In times of uncertainty, our instinct is to predict, but history shows that predicting the future is difficult. The problem goes deeper than prediction; it’s the misconception that prediction equals control. But there’s a more nuanced connection between prediction and control, one that suggests the potential of separating prediction from control and reveals that our inability to predict the distant future can lead to unexpected opportunities and innovation.(more…)
Making decisions under uncertainty is a difficult art. One of the reasons is that the tools and concepts we use are largely designed for risk, for clearly defined and recurring situations. Such tools assume that uncertainty is something to be protected against. This mental model of protection, which seems so logical, is actually counterproductive. What if, on the contrary, we should not protect ourselves (too much) from uncertainty?(more…)
Saras Sarasvathy, the originator of the entrepreneurial theory of effectuation, has just received the prestigious Swedish Global Award for Entrepreneurship Research. Organized since 1996 by the Swedish Foundation for Small Business Research (FSF) and the Swedish Agency for Economic and Regional Growth, the award recognizes researchers who made major contributions to entrepreneurship research. She joins such great researchers as Sidney Winter, Shaker Zahra, Kathleen Eisenhardt, Scott Shane, Israel Kirzner, William Gartner, William Beaumol or Zoltan Acs and David Audretsch. The prize is the recognition of more than twenty years of efforts to promote a radically different approach to entrepreneurship. But its significance goes far beyond that, as effectuation is above all a vision of human action and freedom.(more…)
“How do I motivate my employees in uncertain times?” is a common question these days, but the answer is far from simple: it reveals dominant mental models that limit our perspectives. Challenging these models can provide a resilient response to uncertainty.(more…)
Faced with the legitimacy challenge they currently face, companies are often tempted to react defensively, bow to the zeitgeist, and hope for the best. Often, the only solution is to build a mask to protect themselves. The problem is that it creates a chasm between who they really are and who they pretend to be, which only increases suspicion. The story of Coinbase, a U.S. startup that found itself in the spotlight, shows that a radically opposite approach of asserting one’s uniqueness is not only possible, but pays off.(more…)
[French version here]
Ask anyone with some knowledge of economics about Adam Smith, and they will probably tell you that the great economist is the symbol of unbridled and dehumanized capitalism, with his famous “invisible hand”, which seems to turn us into machines at the mercy of a mechanism that escapes us, and his promotion of selfishness. This is the idea that I myself had for a long time. Yet, this view does not reflect his writings, which instead promoted the market as a living institution governed by ethics. Given Smith’s importance in economic thought, and at a time when the societal role of business and the market is in question, it is important that the debate not be based on a caricature of his thinking.(more…)
That innovation units created within large organizations have a difficult life is not new. Most of them disappear after three years on average, because after the euphoric start, they fail to become part of the life of the organization. But those that survive are not out of the woods yet, because they are caught between a top management that demands “more disruption” and an organization that, through its budgetary and control processes, removes any chance for a disruptive project to see the light of day. Getting out of this difficult situation requires being very clear about what “disruptive” means, and understanding the real nature of innovation.(more…)
[Version française ici]
The coronavirus constitutes a major event that completely disrupts world life, rendering all forecasts and plans based on them obsolete within a few weeks. The very nature of a surprise is to bring to light an element of our mental model (deep beliefs that guide our actions) and invalidate it. Our model told us that the world was going in direction A, but it turns out to be going in direction B and we are surprised. This surprise can have more or less serious consequences. Most of the time the reaction will be to dismiss it. When there is a difference between reality and our beliefs, we try at all costs to maintain the latter by inventing all sorts of reasons to minimize the meaning of surprise; it is a matter of integrity because our mental models are constitutive of our deep identity: how we see the world is also how we see ourselves, and how we are in the world. With the coronavirus, learning to manage our mental models has become critical.
The coronavirus, which is currently causing a major international crisis, is one of those unprecedented events that are taking us by surprise by making all the forecasters lie who, only three months ago for the New Year, were telling us what 2020 would be like. Should we be afraid of the virus? This is the question that each of us is asking, torn between the worry of not taking seriously what could turn out to be the epidemic of the Century and the fear of giving in to panic if its impact proves to be only modest, as Dr. Eric Caumes, head of the infectious diseases department at the French Hospital Pitie-Salpetriere, who recently declared: “If you are not afraid of the flu (up to 10.000 deaths/year in France), why are you afraid of the coronavirus?” This seems to make sense, and yet the comparison is not legitimate, because it ignores a very important distinction, that between risk and uncertainty, which a decision-maker must absolutely understand.
Clayton Christensen, the man behind the work on the notion of disruption, died on January 23, 2020 at the age of 67 of cancer. He was a major management theorist, like giants such as Peter Drucker or Michael Porter, and his work is more relevant than ever at a time when large companies continue to find it difficult to respond to the multiple ruptures in their environment. In what follows, I propose a synthesis of his work to show how it can be very useful.(more…)