Surprisingly, I didn’t know this is more of an economics book until I read it. I guess the economics major that I took in my university days prove to be useful to understand some of the concepts mentioned.
The author talks about the concept of risk and uncertainty and their distinction. Risk refers to situations in which the outcome cannot be known with certainty, but the probability of any given outcome is understood perfectly. Uncertainty refers to situations in which the probability of the various outcomes is itself unknown. There are numerous examples in which he exposes most of the flaws of today’s economic assumptions.
For example in Economics textbooks, there is the formula of set price equal to marginal cost (Price = Marginal Cost) to maximize the amount of profit for a firm. However in practicality, it is not useful as firms may not know the its cost curve and setting of price makes the assumption of the amount of full information and knowledge the firm is supposed to have. With advanced of technology especially online, marginal cost may also be virtually zero. Hence, if a firm charge its price equal to marginal cost, which is zero, the company would soon go bankrupt.
Almost all brands fail eventually. More importantly, most fail very soon after their introduction. (whether internal or external factors)
The attrition rate in early life is very high. Companies know this to be an inherent fact of life and they respond by constant innvoation, constant testing of new ideas and new brands, new products. They do so within a framework, an institutional structure, which itself has adapted over time, has evolved, and which facilities flexibility and innovation. Based on the author, innovation is the best strategy for individual survival, and it is a strategy from which we all, as consumers and citizens, have benefited immensely.
I guess I do know the answer before I read the book that the “key to survive is to innovate”. The author does highlight a number of interesting economics concepts and the flaws, which I find it very interesting.However, I find it quite disappointing that the author choose to end off the part in such a manner for a call to innovate.