The Idea Dude

CONNECTING THE DOTS ONE AT A TIME

Friday, January 18, 2008

Predicting disruptions is an oxymoron

As an entrepreneur, you're always hoping your current gig will be the next disruption. It could be the next Facebook, Google or Microsoft. With it comes a huge following and great wealth. It's a great dream and one worth pursuing. Ask the 30,000 hopefuls that waited to audition for The American Idol in Dallas.

Blueprint for success... or not
So we create business plans that show the growing market, the low hanging fruit, the coming tsunami and how if you invest your dollar, we can give you 1000 back or perhaps more. We all play the game... given a great dream or possibility of wealth, we find all the necessary facts to collaborate our assumptions. Seldom do we sit down and think about all the reasons why it wouldn't turn out the way we hoped. That is not in our DNA.

Make no mistake, it is part of our DNA to be better, to innovate, to disrupt. It is the only reason why our species have become so dominant on this planet. But seeking and predicting disruptions are two different things. Nassim Taleb in his book The Black Swan tells us that great disruptions like Google have three things in common.

The Black Swan
Firstly, they are extremely rare.

Secondly, their impact and ROI is massive.

Thirdly, perhaps most important, it always seems easy to explain why it happen AFTER the fact. It's like people who win the lottery and go on to explain how they chose their numbers or how their circumstances made them by that ticket at that particular time in a particular store.

But the rub here is that it is a non-linearity, or perhaps better termed, a singularity and no historical trend can ever predict something that is discontinuous. We try nevertheless. Today there are thousands of social networks trying to emulate MySpace and Facebook and thousands of Facebook apps that hope to be the next big success story. There is no harm in trying, believing and dreaming. But it is foolish to think that disruptions are predictable, simply because there are many paths to each possible disruption and as many paths that bypass one. It is simply not predictable.

The reality is, life isn't fair
In the land of extremes, as Taleb will tell you, there are many dwarfs and very few giants, disproportionately so.

It is an incredibly sobering thought. I'm glad most entrepreneurs do not think that way, even though it is true. They may decide not to get up in the morning and possibility miss the next disruption.

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