Note: these won't be full transcripts of each event. I've taken copious notes, but my aim in this blog is to chart the flow of significant ideas as they emerge event by event, filtered through my own players' agenda.
Paul Ormerod is a most unusual kind of business guru: he preaches that company failure is the norm, and that from the right perspective, can even be seen to be healthy. That perspective is very macro (Ormerod confesses that in a previous life, he used to be a 'government planner'). I left the event wondering exactly what impact his message had made on a room that seemed - going by the questions and the after-event chatter - full of micro-level operators, whether in commerce or government.
Ormerod draws the certainty of his book's title, Why Most Things Fail, from two places: 1) his extensive knowledge of economic theory, which is keenly aware of the subtleties and complexities in the discipline, not often articulated in standard textbooks and by official economists. And 2), from his embrace of the insights of biology (mixed in with game theory) as they show the limits of how much we can control complex systems.
The landscape of business is one such complex system: and Ormerod makes an explicit comparison between the necessary birth and death of species in evolution, and the necessary creation and destruction of businesses in the marketplace. Yet his consoling message is that everyone - from the large corporation to the small trader - is ultmately part of this larger turbulence. And all enterprises within the economic system should accept the limits of how far they can control their own fate, given the role that extinction and failure plays in the general health of the system.
We should draw solace, said Ormerod, from the face that of the top 100 corporations around 100 years ago, trading unimaginable billions between them, less than twenty survive today. "Where did all that shareholder cash go?" Success can be as unpredictable as failure.When its Windows operating system really took off in 1990, related Ormerod, Microsoft was actually scaling down its production in favour of its collaboration with IBM, the OS/2 system. They scrabbled successfully to meet demand - but Ormerod's point is that for all their West Coast tech smarts, they couldn't anticipate that a disregarded product would come to represent their core business.
Ormerod doesn't counsel a 'que sera, sera' attitude entirely. The future may not be ours to see - indeed, due to the huge complexity of our economic systems, "this uncertainty is inherent, endemic" - but we should still plan and strategize vigorously. In fact, a spirit of innovation at the level of the enterprise or sector is the only coherent way to respond to such a environment. "Innovate, try and test, just like organisms do in evolution. Plan and act with intent, even in the face of chaos".
But my own question to Ormerod was about how easy it is to subjectively feel this framework. What kind of mentality is needed to be able to resiliently innovate and create, within this almost cosmic view of the necessity for failure and extinction (even of one's own project)?
I was obviously delighted at the degree to which Ormerod used play and games to illustrate just how difficult it is to predict the outcomes of our endeavours. EG, all the moves in noughts and crosses may be predictable, checkers less so (though powerful computation can calculate most moves). Yet the shift from using five pieces in a chess simulation, to six, is one that defeats all our current powers of mathematical prediction.
From the reasonably simple rule set of chess, the game's outcomes are incalculable: extrapolate that to the forest of interacting rules and regulations that comprise our economic and social lives, and it's easy to see where Ormerod gets the confidence to accuse all grand-planners of incipient hubris.
Yet play is more than games. At a very elemental level in our species being, play is that wired-in optimism that compels us to keep trying out options, looking for the next move. A vision of ourselves as "players in an open system" might be able to help us live in Ormerod's turbulent world. But this is the beginning of a huge cultural discussion about the nature of what it is to be an active, creative human, not the end of it.
It's perhaps too much to ask an economist to be up to speed with civilisational issues like this - and Ormerod did (with some consistency) admit that he didn't know what the 'cultural' solutions were. Yet his own "try and test" response - that liberal democracy is probably 'the best institutional framework yet devised' to encourage innovation-amidst-uncertainty - seems a particularly impoverished response, given all the familiar factoids about our disillusionment with our lives in the West: decreased democratic participation, disillusionment with work and organisations, popular susceptibility to a 'fear-and-security' agenda (on which, see the next posting on 'The Moral State We're In').
One question from the audience was particularly useful - wondering why it was that the public sector's attitude to innovation (particularly in the cultural industries sector) was so stiff and fear-laden. Ormerod's response was to admit that the evolutionary turbulence he advocates perhaps has to be toned down in the public sector: "we think that they're spending our money, so we are anxious that they are accountable to that...There needs to be more dead-weight process in the public sector, to ensure this accountability".
Which left me with these thoughts at the end of this stimulating morning session. Might the relationship between democracy and planning still have some purchase,compared to all of Ormerod's well-articulated points about the unpredictability (and thus resistance to planning) of the marketplace? Players can be citizens, 'playing their role' in civic life, as well as producers, 'making their plays' in the melee of commerce. We need to fashion 'institutional frameworks' that allow these different players to have the same effectivity. 'Social' democracy is one past alternative to Ormerod's preference for liberal democracy: 'network' democracy might be another for the future (with the Internet/Open Source as the obvious exemplar). We maybe need as much 'innovative energy' to maintain the health of a complex democracy, as we do that of a complex marketplace. And where do we get that energy and insight from?
Leading me nicely onto the next event of the first day of the Festival of Ideas I attended.... What is the moral state we are in? And should be in?
Recent Comments