The Ecology of the Economy? Wait. What?

Hearing the word “ecology” will likely bring up vision of texts books and late nights studying for high school science exams. Or, for those of us who have blocked out 3rd Period Biology from our memories, it might bring to mind Paulie Shore dancing around a BioDome. Ecology is the branch of biology dealing with the relations and interactions between organisms and their environment, including other organisms. So how could a word that reminds you of the Safety Dance and lab goggles be at all related to the economy?

Simple, ecology is the study of ecosystems and the economy is an ecosystem. Take a single apple tree growing in an open valley for example. The tree’s purpose is to collect sun and water in order to grow and produce fruit. Like the tree a business gathers raw material and converts it into a finished good. Trees use some of their resources to develop a root system that will allow them to withstand a drought. Businesses hold capital reserves and maintain adequate equity in order to withstand recession. When water and sunlight are abundant a tree will flourish. When fuel and insurance premiums are cheap, a trucking company will be profitable.

Let’s take it a step further and include another organism into our little ecosystem. Lets say a deer survives by eating the apples produced by our fruit tree. In much the same way a convenience store may rely on the trucking company to deliver product. As you add layers you can see how ecosystems and economies become very complex; however at their core the economy and ecology are the same. Both are composed of moving parts that work together and rely on one another.

This is an important lesson for all business leaders to learn: each decision plays into the sustainability of an ecological system.

No man is an island. – John Donne

So too, not company stands alone. We are all part of a bigger community and it is important to remember that each and every action we take will have an effect on those around us, on our investors, our customers, and our communities. This does not mean we must consider the good of mankind in every action we take. However, it is a profitable practice to use foresight, and consider your actions and their possible consequences. Do not be thoughtless and rash.

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