How Do Some Businesses Remain Prosperous While Others Fail?
Question/Comment: I hear plenty about businesses that are failing or have failed in the recent financial turmoil. I heard little about businesses that remain stable or even prosperous. What is making the difference between the two?
Paul Solman: If you ask me (and you do), the words of the immortal Lola in the immortal musical “Damn Yankees” apply: “A little luck, a little talent.”
Whereas Lola, however emphasized the latter – the importance of “talent” (by which she meant her diabolical wiles) — I would tilt toward an even more powerful member of the gender: Lady Luck, invoked in another immortal musical, “Guys and Dolls.”
Back in 1983, I wrote a book with Thomas Friedman, NOT the New York Times columnist but the PBS producer, executive, and author, whose most recent humor book, “ 1,000 Unforgettable Senior Moments: Of Which We Could Remember Only 246” is a bestseller here and especially in England.
Our joint book was called “Life and Death on the Corporate Battlefield” and has long been out-of-print. But its last sentence sums up the position I (and Tom, I’m sure) subscribe to even more firmly 25 years later:
“A brilliant strategy may prevail in one instance and a brilliant new product may spell victory in another, but behind the bottom line, there are many more crossed fingers that the traditional view of business would lead us to believe.”
A book with which I’m even more impressed than our own is “Fooled by Randomness,” whose author, Nassim Taleb, has become a friend (after I read the book and basically hit on him – intellectually, you understand). Nassim went on to write “ The Black Swan,” which also argues for the importance of chance. Recently, I interviewed Nassim and the man who pioneered many of the ideas he pushes, famed mathematician Benoit Mandelbrot — you can find the video of that interview here.
And if you really want to go crazy with this idea, there’s economist Joseph Steindl’s formal analysis of the question, “The Random Process of the Firm.” If you manage to read the whole book and can evaluate his data, please let me know. I could never quite manage to.