Mutations are usually random, but environment decides which mutations will be a success. Most mutations are negative. Evolution has been observed. The most promising study of evolution, imo, is epigenetics. This phenomenon shows how our environment can change us on a genetic level in a single generation. Larger changes have not yet been observed because they take longer. However, the fossil record we do have shows that these changes have taken place.
It is unlikely that a higher power exists, but I do not deny the possibility.