Issue No 153 October 2005
Book Review
Why most things fail: evolution, extinction and economic by Paul Ormerod
The reasons for business success are often studied, however in this book, Paul Ormerod, the bestselling author of The death of economics, takes a hard look at the phenomenon of failure and comes to some interesting conclusions.
One conclusion is that traditional economic theories of rational agents do a very poor job of explaining failure, and in fact, are poor at explaining success as well. To explain why, we are led through the complexity of game theory and the difficulty of knowing enough to make the informed decisions expected in classical economics. This leads to an explanation of why most business plans and government initiatives fail.
Many powerful effects are caused by very small or seemingly insignificant underlining trends. An example of this is city racial segregation with minority populations. Even a one percent preference for living in a suburb of predominantly your own race will produce segregated communities within a generation, even if the population starts evenly mixed. No wonder plans to promote racial integration have failed.
This is a fascinating book for anyone interested in the phenomenon of failure or anyone who questions traditional economic theories.
Why things fail is well-written and engaging but it is not a casual read to skim during the lunch hour. To get full value from it you should be prepared to commit a decent chunk of time to reading and contemplating what this book has to say.
Hadrian Taylor
Business and Computing Centre
