
Though, businesses may extend their business life cycle during this phase by reinventing themselves or by investing in technologies and launching in new, emerging markets. This enables them to reposition themselves and reinforce their marketplace growth.
Phase 5: Decline
The fifth and final phase concludes the company’s journey as sales decline.
Companies are unable to extend their business life cycle as they fail to adapt to the changing business environment.
Firms lose their competitive advantage and finally exit the market.
The Bacterial Growth Curve
And now let’s discuss the not-so-popular but equally, if not more, interesting bacterial growth curve.
“It has been determined that in a closed system or batch culture (no food added, no wastes removed) bacteria will grow in a predictable pattern, resulting in a growth curve composed of four distinct phases of growth: the lag phase, the exponential or log phase, the stationary phase, and the death or decline phase.” — General Microbiology, Oregon State University (or any individual who paid a little attention in their microbiology lecture)
It is important to note the mention of the word “closed system”, which makes the culture medium comparable to any local geography that a typical business might function in (We can already see similarities emerge!).
Similar to how the business life cycle is agnostic to the type of company or to the industry, so is the bacterial growth cycle agnostic to the type of microorganism. (Another interesting similarity!).
Phase 1: Lag
The Lag phase is the initial period where the bacterium is adapting to its environment and new conditions. The length of this phase can vary considerably from the conditions the bacteria came from, as well as from the condition of the bacterial cells themselves.
Typically, cells in the lag period synthesize RNA, enzymes, and essential metabolites that might be missing from their new environment (such as growth factors or macromolecules).
Phase 2: Exponential or Log
The Exponential or Log phase is characterized by multiplication/division (they mean the same within the context of biological sciences) of bacterial cells to increase their numbers at an extremely fast rate.
The resources are abundant and the bacteria is ambitious and extremely competent. (Just how your typical business management team, and therefore the company, may be. Another similarity!)
Phase 3: Stationary
The stationary phase is where the bacterial population runs out of essential nutrients or inhibition by its own waste or lack of physical space occurs.
This phase witnesses the mathematical balance between life and death, the number of cells being produced is equal to the number of cells dying. This results in the curve flattening out.
Phase 4: Decline or Death
In the Decline or Death phase, the final phase, the number of viable cells decreases predictably. The slope of the curve establishes the rate at which mortality occurs.
Unless the cells are removed from the culture medium before the deterioration is significant and placed into a fresh environment, the bacterial population ultimately declines.
The Similarities
If you’ve been paying attention, significantly attributable to how interesting my narrative was, you would have already noticed quite a few overlaps.
Not only are there surface level similarities—the number of phases and their names as well (sigh, I know this is a stretch)—there are similarities within the underlying principles of the cycles as well.
Below is a table that summarizes the major similarities I have observed.
It All Comes Together
Now look, I am not naïve enough to think that finding two similar looking graphs constitutes a revolutionary or even a notable discovery. The S-shaped curve is common knowledge to most and can be seen from the fields of developmental economics and mathematics to the realms of finance and biology, as I have just revealed.
Nevertheless, I do believe that there is a profound relation between disparate natural phenomena that goes beyond the mere structural conservation of the S-shaped curve. There are intimate similarities between corporations and bacterial species in how their behaviors are shaped and how their incentives are oriented.
If you think about it logically, which should be the only way to think, there should be no difference between how businesses behave and how bacteria behave. Both must ensure their own survival given scarce, limited resources while being surrounded by antagonistic elements and universal hostility.
It’s interesting, to say the least, how much the “macro” world of business and finance has in common with the “micro” world of microbiology and bacteriology.
Conclusions and Perspectives
So in the end what am I really trying to say?
I believe there exist infinite similarities within our universe, given that our universe is itself infinite and thus complex beyond belief.
Having said that, the fact that such similarities exist must imply that there is some level of simplicity as well, for patterns allow us to simplify our understanding about ideas and concepts.
And so, in a way, finding those similarities is perhaps our way of making sense of this infinity we call home.
And perhaps it is also fun to see things from another angle—seeing finance from the perspective of a molecular biologist, and seeing biology from the perspective of an applied economist.
