ABSTRACT
Those biological analogies that have been imported to apply to the study of the dynamic organization are incomplete because they have emphasized a gene frequency approach rather than a gene complex approach. The “gene frequency” approach implies a massive investment to create requisite variety. The gene complex approach allows requisite variety to be achieved parsimoniously by leveraging the combinatorial potential within an organization. We believe that real options reasoning, in which firms can create dynamic potential that conveys the right to make choices at some future point, is a useful analogue to gene complexes in biology. We introduce the idea of real options acting in the organizational equivalent of “gene complexes” to expand the range of contingencies to which an organization can respond.
