OPINION12 June 2017

The risky route

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Behavioural economics Impact Opinion UK

There are three principal means of problem solving to be found on earth – science, government and business. A fourth, arguably, is natural selection. 

Risk jenga_crop

Entrepreneurial capitalism and natural selection both have one thing in common, as a means of finding opportunities – they are entirely pragmatic in deciding what succeeds and what is killed off. In science, in government, in large firms or control economies – the last two are often surprisingly similar in their decision-making; a policy or a theory is more likely to be adopted when it comes dressed up in a fine logical narrative. Such organisations are therefore constrained in their actions by what appears to make sense. No such constraints apply to entrepreneurs or to evolution. Natural selection and market experimentation only care about what works. If it works, it survives; if it fails it is eliminated – through extinction or bankruptcy.

This may explain why so many entrepreneurs are cognitively odd, even downright thick. Yes, your chances of failure are increased if you ignore conventions and norms – but so are the odds of  success.