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The Science of Business

| Mar 19, 2013 No Comments

Human beings inherently dislike chaos, disorder, or a world with no rules. We automatically try to categorize people and things, to put them in a context that makes them easier to understand. Then we search for the rules that govern those categories to explain why people or things act the way they do.

This is the basis of science – a search for understanding the rules, the “natural laws,” that govern how and why the universe, the world, flora, and fauna operate.

This is the basis of statistics – a search for the hidden meanings in the mass (and morass) of data.

And this is the basis for attempting to define the seminal rules of business and business success – a search for the models which, if properly followed, will lead to marketplace success and profits.

But there are some problems in attempting to make business into a science, laudable as the goal may be.

- Science deals with vast swathes of time, eons in which to test theories and hypotheses with some degree of assurance.

- Business’s reality is day-to-day. Historically insightful models might or might not hold for today’s dynamically changing marketplace. Business models built on “current” data have a tendency to be out-dated almost immediately and/or are untested in the real-world marketplace. (It is difficult to see an evolutionary outcome when you are in the middle of the evolution.)

- Paradigms in science have a tendency to be relatively stable. Paradigm shifts – changes in the way we view reality and the world around us – are unusual, rarely occurring more than one or two times in a generation.

- Modern business, however, exists in a world of almost continuous, rapidly accelerating, and profound change. Think about the time between the telegraph and the telephone or between radio and television. Now think about the time between the introduction of the personal computer and the Internet and social media and mobile devices. (This is, at least in part, why it is so hard to develop useful models for business; change is happening too quickly.)

And make no mistake about it, these business changes represent paradigm shifts as momentous as any significant and new scientific hypothesis. Try imaging your life today without computers. When was the last time you left your house without your SmartPhone?

A primary difference between science and business is that while science is looking for first principles, business is looking for how to make first principles practical and, therefore, profitable.

Where they are the same, however, is that breakthroughs in both are much more a matter of art than of well established methods, techniques, or models. It is the unusual scientist – and the unusual business person – who can see the world in a constructively skewed way – and thus change how the rest of us see the world.

Both science and business, at their best, are inherently creative. And this creativity comes from knowing the rules, the models, the methodologies – and knowing when to break them.

Business at its best is not about following the “right” way to do things. It is having the courage to take an imaginative leap, to trust your instincts and ignore what “everyone knows.”

The people who have done that have changed our world.

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