Functional specialization may be the single most effective survival and progress strategy in the world.

At the biological level, organisms specialize within niche environments. Only the best of the best survive.

In economics, functional specialization is the winning strategy at the country, state, firm and individual levels.

David Ricardo’s theory of comparative advantage continues to apply at the country and state level.  Limited by by the size of the potential market, countries and states specialize in what they are economically comparatively best positioned to produce and use trade to improve their overall level of well-being.  The extent of international and state trade continues to grow, with no end in sight.

From Adam Smith to Alfred Marshall to Milton Friedman, many economists have focused their attention on the purely competitive market model.  Alternative monopoly, oligopoly and monopolistic competition models were developed to describe the real world where every profit maximizing firm attempts to differentiate their market position and leverage their market power.  They avoid perfectly competitive markets like the plague.

Michael Porter synthesized this in his theory of core competency, noting that firms could not be the very best at everything, but that they could become world class in a limited area.  The specialization could be in products, channels, customers, functional competencies or strategies.  Treacy and Wiersma made this more specific, observing that successful firms tended to pursue only one of three generic strategies: customer intimacy, product innovation or operational excellence.  Firms have subsequently learned to outsource nearly every functional area.

At the individual level, functional specialization has grown through time.  Classic male and female roles were differentiated in man’s history.  Hunters and gatherers.  Hunters and farmers.  Priestly and political roles.  Traders.  Warriors.  Guilds.  Professions.  Tax collectors.  Court attendants.  Scientists.  Degrees.  Doctorates.  Certificates.  Professional specialists. Industry specialists.  Business specialists.  Subspecialists.  ERP Rainmakers.  Etc.

At every level, functional specialization continues to grow because it is effective and efficient.  Functional specialization provides cost effective results in the short-run and the long-run.  It manages risk and capacity effectively. 

The use of functional specialization as an effective country, state, firm and individual strategy has become increasingly sophisticated and detailed in every half-life of history: millennia, century, decade and year!  It continues because the human population and market have grown and because transportation, politics, communications and science have advanced.

Is there no end to the application of functional specialization?