Black Swans and Business

My very talented artistic brother (if you need artwork, video production, computer graphics contact him) sent me this Fortune interview with Jeff Bezos, founder of Amazon.com.

In it, Bezos expresses something that many business managers and many people do not understand.  It’s about setting your company up to benefit from Nassim Taleb’s idea of black swans, or highly improbable events.

Fortune: In the past, you’ve said that a company learns just as much as by its failures as it does by its successes. Do you still believe that?

Bezos: Well, the key is that the company has to experiment, and what you want to try and do is reduce the cost of experimentation so you can do as many experiments per unit time as possible so you can do as many experiments per week, per month, per year as you can –and they’re not experiments if you know they’re going to work.

So you want to do a lot of these experiments, and many of them will fail, and that’s okay. Because if you’re doing enough of them, there will be some winners. That’s the only mindset you can have if you want to invent. At Amazon, we’re very focused on invention.

Bezos understands that much of business success and failure is luck.

That’s difficult for smart people to believe.  Continue reading

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