Climatic patterns are the changes that occur regardless of your actions, such as economic trends or competitor moves. Understanding these patterns is crucial for anticipating change, much like understanding the rules and likely moves in chess. While you can't stop climatic patterns from happening, you can influence, use, and exploit them.

As components evolve, their characteristics change dramatically. In the early stages, an activity may be scarce, poorly understood, and rapidly changing, but also a source of competitive advantage. Over time, it becomes more commonplace, well-defined, and a standard cost of doing business.

For example, early computing infrastructure was custom-built and seen as a marvel, but eventually became standardised racks of servers, with virtual machines created and discarded as needed. Similarly, the behaviour around digital images shifted from precious and limited to abundant and disposable as the format became a commodity.

Large systems, whether a business, government, or IT project, contain multiple components that are evolving at different rates. To manage this, organisations need to use a variety of methodologies suited to the characteristics of each component.

In the uncharted, exploratory domain, an Agile approach focused on experimentation and change is most appropriate. As components become better understood, a Lean focus on reducing waste and creating a minimal viable product is more suitable. And in the industrialised domain, Six Sigma and formalised frameworks like ITIL are better suited to mass production and reducing deviation.

The evolution of components not only changes their own characteristics, but also enables the creation of new, higher-order systems. As activities become more standardised and commoditised, they act as building blocks that allow for faster implementation and greater agility in constructing novel systems.

As components evolve and become more industrialised, their economic value tends to decrease, while their role as building blocks for new, higher-order systems creates new sources of worth. The transitional domain, where an activity is well-understood but still differentiated, is often the most profitable.

However, the downside is that the future opportunity for the original activity declines as it becomes a commodity. The real value lies in the new higher-order systems that are enabled by the evolved components, even though predicting which of these systems will be successful is difficult.

As components within a value chain evolve, competitors will inevitably adapt to use the new, more efficient and effective options, whether it's utility computing, standardised mechanical components, or electricity. The benefits of efficiency, faster creation of higher-order systems, and new potential sources of worth create pressure on others to adapt.

This process, known as the "Red Queen Hypothesis", means that organisations have no choice but to evolve along with the changing landscape. Failing to adapt will result in being left behind by competitors who do.

Let's apply the climatic patterns we've discussed to a real-world example: the evolution of computing infrastructure.

The principles of climatic patterns and evolution don't just apply to technology - they impact other areas of business as well, such as purchasing and procurement.

The need to manage both the uncharted, exploratory domain and the industrialised, efficient domain creates a paradox for organisations. Coherence, coordination, and stability are required for the industrialised components, while the uncharted domain demands experimentation and flexibility.

The cycle of evolution, componentisation, and the creation of new higher-order systems is an ongoing process. As we look to the future, we can anticipate that even the most advanced technologies of today, such as intelligent machine agents, will eventually become commoditised and enable the development of even more novel and transformative systems.

The evolution of components and the creation of new higher-order systems have significant implications for how organisations can achieve and maintain competitive advantage.

The principles of climatic patterns and evolution have significant implications for how organisations approach transformation and change. Recognising the different needs of components at different stages of evolution, and adapting the organisation's structure, processes, and mindset accordingly, is essential for success.