With the same originality and astuteness that marked his widely praised Butterfly Economics, Paul Ormerod now examines the “Iron Law of Failure” as it applies to business and government–and explains what can be done about it.
“Failure is all around us,” asserts Ormerod. For every General Electric–still going strong after more than one hundred years–there are dozens of businesses like Central Leather, which was one of the world’s largest companies in 1912 but was liquidated in 1952. Ormerod debunks conventional economic theory–that the world economy ticks along in perfect equilibrium according to the best-laid plans of business and government–and delves into the reasons for the failure of brands, entire companies, and public policies. Inspired by recent advances in evolutionary theory and biology, Ormerod illuminates the ways in which companies and policy-setting sectors of government behave much like living organisms: unless they evolve, they die. But he also makes clear how desirable social and economic outcomes may be achieved when individuals, companies and governments adapt in response to the actual behavior and requirements of their customers and constituents.
Why Most Things Fail is a fascinating and provocative study of a truth all too seldom acknowledged.
Customer Reviews
Systems (Both Social & Economical) — Growing Evidence of Fractal & Power Law Connectivity:
I have two perspectives for the review of Mr. Ormerod’s fine book. First - if you are new to this subject, the book is interesting throughout as it helps explain, or at least builds a framework to hang our hats own about why some things seem to succeed and others fail. There are multitudes of examples from the pet rock (succeed), to the Edsel (a considered failure).
Second - if you are familiar with the subject of extinction theory and dynamic systems, the book starts out slow, but really hits its stride in Chapter 8 “Doves & Hawks” (and forward) as we start to get into examples of dynamic theory and extinction theory/data. In Chapter 10 “The Powers That Be” we learn that systems in which the connections are not random but follow a power law have completely different properties than ones that do, since it is the structure of the connections between the component parts (i.e. agents) which gives systems their distinctive and characteristic features.
No, don’t be afraid, as this is not a technical book as I make it out to be as all the examples are easy to read and comprehend. If you are interested in this subject, other fine books to review are Ubiquity by Mark Buchanan, The Black Swan by Nassim Nicholas Taleb, or Deep Simplicity by John Gribbin.
How evolution explains business failures:
This excellent, short work by Paul Ormerod is a worthy successor to his remarkably successful Butterfly Economics. As he did in that work, he draws here on lessons from biology to explain phenomena in economics. He covers a wide range of subjects, time periods and theories, all tied together (though not without some straining at the rope) by an inquiry into failure. Although Ormerod makes every effort to keep the work accessible, that scarcely makes it is easy reading. Readers who lack at least a nodding acquaintance with scientific writings and economic studies may find this hard slogging indeed. With that caveat, we think that readers who have a background in this field should pay serious attention to Ormerod’s ideas. The notion that failure is inherent and inevitable for many systems ought to guide business strategies and - especially - government regulation.
A dose of clarity for MBA’s, Corporate Strategists & Market Analysts:
This book should be essential reading in all MBA programs and boardrooms. Failure of many ventures is inevitable, any person with a few years of business experience can attest to that. The problem is many consultants and strategists do not understand the chance or dynamics of failure. The lessons this book carries and the facts collected here are vital to all the large scale ventures in the world but are not just concerned with the economics of them.
Good book that lost its theme:
I’d like to recommend this book, but I can only recommend the first half of it. I’m a fan of solid economics writing and clear systemic argument. This book begins with both and builds a case for understanding something both obvious and stunning– businesses fail at such a high rate that they look a great deal like biological systems suffering waves of extinction events. I greatly enjoyed Ormerod’s “Butterfly Economics” but after a solid beginning this book lost focus.
One very good item here is the Iron Law of Failure. He writes, “Failure is pervasive. Failure is everywhere, across time, across place and across different aspects of life; 99.99% of all biological species that have ever existed are now extinct. More than 10% of all the companies in America disappear each year.” Failure happens when companies don’t evolve and change to meet new challenges, competitors or brands. What happens after failures is also a key component of the book and one I wish he would have dealt with more deeply. The ideas of creative destruction and adaptive evolution are found in the latter half of the book but they seem less developed. And while the existance of an Iron Law (I liked the term) is no doubt true, is it necessary for the growth of prosperity? Do we all do better, live longer, etc., because of competition and destruction?
He’s a great writer and wonderful thinker but this is only a fair book.
Just not very good:
This guy describes a few interestng mathematical ideas concerning economics including some stuff he has done himself. He also adds a lot of half-baked remarks like the unsubstantiated claim that the Euro will lead to a revival of Fascism.
He portrays himself as a sort of Robin Hood figure in economics.
Nothing here really fits together or is worth reading.
