Tim Harford: Problem Solving in a Complex World

PROBLEM SOLVING IN A COMPLEX WORLD

BY TIM HARFORD

1

Thomas Thwaites, http://www.thetoasterproject.org

2

NUMBER OF DISTINCT PRODUCTS

In a hunter-gather society

Source: Starbucks; Eric Beinhocker, McKinsey Global Institute

300Served by StarbucksIn a typical Wal-MartIn New York

85,000100,000

10,000,000,000

3

“When a century has passed all thought of our

so-called speaking pictures will have been abandoned. It will never

be possible to synchronize the sound with the

picture.”

Oscar-winning director D.W. Griffith, 1924

“When a century has passed all thought of our

so-called speaking pictures will have been abandoned. It will never

be possible to synchronize the sound with the

picture.”

Oscar-winning director D.W. Griffith, 1924

“When a century has passed all thought of our

so-called speaking pictures will have been abandoned. It will never

be possible to synchronize the sound with the

picture.”

Oscar-winning director D.W. Griffith, 1924

“When a century has passed all thought of our

so-called speaking pictures will have been abandoned. It will never

be possible to synchronize the sound with the

picture.”

Oscar-winning director D.W. Griffith, 1924

“When a century has passed all thought of our

so-called speaking pictures will have been abandoned. It will never

be possible to synchronize the sound with the

picture.”

Oscar-winning director D.W. Griffith, 1924

0

20

40

60

80

100

1970 1980 1990 2000 2010 2020

US

('90

)/bb

l

EXPERT FORECASTSOIL EXPERT CONSENSUS FORECASTS

1981

1984

1987

19901993

4

WORLD’S LARGEST COMPANIES, 19121. US Steel

2. Jersey Standard

3. J&P Coats

4. Pullman

5. Royal Dutch Shell

1. Anaconda

2. General Electric

3. Singer

4. American Tobacco

5. Internat. Harvester

5

BIOLOGICAL EXTINCTIONSPERCENTAGE OF SPECIES BECOMING EXTINCT PER MILLION YEARS

5

15

10

20

550 500 450 400 350 300 250 200 150 100 50 0

Millions of years before present

Per

cen

t pe

r m

illio

n ye

ars

LARGE FIRM EXTINCTIONSWHEN THE WORLD’S LARGEST 100 COMPANIES IN 1912 DIED

1

2

3

4

5

0

1912 1945 1968 1995

Num

ber

of f

irm

s be

com

ing

exti

nct

SMALL FIRM EXTINCTIONSPERCENTAGE OF US FIRMS DYING EACH YEAR BY INDUSTRY & STATE

40

0

20

60

0 2000 30001000 4000

Observations by 9 industrial sectors, 9 years, 50 states

Per

cent

EXTINCTION SIGNATUREFREQ. OF EXTINCTIONS, BIOLOGICAL SPECIES

10

20

0

40

30

0-3 3-6 6-9 12-159-12 15-18 18-21 21-24Percentage of total species becoming extinct per million years

Freq

uenc

y

ECONOMIC EXTINCTION SIG.FREQUENCY OF EXTINCTION EVENTS, 1912 TITANS

30

20

40

50

0

10

0 1 2 3 4 5 6Number of firms becoming extinct

Freq

uenc

y

6

t

You can be watching TV and see Coca-Cola, and you know that the president drinks coke, Liz Taylor drinks coke, and just think, you can drink coke, too. A coke is a coke and no amount of money can get you a better coke than the one the bum on the corner is drinking. All the cokes are the same and all the cokes are good.

ANDY WARHOL

“

”

7

8

PROBLEM SOLVING IN A COMPLEX WORLD

BY TIM HARFORD