One of the lead articles in today’s Wall Street Journal is “Crisis Compels Economists To Reach for New Paradigm”. The story focuses on John Geanakoplos, a Yale economist whose observations of the machinations of the economy in the late 1990’s led him to believe that the market was not as efficient as economic theorists had concluded in the 70’s. Further, based on his analyses, it appeared that degree of leverage in borrowing was a more important indicator of the economy’s health than interest rates- another deviation from conventional wisdom. As is often true with innovative ideas, “they” knew he was wrong so paid little heed to what was being said. Current financial circumstances are generating interest in what Geanakoplos – and other innovative economists- are saying. Perhaps what they are saying will avoid a repeat of the current situation.
The world keeps changing and what worked before may not work now. Ken Olsen, co-founder of Digital Equipment Company (DEC), was convinced no one would want a computer at home. The company missed the PC revolution and has ceased to exist. Swiss engineers created the first quartz watch. It was interesting enough that they put it on display at a watchmakers’ trade show. Someone from Seiko saw the display and convinced the company to manufacture these newfangled timepieces. [The Swiss were so convinced no one would want a watch without the mechanical craftsmanship, they didn’t patent the idea]. Japan has replaced Switzerland as #1 exporter of watches.
Time and time again, existing paradigms blind even the brightest people to reality. If you have an innovative proposal, be prepared for the naysayers and figure out how to overcome their resistance. Dr. Barry Marshall went to extraordinary measures to prove his point. It used to be believed that ulcers were caused by stress. Barry Marshall, a doctor in Australia, did research – including curing patients by using antibiotics- which showed that bacteria were the cause. No one took him seriously and he couldn’t get funding for additional studies because his conclusions were out of line with the conventional wisdom. Desperate to prove his findings, he mixed up a batch of the suspect bacteria and swallowed it, convinced he would develop ulcers which could then be cured with antibiotics. He was right. Not only did he live to tell the tale but he won the 2005 Nobel Prize for Physiology or Medicine.
And how are you as the listener? When presented with a suggestion for a new product or process or business model or way to plan a trip or complete a home project, how open are you to consider the possibility? How often have you killed an idea because you “knew” it wouldn’t work? Make like those HP ads and think “what if….”