Business Advice from the Gray Whalehttp://body-corporate.org/wp-content/uploads/2015/02/Gray-Whale-01-1024x682.jpg 1024 682 Roddy Carter Roddy Carter http://2.gravatar.com/avatar/e3814b2c95ed99be8d223bd613e2d189?s=96&d=mm&r=g
I was gifted with Gray Whale sightings on 3 consecutive days last week. On the third day, a huge adult surfaced within a few feet of my kayak. The giant cetacean was swimming directly towards me, just below the surface of the ocean. Honestly, I was preparing for a collision. It looked like the sleepy whale hadn’t seen me. It veered away at the last second, coming within arm’s reach as it surfaced, raised its tail in salute and dived deep below the surface of the Pacific Ocean. When my heart stopped racing I was left marveling at this beautiful species, and wondering what we humans could learn from them.
The Gray Whale (Estrichius Robustus) is a mid-sized whale with adults reaching about 45 feet in length and 40 tons at their peak weight. They lead migrant lives in the eastern Pacific, mainly in shallower waters, so their characteristic blotchy grey and white outlines are regularly seen from vantage points along the shore. From close up their backs look like crusty ocean rocks due to the parasites and barnacles that live on their tough skin. In calm conditions, they blow distinctive V-shaped sprays of water out of the two blowholes on top of their heads.
Two aspects of gray whale biology came to my mind as I paddled back home after my close encounter. We can learn from both.
Gray Whale Energetics and Business Models for Commoditized Markets
The gray whale has a massive energy requirement. An adult must consume over 2,500 pounds (1.1 tons) of food per day to fuel its giant body. More remarkable is the fact that it achieves this not by hunting delicious fat sea lions or plump fish, but by filtering tiny crustaceans from the ocean bed. The whales dive down and suck large mouthfuls of sediment and water into their huge mouths. They then use their tongue to force the water back out, filtering it through a specialized feeding system called baleen that has evolved from teeth in their early ancestors. The baleen is made up of flexible, strong keratin plates that hang in rows from the top jaw, like the teeth of a comb. The plates taper into fibrous fringes that form a curtain that traps the food inside the mouth while water and sand particles are expelled.
The whale overcomes two extraordinary inefficiencies to remain a successful inhabitant of the planet. First, it must sift through large volumes of sand, sediment and water to ingest a few tiny crustaceans that are generally between 1mm and 10mm in diameter. Second, each tiny crustacean provides small fractions of calories, so the whales must ingest a huge number of these tiny creatures to meet their total calorie needs.
This made me think of businesses like wireless service providers who have to amass a massive base of small clients in order to turn commoditized contracts into substantial revenue. The scale of the process is similar for AT&T with their market cap of $175B making a few dollars a month out of individual service contracts, and the gray whale. They are both driven by volume. Although investors clamor for growth, some would argue that a stable stock price of around $35 over a two-year period in this increasingly commoditized market is a remarkable feat. If we asked the gray whales for advice, they would probably identify 3 elements to their success:
- Target the huge market in a focused manner;
- Sieve the valuable contracts out of the market debris; and
- Evolve smart systems to retain good customers.
Gray Whale Migration and Seasonal Business Models
Gray Whales journey between frigid arctic feeding grounds in the north and warm breeding grounds off Baja California and Mexico. The 10,000 mile round trip makes them the most travelled mammalian species. Led by pregnant females, they leave the arctic in October so they can give birth and nurture their young in warm southern waters. The whales return to feed in the icy arctic waters by May. Remarkably, they eat very little, if at all during the travel and breeding seasons. This gives them a relatively short feeding season to pack on all the calories required for the year. This is evidenced in dramatic weight fluctuations; they gain between 20% and 30% of their peak body mass during the feeding season. During these periods they consume more food than they need, storing excess as fat in their thick blubber layers (roughly 30% of the gray whale’s peak mass). This energy larder must provide for the long haul to the breeding grounds and back. In addition, pregnant and lactating females must nourish their growing offspring. This is no small task, because nursing calves have a daily requirement of almost 50 gallons of milk, a rich food source with a fat composition of between 35% and 50%.
This harsh feast and famine cycle seems unsustainable, but there are human enterprises that have evolved business models to cope with similar challenges. In less extreme markets, seasonal trends are identified by colloquial terms such as the “Halloween Effect” and the “Santa Claus Rally”. There are sectors such as the ski resort industry that experiences more drastic, predictable seasonal variability. Like the whales, the keys to success are three-fold:
- Careful cash flow and credit management to ensure survival in the off-season, and flexible payment terms negotiated with suppliers.
- Strategic use of the off-season for regeneration and fertility.
- Alternative sources of income (like fat stores) when not feeding actively.
I hope these comparisons will help you to think about efficiency and seasonality in your own organizational context. Please think about the beautiful grey whale when you come across similar examples in your daily life. The diversity and richness of our planet is a cherished asset that we must guard and use wisely. Hopefully the gray whale is now on your watch-list!
(Roddy Carter is an executive consultant who uses nature to provide analogues for human organizational structure and function. Through the BioSimilar Programs he helps organizations select and learn from a species or environment that closely resembles their own circumstances. This is a fun way to build and implement strategy and to enhance performance. Please reach out through the connect tab at Body-Corporate.org if you’d like to explore a BioSimilar Program in your organization.)
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