Bet-Hedging
Organizations should deploy only 20-30% of resources during favorable conditions while holding 70-80% in reserve for unfavorable conditions.
The organism that performs best in favorable conditions often performs worst across full cycles. Maximum efficiency during booms creates maximum vulnerability during busts.
Desert annual plants face extreme unpredictability with rainfall varying 10-fold year-to-year. Rather than germinating all seeds in any single year (gambling that pays off in wet years but fails catastrophically in dry years), desert annuals spread germination across multiple years by maintaining seed dormancy. When a plant produces 1,000 seeds, only 10-30% germinate the following year. The remaining 70-90% stay dormant in the soil, creating a seed bank that persists for years or decades. This biological insurance sacrifices maximum growth in good years to ensure survival in bad years. The bet-hedging genotype never outperforms the 'all-in' genotype in a single year but outperforms across multiple years because it survives inevitable droughts. Mathematically, bet-hedging reduces variance at the cost of mean performance - but over long timescales in variable environments, geometric mean fitness matters more than arithmetic mean.
Business Application of Bet-Hedging
Organizations should deploy only 20-30% of resources during favorable conditions while holding 70-80% in reserve for unfavorable conditions. This counter-cyclical discipline sacrifices maximum returns during booms to ensure survival during busts.