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Adapt: Why success always starts with failure by Tim Harford

19/05/2014

Adapt: Why success always starts with failure

As a child growing up, I recall well meaning role models often counselling youngsters “If at first you don’t succeed, try, try and try again”. But is this sound advice? It is clear when we observe people at work, school and play that different folks have different abilities and comparative advantages (what they can do best compared to the opportunity cost of other things they can do) as an economist would say. Last year I blogged on The Undercover economist by Tim Harford, a columnist for the Financial Times. It was apparent after reading that book that Mr Harford has an affecting ability of writing by using clever and relevant analogies to bring the economic way of thinking to life and to offer real insights into why the world works the way it does.

Adapt is an ambitious book where Mr Harford uses a raft of interesting examples to illustrate how people can combine a system of trial and error encouraging failure, an ability to receive feedback (good and bad) and apply specific knowledge of local conditions in order to generate positive outcomes. Sometimes this means shifting direction altogether. As an economist, Mr Harford’s background is in understanding market processes and it is his insights here which tells us something about how success happens.

The Market: Failing its way to success

In his classic 1942 tome Capitalism, socialism and democracy, Joseph Schumpeter coined the phrase creative destruction to describe the process whereby more efficient and innovative firms who can better serve the customers often supplant existing firms with outdated technology and methods.

Yet this only represents the end result of creative destruction (the end until a new firm with a better method and technology challenges the new incumbent). In the interim there is a lot of failure as companies and individuals try to come up with new ideas to better meet their customer’s needs. Harford points out when we see a new technology like smart phones we merely see the final product but in fact there have often been a number of failed initiatives which offered feedback to the creators who incorporate those lessons (not just from themselves but from other related failures) and through trial and error deliver something new and better.
Contrary to business executives who believe it is the brilliant acumen and timing that contributes to the success of their company, it is the failed projects which offer lessons leading towards a successful outcome. So failure within the system and feedback of customers who reject unwanted or undesired products often leads to success but are these aspects solely inherent in this system or is it just a question of incomplete information?

The absence of feedback loops

Throughout the book Harford invokes FA Hayek in identifying the specific knowledge of time and place. Hayek wrote about local knowledge as a rejection of centrally planned economies but Harford invokes Hayek with respect to policies which helped the US army pull back from the brink and deliver some success out of abject failure in Iraq.

Command and control vs Mission command

In Iraq, Donald Rumsfeld adopted a command and control position in directing his generals to tow the official line which was brought to the level of absurdity when Rumsfeld and the then top general refused to use the word insurgency in a press conference. Such a view was in direct contradiction with what was actually happening on the ground, Rumsfeld seemed to believe if he didn’t talk about it it didn’t exist. Rumsfeld wasn’t comfortable in responding to feedback loops and devolving decision making to those on the ground with specific knowledge of place and time.

Whilst Rumsfeld sought people around him who would tow his official line, David Petreaus actively sought feedback from the dissenters. This was a way of thinking he had been introduced to in his early army days when as a head strong young captain he served under major Jack Galvin who told him “It’s my job to run the division and it’s your job to critique me”. Galvin taught Petraeus the importance of feedback and processing feedback to better decision making and increased chance of success.

Command and control directs people on the ground to follow procedures and orders delivered from the top of the organisation. Command and control is rigid and less flexible because it cannot respond to the particular circumstances of time and space. Mission command allows those on the ground to ‘adapt’ to those particular circumstances as they see them in a flexible way, a way where soldiers remain aware of the overarching strategy from the top but have the confidence to use their own discretion in decision making.

Lessons

Adapt taught me that failure has been an integral step along the route to many great successes (and some more modest ones). There is a key difference between failure for its own sake though and good failure which helps us learn. Trial and error can deliver success but only if those in charge are willing to admit failures, absorb what they mean and learn from them. Perhaps the key to learning from failure is to realise that smart people make mistakes and because we made a mistake doesn’t mean we aren’t smart but we must learn from failure.

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