March 4, 2010

Dance with chance

This is the title of a book written by Spyros Makridakis, Robin Hogarth and Anil Gaba (for more information please visit www.dancewithchance.com).  The subtitle is “making luck work for you.”

On the back cover it says: “Uneasy with how chance determines a huge part of our lives, we try to control what cannot be controlled and predict what cannot be predicted. …. Dance with Chance explains how we all fall foul of this ‘Illusion of Control’.”

This ‘Illusion of Control’ also exists in business… very strongly… and very widely…

Some years ago I tried to explain to the owner of a shoe manufacturing company in Turkey, whose business was thriving that year, that he had to change his strategy in doing business. Either he had to close his manufacturing plant or find a partner with marketing capabilities. The other solution would have been to change the business line.  It should not be misunderstood: I have no experience in shoe business but I had visited the largest exhibition in Germany that year and had talked with manufacturers, distributers and salesmen coming from different countries.  My recommendations found no acceptance. 3 years later he had to close down his plant with a lot of investment going into the air.

To fight the ‘Illusion of Control’ the book also recommends a methodology:

  1. Accept that you are operating in an uncertain world.
  2. Assess the level of uncertainty you are facing using all available inputs, models and data, even if you are dealing with an event that seems regular as clockwork.
  3. Augment the range of uncertainty just estimated.

I do not want to kill the appetite of those of you who would like to read the book from the beginning.  Just seeing how widely ‘Illusion of Control’ is practiced, for some of the business owners a partnership in their company might help a lot to secure their businesses in the future without throwing out their monies hard earned throughout the years in business

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