Vertical Integration
Internalizing external suppliers as permanent capabilities—like cells that swallowed bacteria to create mitochondria 2.3 billion years ago. Tesla, Apple, and Amazon execute the same evolutionary strategy.
Endosymbiosis is biology's vertical integration: 2.3 billion years ago, an archaeon internalized an alphaproteobacterium that became mitochondria. 1 billion years later, some cells absorbed cyanobacteria that became chloroplasts. External suppliers became permanent internal capabilities.
Business Application of Vertical Integration
Vertical integration creates fractal depth rather than horizontal breadth. Each level feeds the next (oil → refining → petrochemicals → polymers → textiles → retail), capturing margins at every level and providing supply chain resilience through internal transfer pricing. Trade-offs include coordination complexity and technological lock-in.