I read a very interesting book recently (Risk Savvy by Gerd Gigerenzer) which had a few things to say about risk and uncertainty. His team looked at various predictions made by analysts in the financial markets and found no correspondence at all between their predictions and what actually happened. Looking at the dollar / euro exchange rate over the noughties, in only one year did the analysts get it right, or rather guessed it right. And that was in 2008, the year of the crash, when you would least expect it to be predictable.
In fact, in most years the real exchange rates were outside even the most extreme guess – sorry, prediction. Clearly there’s no predictive power in the estimates whatsoever. So the question is why anyone keeps paying for this research – after all, if it has no predictive ability why do smart people and successful organizations keep shelling out for the stuff?
Gigerenzer suggests that it’s because people are making decisions that aren’t the ones they would make with a free hand but those that protect their backs if things go wrong. This he attributes to the blame culture, society’s need to find someone to blame if things go wrong.
This stifles initiative and wastes a lot of time, energy and money. More problematically it gives sub standard results.
However as small business owners we have a massive advantage. There is no-one watching us, so we are free to make the decisions we think are best. So long as we remember that we don’t have to please anyone else and don’t concern ourselves with someone else’s viewpoint (except the ones of the people who are actually giving us money!). It’s your business; don’t let other people run it.
Have a great week and let’s hope for a sunny bank holiday.
Paul