December 19, 2013

A lesson from the crisis: the economics of doing

Economy

A lesson from the crisis: the economics of doing - Alessandro Benetton blog

 We live in the “age of knowledge”, whose axioms are: investment in the production and transmission of information is constantly growing; the cost of using this same information is decreasing thanks to continuous technological innovation. The result is that we have access to a quantity of data and news unimaginable until a few years ago.

The downside is that too much information can mean no information, and therefore no decisions. Faced with too many variables, those who want to analyse everything find it becomes impossible to make a choice. Data overload causes even the most sophisticated systems to crash. It is the so-called paralysis by analysis.

No one in business can afford to let this to happen. In a world where speed has become a decisive factor, waiting to have control of the full picture before moving on to ‘execution’ can be fatal. Think of 2008, when a latent problem turned into a full-blown crisis. Many stopped to observe, analyse and wait for the perfect storm to pass. But the perfect storm, unfortunately, has not passed.

Others have tried to find a way to get to safety, repositioning themselves. They were the companies that, despite the uncertain scenario, acted. And survived. In fact, they have started to grow.  The inexorable lesson of the crisis is this: those who did not act, lost out.

This is a lesson I had already learned, thanks to private equity. During the 21-year history of 21, Investmenti, we have entered the capital and the lives of dozens of companies. Bringing discontinuity has become the basis of the way I meet challenges. Analysis is crucial, of course. But it is mainly through doing that we become instigators of change. Rational understanding is not enough, choices have to be guided by a combination of factors including courage, instinct, listening to others and attention. In short the ’emotional intelligence’, Daniel Goleman talked about, is essential to every entrepreneur.

According to Jeremy Rifkin and other leading economists, the knowledge economy is the third industrial revolution. Perhaps the fourth will be the new “economics of doing“.

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