Strategy & LeadershipBusiness TransformationLeadership does not always need conventional wisdom

Leadership does not always need conventional wisdom

Half a century has passed since the publication of The Population Bomb, American biologist Paul R Ehrlich’s infamous prophecy of doom for the human race. The book, in which Ehrlich warned that the 1970s would witness mass starvation, caused quite a stir. Today it provides a useful lesson for any business.

Ehrlich foresaw a catastrophic future in which demand would hopelessly outstrip supply. He declared the “battle to feed all of humanity” over and claimed that no number of emergency programmes, however swift their implementation, would avert the imminent crisis.

He was, of course, spectacularly mistaken. Demand didn’t outstrip supply, even in the notable absence of the emergency programmes he had already proclaimed futile. The 1970s came and went without global famine, leaving him to reassess his views on the threat of overpopulation.

What particularly interests us here is the fundamental consideration that Ehrlich neglected to factor into his cataclysmic prediction. It’s a point that his arch-rival in academic circles, economist Julian Simon, appreciated only too well. Let’s dig a little deeper into the story.

Betting on the future

Although the devastating scenario portrayed in The Population Bomb had failed to materialise, Ehrlich clung to his belief in fast-approaching resource depletion. He was so convinced that in 1980 he bet that the prices of metals would go up, reflecting what he believed would be increasing scarcity, over the course of the decade.

It was a wager that Simon, a professor of business administration and a staunch advocate of ingenuity, was only too delighted to accept. He took the other side, betting that the prices of five specific metals – chrome, copper, nickel, tin and tungsten – would fall. The winner would pocket $10,000.

At first it seemed Ehrlich might be right. The prices rose. But by the end of the 1980s, to Ehrlich’s dismay, chrome, copper, nickel, tin and tungsten were cheaper than they had been 10 years earlier.

Ehrlich subsequently offered assorted explanations for what he regarded as Simon’s unjust triumph, but the fact is that he had made much the same mistake again. As with The Population Bomb, he had completely overlooked innovation’s ability to keep us ahead of the curve.

The nature of progress

The idea at the heart of Ehrlich’s book was that population growth drains resources. Simon saw things entirely differently: he reasoned that population growth is actually a solution to resource scarcity, because people and markets innovate.

It was innovation that made each of those five metals cheaper. The price of chrome fell because of better smelting techniques. The price of copper fell because of the invention of fibre-optic cable, which superseded copper wire. The price of nickel fell because improvements in mining technology led to the discovery of huge new reserves. The price of tin fell because of the greater use of aluminium, a more abundant and inexpensive alternative. The price of tungsten fell because of the growing use of ceramics in cookware.

This is the nature of progress. It always has been and always will be. We identify problems and overcome them. We invent. We transform. We revolutionise. We create.

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Such a mindset may be more important now than ever, because the way in which successful businesses operate is itself undergoing a major revolution. What we might call the “traditional” form of strategic thinking, which was central to the cause of innovation for many years, is giving way to something dramatically different.

Reinventing strategy

Most businesses will be familiar with SWOT – strengths, weaknesses, opportunities and threats. It’s a model that has long been used to evaluate pros and cons, to weigh up potential rewards and risks, to assemble all the resulting information and to plot a suitable course.

Many still adhere to this kind of strategy. It represents an adversarial, military-based philosophy that’s firmly rooted in analysis and rational planning. Historically, the managers of corporate multinationals have done rather well out of it. Yet times have moved on.

The lumbering leviathans that once reigned supreme no longer dominate the sphere of innovation. Instead the new masters are likely to be smaller and more fleet-footed enterprises that work in unfamiliar, radical ways. This is because SWOT counts for little in a world in which the slow and the predictable have succumbed to the swift and the uncertain. In short, conventional wisdom just doesn’t cut it any more.

And this is precisely where Ehrlich got it all wrong. His bet with Simon was in many ways an age-old question of strengths, weaknesses, opportunities and threats, but no amount of SWOT analysis could presage the ingenuity of the creative responses that ultimately settled the wager. The truth is that genuine innovations rarely emerge from historical data or accepted thought. As more and more businesses are recognising, the best and most effective answers to the problems we face today may very well lie outside existing practice.

About the author 

Simon Mosey is a Professor of Entrepreneurship and Innovation at Nottingham University Business School, Director of its Haydn Green Institute for Innovation and Entrepreneurship (HGIIE) and co-author of ‘Building an Entrepreneurial Organisation’. [email protected]

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