Learn more Download now Shop now Browse your favorite restaurants Shop now Shop now Shop now Shop now Shop now Shop now Shop now Learn More Shop now Learn more Shop Fire Shop Kindle Learn More Shop now Shop now Learn more

Customer reviews

3.4 out of 5 stars
Why Most Things Fail: And How to Avoid It
Format: Paperback|Change
Price:£10.14+ Free shipping with Amazon Prime

on 1 January 2012
Economics is supposed to be the study of human behaviour as human beings make choices to satisfy their needs/wants using scarce resources. At least that's what I learnt in high school. However, the more I learn about economics the more it seems that economics--at least as is taught in many universities--is not about human beings.

As part of my Ph.D. programme, I took a course on microeconomic theory and was chuffed that the predictions of economic theory are mathematically elegant, but shaky. Why do human beings not behave as `rational' economic theory would predict? Why do human beings not scout for the best solution to satisfy their needs from a menu of available options and then choose the option that maximises utility?

In this book, Paul Ormerod challenges key economic concepts like equilibrium, perfect information and perfect competition. Mr. Ormerod is clearly not enamoured of economic theory. He discusses the history of these concepts as `physics envy': economists in the eighteenth century assumed that the economy--like many physical systems--will reach a predictable equilibrium. That may be harmless theory, but, according to Mr. Ormerod, these concepts have dominated economic thought and policy. The result: policy prescriptions to economic problems have often done more harm than good and well-meaning social policies (such as racially integrated neighbourhoods and schools) flounder.

The author uses recent research from the biological sciences (for example on the size and probability of biological extinction events inferred from the fossil record) to argue that the economy is more like a complex ecosystem that is hardly predictable. Perhaps, most importantly, Mr. Ormerod dismisses the notion that omnipotent social planners can solve all of society's problems; instead, he argues for small scale (humble) experimentation in business and in social policy as a means to solving economic and social problems.

Mr. Ormerod's arguments are fitting as the United States gears up for another election season. Invariably, President Barack Obama is being blamed for the lousy state of the US economy and may well lose his bid for re-election. But how much of the blame for the state of the economy really lies with Mr. Obama? The parlous counterargument is that only a manager president, who has business experience can run the economy. Mr. Ormerod reminds the reader that complex economies like the United States' do not lend themselves to such facile analysis.

Mr. Ormerod's prescription for success flies in the face of our obsession with control. Since the 1930s, we have believed--with good reason--in the efficacy of some form of central planning. Therefore, while Mr. Ormerod's prescription might make sense, it will be political suicide; we still need to believe that someone is in control. I liked `Why Things Fail' because it is a reminder that `rational' economics does not predict human behaviour terribly well. Moreover, it is a reminder that grand policies--on average--do not work as well as small-scale experimentation. It is a message that I, as business scholar, tend to concur with. Successful businesses make plans, but they adapt and experiment as they seek to gain market share and make a profit. The book deserves three stars.
0Comment| 4 people found this helpful. Was this review helpful to you? Report abuse
on 21 June 2008
Ormerod's central idea in this book is that conventional economic theory does not explain why firms fail. By "conventional economic theory" he seems to mean Marshallian microeconomics together with general equilibrium theory. The fault lies, he says, with unrealistic assumptions about utility-maximising behaviour in perfectly competitive markets. (Wow! Who would have thought? ROTFL)

He then goes on to examine models of extinction in biological systems and failure of firms in economies and shows they both exhibit a power law of failure. Further he discusses, without mathematics, some simple stochastic models of extinction and failure and shows that they are a good match to reality. Eventually the nub of his argument is reached. Some stochastic models of enterprise failure are accurate under certain assumptions about the behaviour of economic actors - but these assumptions are quite different from the assumptions made in conventional economics. In particular they are not consistent with the conventional assumption that economic actors are have perfect knowledge and it is the absence of perfect knowledge that dooms any form of planning, micro- or macro-economic to ultimate failure.

Astonishing! ROTFLMAO

It is patently obvious that the assumptions of conventional economics are wrong. Various economists have said as much several times in the latter half of the last century. Ormerod even quotes 2002 Nobel Laureate economist Vernon Smith's words, "We do not understand why markets work as they do." That nobody can possess the perfect knowledge assumed in the perfectly competitive market was pointed out in the 1940's by Hayek. Schumpeter also criticised unrealistic assumptions in the same vein. IMO, anyone wanting to explore these themes would be better off reading Hayek's "The Road to Serfdom".

On a more positive note, Ormerod's comparison of biological and economic systems is interesting. It provides a taster of the comparatively new interdisciplinary field of complexity theory. Alas, however, a taster is all that you get. The book would be IMO much the better for some material setting such comparisons in the broader complexity theory context. I suspect that he eschews this because it would require more mathematics than he was prepared to put between the covers (presumably because any sight of maths puts potential purchasers off). This, IMO, is intellectual timidity. The stochastic models that he describes are actually quite easy to understand (I recall playing with similar models in third form maths!). A few more diagrams and the odd spot of algebra (relegated if necessary to an Appendix) would IMO be a significant improvement. The overall length of the book could then be kept the same by a robust precis of the rest, which IMO takes twice as many words as necessary to say what it does. I also agree with the reviewer who thought the final chapter a big let-down.

Overall, for me, this book lacks balance and for that reason alone misses its mark.
0Comment| 4 people found this helpful. Was this review helpful to you? Report abuse
on 18 December 2011
This book perhaps goes into too much detail for some readers, but for anyone open-minded who has already read a little about economics it is superb.

One of the things it does well is give lay readers some insight into how economists think and how they research and try to test ideas inside the field. Of course, given these two, Ormerod is well placed to also describe how economists often get it wrong too.

An outstanding upper-level introduction to the subject, one which doesn't forget to discuss basic problems (like survivor bias) which often undercut naive economic theories put forward by otherwise clever people who overlook them.

Apart from 'How Most Things Fail' I have only read Ormerod's excellent earlier book Death of Economics from the 1990s, and his also very good article in the more recent paperback collection about the current financial crisis Collateral Damage: Global Crash Phase Two of which (full disclosure) I am one of the two editors.

'How Most Things Fail' is especially interesting because of the parallel between businesses and organisations which survive, and organisms which survive in biological evolution. Unlike the mass of sensationalist bestsellers telling magazine-type stories about evil bankers and scandalous financial scandals, 'How Most Things Fail' explains some things genuinely worth understanding.
0Comment|Was this review helpful to you? Report abuse
on 15 June 2007
Paul has written a fascinating and entertaining book on the probability of failure and develops what he calls an extinction model. As a strategist working within large corporations I found the application of these ideas to the world of work a novel and practical use of the 'extinction factor'.

He goes on to examine the factors that prevent extinction, one major finding was that only a small increase in the application of knowledge and information (5%) in the formation of Strategies will improve survival chances by 40%. Further improvement towards 10% and survival chances increase exponentially. The book uses many cases to explain how this is achieved.

One other counter intuitive finding was mild tendencies at the individual level within organisations create marked differences at the level of the corporate system as a whole. This has enormous implications for the world of organisational development.

I now use many of the statistics and contexts Paul provides in material I use with senior executives.

Excellent book.
11 Comment| 8 people found this helpful. Was this review helpful to you? Report abuse
on 3 September 2012
I was reading this book expecting to discover, as the title suggests, why most things fail. I was dissapointed. Instead, the author argues that certain types of system are structured in such a complex way that it is difficult for individuals to act in a way that results in, predictable, intended outcomes. In effect "How Some Things Fail in Some Types of System".

The author padded this rather simple message with reams of acrobatic displays of his polymathic knowledge of Economics, Biology, Aristolian Poetics and Game Theory etc. It was quite interesting. But, I felt a bit deceived. If I had wanted to go on such a journey, I'd watch QI or read a book of trivia.

I picked up some unexpected gems of knowledge such as "The History of the Big Corporation", "Why Economically Illiterate People are Right" and an "Introduction to Economic Modeling". So, it *was* an interesting read. But, loses 2 stars for its deceptive title.
0Comment| One person found this helpful. Was this review helpful to you? Report abuse
on 10 March 2017
Somewhat tongue-in-cheek but nonetheless factual study of the subject. After about half way through I found it very repetitive with nothing much more to add other than anecdote.
0Comment|Was this review helpful to you? Report abuse
on 11 May 2006
I was expecting to get more from this than I did. As a critique of mainstream economics it succeeds, and as a way of modelling economic activity it appears to offer some genuine insight. The idea of bringing economics up to date with some of the more creative methods from the natural sciences is a welcome one, and it is even a good read.

The ending (what is to be done) is really weak though, so having teased us with little asides from Shakespeare and Voltaire, appearing to be leading us towards a brilliant final twist, we are left with a resounding 'so what'.

Does the model he has developed tell us anything new or important about fizzy drinks, and if it does, why would it matter? This can't be the main purpose.

On the other hand, there are some curious, mildly radical, political issues arising here and there, about endogenous, inevitable system failure, and even how this might be a good thing, but instead we get rather forced case studies, usually involving Anglo American business stereotypes as reassurance.

I would have preferred it if he had simply stated that the technique he is developing is new, and that he doesn't know what it means. However, for anybody studying economics, read Ormerod, but maybe not this one first!
0Comment| 24 people found this helpful. Was this review helpful to you? Report abuse
on 29 June 2009
This excellent, short work by Paul Ormerod is a worthy successor to his remarkably successful Butterfly Economics. As he did in that work, he draws here on lessons from biology to explain phenomena in economics. He covers a wide range of subjects, time periods and theories, all tied together (though not without some straining at the rope) by an inquiry into failure. Although Ormerod makes every effort to keep the work accessible, that scarcely makes it is easy reading. Readers who lack at least a nodding acquaintance with scientific writings and economic studies may find this hard slogging indeed. With that caveat, getAbstract thinks that readers who have a background in this field should pay serious attention to Ormerod's ideas. The notion that failure is inherent and inevitable for many systems ought to guide business strategies and - especially - government regulation.
0Comment| 9 people found this helpful. Was this review helpful to you? Report abuse
on 19 June 2008
prehaps its just me, but this book seemed to be 246 pages of repetitive drone and little substance. The first half was a weak critique of economic theory. The second half was a very very long explanation that the bigger an extinction (both in biology and within the economy), the less likely it was. i remember learning a similar thing in primary school so came as no great shock.
0Comment| One person found this helpful. Was this review helpful to you? Report abuse

Sponsored Links

  (What is this?)