Why Most Things Fail

February 27, 2006
Businesses collapse just as surely as people do, yet economics textbooks and financial reporters stubbornly concentrate on success rather than failure. Ormerod (Butterfly Economics) argues this outlook is fundamentally flawed; failure, he says, is "the distinguishing feature of corporate life," and he uses it to link economic models with models of biological evolution, which he presents as a string of extinctions rather than survival of the fittest. Despite this parallel, his focus is on economic theory and what he sees as its inadequate accounting of uncertainty (defined as the impossibility of knowing how policies or business strategies will work) and how it breeds failure. He writes about complex concepts such as power-law behavior, game theory and bounded rationality, but makes them accessible to the lay reader with lengthy but readable explanations that forsake jargon for contemporary cultural references. (Though people who are already familiar with the debates he brings up will doubtless get more out of the book) Yet for all his persuasive examples, the book never crystallizes into a whole, so while readers may find many parts provocative, they are likely to finish it still lacking a complete understanding of failure as Ormerod sees it.