Why Most Things Fail: Evolution, Extinction and Economics
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.
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Globalization is a hot topic in the early twenty-first century, but its foundations
were laid a century before. The single most useful and productive legal invention
in the past few centuries has been that of the commercial firm. Individuals have
banded together and pooled their resources in the pursuit of business since time
immemorial, but the massive economic expansion of the past two hundred years
is based on the modern concept of the company. Financed by outside
On the downside, however, the entire personal wealth of each individual partner
was, in principle, at risk every single day. The don1ina11t life form for more than
a century, however, has been that ofthe li111ited liability company. Like the
dinosaurs, this took time to reach its full evolutionary potential. The massive
dinosaurs that ruled the world did not spring up entirely from nothing. In the same
way, the concepts of anonymous outside investors and limited liability were not
invented in ...
Instead, competition was simply reduced by firms eliminating rivals by merging
them into a single organization. In part, this dramatic reduction in the number of
major players in each market was triggered by another piece of legislation, the
general incorporation laws passed by the state of New Jersey in 1889. General
incorporation laws. The very phrase triggers a colossal thud of boredom in the
minds of most people. But astute business people realized that they provided a
way round ...
... 1979, and since then the attrition amongst the survivors has continued.
Fligstein notes that no fewer than 216 companies in total made it into the US top
100 over the sixty-year period. Some, such as Bethlehem Steel, WF Woolworth,
Chrysler and Goodyear Tire and Rubber were in the list for the entire period.
Others enjoyed their fifteen minutes of fame in a single appearance, such as
Atlantic Gulf and West Indies Shipping Line in 1919, Lehigh Valley WHY MOST
THINGS FAIL I 12.
Despite this, economists have an irritating habit of claiming the discipline is the
first to explain anything worth knowing about how the business world works. A
single example will suffice to illustrate the point. A successful textbook, by highly
respected authors and specifically directed at the interface between economics
and business, contains an amazing opening remark. 'The economic analysis of
firms,' it is declaimed, 'provides a simple decision rule that managers and
What people are saying - Write a review
LibraryThing ReviewUser Review - Razinha - LibraryThing
For me, the only thing of value in the book was in two lines in the introduction: "The book's content is firmly grounded in reality. Too much work in the social sciences, whether it is the dense ... Read full review
LibraryThing ReviewUser Review - nocto - LibraryThing
The hardback copy of this I read had the subtitle "Evolution, Extinction and Economics" but it looks like the paperback got the subtitle swizzled to "...and how to avoid it". I probably wouldn't have ... Read full review