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Creating Generational Legacies

Thursday, August 20, 2015

radical innovation cannot be measured by economics

great thought by David Nordfors 

I believe radical innovative entrepreneurship must be difficult in economics, almost per definition.

Economics does quantitive measurement of parts of a grander narrative, for example ‘number of active job seekers’ and ’the US labor market'. It has a model of the grander narrative where it puts in the measured numbers. Then it says how the grander narrative is doing.

But radical innovation entrepreneurship isn’t about changing the numbers. It’s about changing the narrative. Radical innovation is a new way of relating, rather than just relating more to something (or less). And the narrative is a scheme of how things relate. 

In order to be able to do that, economics must work with scenarios. Projections of how the existing narrative of how things relate will perform is not relevant if some entrepreneur came along and replaced it with another narrative. When Apple presented the iPhone and the app store, that changed the narrative. If you measure old indicators applying it to the old narrative you won’t get it right. You’d for example get the impression that people stopped listening to music, because the sales of music players has dropped drastically. You’d get the impression that people find it much more important to talk on the phone, because the sales of mobile phones went up. But what actually happened is that the old narrative of the “phone” was disrupted, and there came a new one. 

Aggregates don’t explain (radical) innovation. 

The introduction of new narrative is highly non-linear. Perhaps if one can construct lots of scenarios and do a Monte Carlo or something, I don’t know. 


Should remind a bit of tracing infectious diseases but much much wilder. 

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