Since the turn of the millennium, a seismic shift has taken place in the corporate world

As I type these words, the five most valuable companies in the world— Apple, Microsoft, Nvidia, Alphabet (Google) and Amazon— are all tech companies.

Following breakthroughs made in the realm of artificial intelligence, corporations building digital minds have also experienced explosive growth in their stock prices, with Nvidia leading the charge (bar some recent turbulence in stock markets).

Before the chaos and misery of the 2008 Financial Crisis, banks and oil companies ruled supreme, where the only one tech company, Microsoft, made the top honours list in 2007. How many banks are now amongst the 10 most valuable companies in the world? Not a single one.

How did a bunch of nerds creating startups from their garages in the sleepy suburbs of Silicon Valley take over the corporate world, and what lessons can we take from their meteoric rise? Enter Andrew McAfee, a Principal Research Scientist at MIT, whose new book, The Geek Way: The Radical Mindset That Drives Extraordinary Results, explores how computer geeks and technologists are rewriting the rules of business.

The rise of the nerds

A common answer for the newly established dominance of Silicon Valley is the digitalization of the modern economy and the timing of their innovations. In other words, these companies were conceived at right place at the right time, and, whilst the deck chairs could have been moved around, the success of these tech firms was virtually sealed. However, if McAfee is correct, this is far from the whole story.

When the world’s first commercial web browser, Netscape navigator, was launched in 1994, McAfee saw the writing on the wall, and has since devoted his professional life to investigating how digital innovations are helping companies best their competition. McAfee and his collaborator, economist Erik Brynjolfsson, wrote a trilogy of books about digital transformation, The Second Machine Age, Race Against the Machine, and Machine, Platform, Crowd. Their books became bestsellers, where The Economist named The Second Machine Age “the most influential recent business book”. The Financial Times also called McAfee and Brynjolfsson “the pinup boys of the Davos crowd.”

Whilst McAfee bathed in the glory of success, with the passing of time, he realised that there was more to this story. Having reflected on the flesh and blood behind the machines being built, McAfee describes seeing for the first time what was hiding in plain sight. “We’ve paid a lot of attention to the computer revolution kicked off by the geeks. But I think we’ve been misunderstanding the other revolution they initiated: a still-unfolding revolution in the company itself.”

What McAfee terms ‘the geek way’ is the corporate equivalent of a software upgrade. Rather than replicating the command-and-control model of the traditional 20^th century corporation, this new generation of tech entrepreneurs have shunned traditional management practices and installed a ‘killer app’ that allowed them to move smarter and innovate faster. “The business geeks have taken the standard corporate culture of the industrial era and given it an upgrade.”

According to McAfee, tech firms that have upgraded their corporate cultures and embraced ‘the geek way’ are far from identical, but do share some things in common. Essentially, the geek way is all about promoting innovation and human ingenuity, and, conversely, pruning the poisonous weeds of bureaucracy.  

The geek way leans into arguments and loathes bureaucracy. It favors iteration over planning, shuns coordination, and tolerates some chaos. Its practitioners are vocal and egalitarian, and they’re not afraid to fail, challenge the boss, or be proven wrong. Instead of respecting hierarchy and credentials, they respect helpfulness and chops.

McAfee distils these traits into four pillars: championing norms of science, prioritising speed, instilling ownership, and fostering openness. Apparently, this cocktail of enterprising values allows these companies to be more agile, scientific, and innovative, than those of the typical industrial-era corporation.

Take tech companies sophisticated use of data. ‘Big Tech’ has essentially revolutionized the collection and analysis of data, with split testing emerging as a game-changer in how decisions are made. McAfee highlights this practice as a critical innovation of the business geeks—transforming guesswork into a methodical, data-savvy process that has become the bedrock of agile programming. This approach, pioneered by Google in the early 2000s, has since become standard practice, allowing firms to make informed decisions swiftly and effectively. As McAfee notes, instead of endless squabbling over minor choices, tech firms now run experiments to determine the best course of action, a practice that has undoubtedly contributed to their success.

Another defining trait of ‘geek’ companies is their laser like focus on speed and rapid iteration, which McAfee argues gives them a significant advantage. Despite becoming a polarising figure, McAfee gives the twin examples of Tesla and SpaceX, two companies led Elon Musk, as prime examples. “Whatever you think of the man, there is no denying the phenomenal successes and achievements of Tesla and SpaceX”. SpaceX, for instance, is the world’s only producer of commercially viable reusable rockets, now handling two-thirds of all payloads leaving planet Earth.

Their flagship project, Starship, aims to make humanity a multi-planetary species by colonizing Mars. This is as lofty as goals get, and yet SpaceX apparently doesn’t have a master plan it is sticking tightly to. Rather, their engineers begin by building prototypes, get prompt feedback, and steadily make incremental changes. When initial tests revealed that building Starship out of carbon fibre was too slow and wasteful, SpaceX quickly pivoted to stainless steel—a decision that showcases their agility and willingness to adapt. As Elon Musk is quoted saying, ‘failure is an option here, if things are not failing, you are not innovating enough’.

However, prioritizing speed is not without its dangers. The recent tragedies involving Boeing’s 737 Max plane serve as a violent reminder of the risks of sacrificing safety for speed. While McAfee spills much ink on the importance of leaders establishing high ethical standards, and acknowledges that tech companies are far from angels, the tension between prizing speed and maintaining safety arguably isn’t given sufficient discussion. Yes, openness and scientific rigor can serve as safety valves, but the pressure created by a relentless drive for rapid results can cause explosions of corner-cutting and ethical lapses.

The dark matter of organizational culture

Whilst The Geek Way delves into some of the most fascinating topics in business today, it’s McAfee’s interdisciplinary approach, particularly his full throttle embrace of evolutionary science, that truly sets the book apart.

As McAfee explains:

Why does the geek way work so well? For an answer to this key question we’re going to draw on a body of research that considers all kinds of human cultures — not just corporate ones — and looks at how they accumulate knowledge and know-how over time. This research starts from first principles. It’s based on the theory of evolution, which is about as solid a foundation as there is in all of science.

Whilst evolution via natural selection is one of the scientific community’s’ most robust theories, which also has profound implications for our daily lives and how we conduct business, McAfee notes the dearth of academics who view business from this ultimate perspective. McAfee echoes sentiment that most business scholars remain unaware of, or even hostile to, the idea that evolution could provide valuable insights into organizational behaviour.

In my nearly three decades at business schools, I’ve participated in countless conferences, seminars, research group meetings, and so on. I can remember only a couple times when someone seriously suggested that we look to the science of evolution.

Evolutionary science is a broad church, and its applications to the social realm is land laid with mines. That said, McAfee singles out the burgeoning field of cultural evolution as one of the most powerful frameworks for us to unify the new science of organizational culture.

As McAfee writes:

We’re not the only species on the planet that forms cultures, but we are the only species with cultures capable of launching spaceships and doing other insanely difficult and complicated things. This observation quickly leads to a bunch of questions: How do human cultures get smarter over time? What accelerates that accumulation of knowledge, or slows it down? Why are some cultures more successful than others? When cultures clash, which ones win? What are the most common ways for cultures to decay? How do individuals acquire, generate, and pass on knowledge? How do we balance our individual interests with those of our group? When individuals misbehave, how do they cultures bring them back in line? As we’ll see, the field of cultural evolution has been investigating these questions for a while now and has come up with solid, stress-tested answers. The great news is that the answers apply to corporate cultures just as well as they do to all other kinds of cultures we humans create.

Whilst cultural evolutionary forces are by nature highly unpredictable and can lead us to strange places, McAfee encourages business leaders to attempt to grab hold of it and guide its direction. For firms looking to navigate the frontiers of cutting-edge innovation, this entails accelerating learning, and, counterintuitively, planning less and iterating more.

As stated by McAfee:

Making cultural evolution as rapid as possible means compressing the time it takes you to launch your spaceships, or whatever you’re launching. Innovate more. Improve faster. Become more nimble. Make your customers happier. Operate with greater efficiency and reliability. Get higher productivity growth (or, for you noneconomists, get better at converting all your inputs into outputs). All of these are business versions of cultural evolution. In recent decades, we’ve learned a lot about how cultural evolution happens. As a result, we know how to speed it up.

McAfee notes the striking coincidence of the field of cultural evolution maturing just as the geek way of managing companies has taken centre stage. Similar to how James Watt’s invention of the steam engine was powered by, and subsequently fuelled, a generation of scientific breakthroughs, McAfee sees the science of cultural evolution and its application as a harmonious marriage.

People want to work in healthy environments, and we now know how to create them, thanks to two very different communities: a new cohort of geek business founders and leaders, and scientists asking and answering different kinds of questions about human behavior.

As a card-carrying Darwinian, McAfee’s advocacy for evolutionary science as a meta-framework for management is both refreshing and invigorating. By bringing cultural evolution into the mainstream of business, The Geek Way stands as a pivotal book that will inspire future generations of scholars to adopt ‘this view of business’.

Outsmarting your competition

Whilst The Geek Way makes a compelling case for the transformative power of the tech world’s cultural norms—championing science, prioritizing speed, instilling ownership, and fostering openness—its broader applicability across industries warrants scrutiny. Arguably, the success of these norms is deeply rooted in the unique socio-technical environment of Silicon Valley, where innovation thrives with minimal interference. However, can these cultural traits be lifted and dropped to other sectors, like finance, where the stakes are far higher, and the risks more tightly controlled?

In the world of finance, transparency and radical openness— the hallmarks of McAfee’s geek norms—clash with the realities of tight regulation and the necessity of safeguarding market stability. Whilst the general public may think otherwise, banks operate under stringent laws and regulations designed to prevent conflicts of interest and ensure the integrity of financial markets. The level of transparency McAfee advocates might be laudable, but is practically impossible in an industry where the strict management of information is vital to prevent insider trading. In other words, the risk aversion of financial institutions, often criticized as bureaucratic, might actually be a cultural adaptation to the hazardous business environments they inhabit.

Conversely, the meteoric rise of tech giants could be partly attributed to a lack of regulatory oversight, which has allowed them to operate with unfettered freedom. The success stories McAfee highlights, such as Amazon and Google, have flourished in an environment where antitrust laws have been loosely enforced, and privacy regulations are still catching up. However, as scrutiny increases, particularly with the growing concerns around artificial intelligence and the impacts of social media, these companies may soon face the kind of regulatory pressures that could temper their innovative edge.

The fintech industry’s ongoing struggle to disrupt traditional banking highlights the challenges of applying tech firm’s norms to the financial world. Whilst fintechs have injected innovation into the sector and have notched up numerous successes, their smaller scale and, at times, lax controls, have landed them in hot water. Indeed, the collapse of Silicon Valley Bank, the world’s premier financier of fintech companies, underscores the susceptibility of smaller financial entities that prioritize speed and innovation at the expense of stability.

Of course, this doesn’t mean traditional financial institutions should resign themselves to the status quo. As cultural psychologist Michele Gelfand argues, successful organizations, like nation states, must be culturally ambidextrous. That is, they need to have the maturity and foresight to know when to tighten up in the face of existential threats, and also when they have the luxury of loosening. For banks, this could mean maintaining rigorous safeguards where necessary, but also delineating areas of their business activities where they can embrace the kind of agility and openness that fuel innovation.

Whether you are a cheerleader or staunch critic of today’s tech giants, understanding their meteoric rise is crucial. McAfee argues that the organizational cultures these companies have nurtured are not byproducts of their success, but rather, are foundational to it. If you find yourself competing against these tech behemoths, you should approach them like a military general studying an adversary on the battlefield.

Written by Max Beilby for Darwinian Business.

The Geek Way: The Radical Mindset That Drives Extraordinary Results is published by Pan MacMillan. Click here to buy a copy.

Image credit: The Economist.