158. Mark Romera’s Globally Orchestrated Entrepreneurial Design Journey

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Entrepreneurship-as-design is brought to life in a wonderful conversation with Mark Romera, who conceived, designed and brought to market a values-driven vision of kids having fun playing in their backyards, via an impeccably crafted brand named Spimbey.

Key Takeaways and Actionable Insights.

Entrepreneurs can identify innovation opportunities even in the most established fundamental routines of everyday family life.

What’s more basic than kids playing with physical toys in the family back yard, running round, having fun, connecting with others? It’s fundamental to family life in the neighborhood. Yet, kids don’t get that experience so much these days. How to bring it back? That’s an entrepreneurial question that Mark Romera answered with Spimbey, a brand new playset product he designed and launched though his company, Spimba.

First, choose your customer.

Mark chose Mom. Kids are users, but Mom’s the customer. She’s part of a family with target-age kids and some backyard space. She wants her kids to have fun, play safely outside, play with others, and develop themselves physically and mentally. She worries about how much time kids spend on their digital screens, and how that affects their development.

How does an entrepreneur develop the requisite deep knowledge about Mom? Talk to her; engage her in conversation. Go where the play takes place — the back yard.

Distill a complex need into a simple solution.

Already, there’s a lot of complexity. Mom, kids, families, playthings and the materials they’re made with. This brings in safety considerations and regulations, as well as design and manufacturing needs and marketing and distribution needs. The best way to get started is work backwards from the simple solution — the concept of a finished playset, easily assembled by Mom or Dad in a suburban backyard. It needs to be simple for Mom to understand and picture in her mind, and all her questions (like safety and ease of assembly and sustainability) must have simple answers.

From this simple vision, entrepreneurs work backwards in a disassembly process to identify everything they’ll need and the network design to bring it all together.

Design and assemble a flexibly networked internal and external team.

Mark was a sole founder. First, he assembled his team in answer to the questions, who can help me with this journey? He also had flexibility for when and where he needed team members. For the “internal” team (not necessarily employees but performing functional management roles) he looked for process development, product development, brand development and web development. He made careful decisions about types of people, level of experience and the ability to take responsibility in an agile process. Most important was brand alignment — a premium, high quality, high integrity brand presentation requires team members of an appropriate caliber who understand reputation building and high consumer trust.

Next, he focused on assembling the external support team: design, safety experts, materials experts, testing labs and safety certifiers aligned with the appropriate regulatory regimes, manufacturing partners, external sales and customer service experts, logistics, freight and delivery partners. The entire value network must be linked, and scheduled for the right inputs at the right time, all working backwards in the calendar from the critical date, which is the high season for retail sales of playsets. Co-ordination of value network nodes and information flows with process inputs, sequences and handoffs is a complex exercise which must be programmed before any work commences.

The design process is a combination of creativity, rigor, networking and collaborative integration.

As we’ve learned, much of entrepreneurship is a design process, to get from a concept that’s generated internally to a completed product or project that can meet the rigorous demands of the external world, including Mom and the safety regulators, and the guardians of the distribution channels.

The design concept must take a form that everyone involved in the design process can see and understand in an appropriate way, without contradictions or misunderstandings. Then the appropriate design parameters must be assigned: safety, durability, ease of assembly and ease of use, manufacturability, regulatory compliance, freight and packaging constraints. Many of these design inputs must be outsourced — to computer design shops, materials specialists, manufacturers who can impose their own restrictions, warehousers and freight carriers who have specific requirements.

There is a lot of iteration, adjustment, change management and process orchestration to be managed as the design concept advances towards the market and becomes more and more solid, complete and comprehensively detailed. Mark emphasizes meticulous planning, and a calm demeanor with clear communications to keep the network aligned and on the same page.

Branding is a critical element.

The product is physical, but the benefits are psychological. This includes the sense of fun and easiness for the kids, and the feeling of satisfaction and safety for parents. These psychic benefits must be captured in the brand presentation, both online and in physical elements like design and color and packaging. For Mark, his brand is his philosophy, captured in communication, presentation, design, production and delivery.

Mark Romera’s personal entrepreneurial journey passed through various business roles and experiences before branching into entrepreneurship.

Mark worked in growth marketing, business intelligence, new business development and as an independent consultant solving strategic problems for business clients. As his responsibilities increased, he often felt like an entrepreneur inside the corporation. In growth marketing, he learned the power of testing supported by data. Test everything, without waiting for too much discussion about the pros and cons of an idea or concept. If it works, scale it up, if it doesn’t, try to understand why based on the data you’ve collected. Testing and experimentation produce data, and data reduces uncertainty. The data cycle requires speed for success, and not conventional structures or decision-making processes that slow things down.

Entrepreneurship brings unique psychic rewards.

With his growth hacking and exploit-and-expand experience, Mark felt ready and eager to step into entrepreneurship. He told us he wanted something more, because something was missing. He wanted the freedom to develop his own ideas from scratch and to create something new and cool. The psychic reward from entrepreneurship is special. It combines the challenge of immediate implementation and a successful sales season with the long term vision of building a global brand, extending a product line, and gaining acceptance in markets worldwide.

The entrepreneurial journey for Mark is immediately highly rewarding with the long term prospect of increasing achievement and success.

Additional Resources

Mark Romera’s “Entrepreneurial Journey as a Design Process” (PDF): Download Now

See the completion of the journey: Spimbey.com

Seven Business Secrets Of Austrian Economics.

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There’s a brand of economics that goes by the name, in academic circles, of Austrian economics. If I was the brand manager, I would re-brand it, in much the same way that Chrysler (now part of Stellantis) rebranded their truck line from Dodge To RAM. The RAM name is far more communicative of important core attributes like sturdy engineering, power, reliability, and assertiveness than is Dodge. RAM sales have been robust, and so, while we wouldn’t claim to know cause and effect, we might assume that the brand name did not hurt and may have helped.

Austrian economics got its name way back in economic history when the rival, incumbent brand of German economics got annoyed at the disruptive thinking of some young economists from the University of Vienna, and dismissed their ideas as merely “Austrian”. To the Germans, Austrian meant a smaller, subsidiary, irrelevant group that had no place on the world stage.

The disruptive body of thought stuck, however, and made great strides, because it’s more useful to real people than conventional academic economics. It provides better mental models to work with. For producers, Austrian economics is the economics of entrepreneurship and value generation. For consumers, Austrian economics is the economics of individual satisfaction.

From the point of view of entrepreneurial business, of any size from single practitioner to start-up to mid-size to mega-size, here are seven secrets of Austrian economics that can be usefully applied for the achievement of business success.

Understanding Subjective Value

The purpose of business is to generate value. Austrian economics enables businesses to understand value in a new way, and, consequently to generate more of it. Curt Carlson, the authority on value creation, weaves wonderful value stories. in one of them, he imagines the iPack, a wheeled robotic suitcase that will follow you through the airport without effort on your part, via its electronic tether to your iPhone. He goes further, to imagine the iPack understanding your calendar well enough to ship itself to Singapore to your hotel to await your arrival. 

Where is the value? It’s not the physical case, and it’s not even its functionality, beneficial though it will undoubtedly be. The value is the feeling that’s created in the mind of the customer, both in the form of anticipation of relief of a travel hassle (“What a great value that will be! I’ll gladly pay for it”) and in the after-evaluation of the experience (“That was the most convenient trip ever!). Curt writes:

It is the space in the minds of potential customers. It is important to them because they have an imagination and an expectation for continuous betterment. The white space for iPack is future travel, which customers can imagine (going to Singapore through Hong Kong – what a hassle) and they have expectations for betterment (wouldn’t it be great if somehow I didn’t have to carry my bag).

Understanding value as a feeling, as the expectation of delight and the evaluation of that delight, unleashes the value generation process. 

Customer Sovereignty

In the value generation process, the customer is the boss. What the customer says, goes. If a business is unable to conjure the anticipation of delight, new products and services will not be adopted; they’ll never get off the ground. If the business does conjure the anticipation of delight but does not deliver, resulting in disappointment, the customer will not only walk away, they might even destroy the business’s reputation with negative word of mouth. The customer truly decides what is produced, and what succeeds in the marketplace. They decide on prices by establishing their willingness to pay – there’s no point in setting a price that’s higher than this level.

The full acceptance of customer sovereignty changes completely the traditional way of thinking about business. It is typical to think of business as production, as a sequence of steps from conceptualizing a future value, through designing a way of delivering that value, to realize it through exchange in the marketplace. It’s a forward-facing sequence of producer-driven action. 

But the opposite mindset is the right one. The true nature of business is working backwards from the customer experience, which is where value originates. If there were no customer experience, there’d be no value.

Entrepreneurship

Who creates value and how do they do it? Obviously, customers are key to value, because they are the ones who experience it. They need a partner because they can’t conjure up value by themselves. They need a producer. That’s the role of the entrepreneur. The entrepreneur – or the entrepreneurial process when it takes place in companies and corporations – performs the function of sensing what consumers and customers want, doing the hard work of designing and producing it, and presenting it to the customer as an option for them, a new choice, a better alternative. There’s uncertainty on both sides. The customer doesn’t know what to want (they couldn’t have designed an iPhone before Apple made one, they just knew they wanted a better phone experience). And the entrepreneur doesn’t know for certain that what they design will align perfectly with what the customer wants. This coming together in eventual alignment is the beauty of entrepreneurship and also its risk.

Entrepreneurship requires a very special empathy between producer and customer, and when this empathy results in what economists call exchange – willing buyer, willing seller, both happy – there is progress, and the world is a better place.

The entrepreneur doesn’t exist in conventional economic textbooks or theory. Entrepreneurship is at the very heart of Austrian economics. Austrians see that entrepreneurship creates betterment, economic growth, happiness, and satisfaction.

Action

Entrepreneurship is difficult, sheathed in multiple challenges. It has typically been portrayed as high-risk. Entrepreneurship might result in failure. Look at all the projects that are started and don’t succeed.

An entire tradition in business schools has been developed to purport to eliminate these risks. Business school professors sell their courses and lectures and books and presentations to present and future business managers on the promise of control and prediction. You can control the future with good planning and strategy, according to the professors, and predict the future outcomes.

Austrian entrepreneurship takes an opposite approach. The future is unpredictable, so the task is to find out what it will be, not to control and predict it. The axiom of entrepreneurship is action. Act, don’t strategize, and don’t plan. Action takes the form of experiments and explorations: try this, what about that? The entrepreneur reads the feedback data from the experiments (did the customer react positively or not?) and adapts to it, making changes and adjustments, or abandoning that experiment and trying another. This is the culture of the start-up as well as that of the agile management method. Fast, tight feedback loops replace the strategic planning process and the 100-page business plan.

Imagination / expectation

Conventional economics favors numbers and mathematical models. At the core of Austrian economics are imagination and expectation. Customers imagine a future that’s better in some way than today, but they’re not sure how it will come about. All they can communicate is their expectations. Entrepreneurs sense this, and imagine the kinds of new solutions and new services, and new products they can offer to meet consumer expectations.

Imagination is a robustly powerful business tool. Entrepreneurs can imagine new services that don’t exist, new processes that have never been used, new lines of code that might unlock some new functionality, and new organizations and structures that might unleash creativity. Their expectation is that, if they act, they’ll learn something positive and identify a future benefit.

Imagination is human, creative, and expansive. It’s about possibilities. Conventional economics tend to focus on scarcity, but entrepreneurial economics is much more focused on abundant possibilities.

Co-generation / value learning

Who produces value and who consumes it? That’s the kind of bi-valent logic that leads to restrictive thinking. Value generation is a collaboration. Customers need to be creative enough to imagine a better future, and to seek improvements in the status quo. Entrepreneurs need to be alert enough to understand customers’ yearnings and creative enough to think of new ideas that can potentially fulfill them.

There is a learning process for both customers and entrepreneurs. Customers are learning what to want, and entrepreneurs are learning what to offer them. They both learn by experience. The customer tries something new, experiences the usage of it, then stands back and evaluates that experience. That’s where value arises: in the customer’s evaluation. The entrepreneur observes and monitors that evaluation, seeking feedback from which to learn. Co-generation of value and shared value learning are the characteristics of Austrian economics at the level of the individual and the firm.

The Flow

An important underpinning to Austrian economic thought is to view markets and value and customer relationships as flows. The world, the economy, life, and business are in constant flux. There are so many actions and interactions that they can never be understood or captured in snapshots, such as today’s price or today’s market share, or today’s sales, or this month’s GDP figures. Snapshot thinking is static. Austrian entrepreneurs see the market and their business and the mind of the customer as flows. Always changing, never still. Perhaps a trend or a pattern can be detected, but these tend to be imagined by looking backwards then projecting the past into the future and this is dangerous. The flow is not predictable or projectable. The best entrepreneurs embrace the flow, keep the pace of their experiments high, make continuous adjustments and adaptations and revel in the unrestricted wonders of adaptation to complexity.

These are just seven of the ways in which Austrian economics is applied in creative and innovative businesses. More and more entrepreneurs – both inside and outside corporations – are adopting the principles of Austrian economics.

157. Luca Dellanna on the Power of Adaptation: Managing Complexity Every Day

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The terminology of complex adaptive systems sounds academic and abstruse, but the subject is not: it’s about the real-life, in-your-face problems and challenges that face a business every day. The secret to solving the challenges of complexity is adaptation. Luca Dellanna, a business expert on the subject, joined Economics For Business to explain how any firm and all management teams can harness the power of adaptation.

Key Takeaways And Actionable Insights

Complex systems are a business’s everyday environment, and every business behavior is an adaptation.

Every action a manager or leader takes should be aimed not just at its direct outcome but also for the adaptations triggered in your team, i.e. the longer term, second order future behaviors that are made more likely as a consequence of the immediate action. Take motivation as an example. Motivation results less from direct efforts (such as a “motivational speech”) but rather from the establishment of an environment in which good effort is recognized and rewarded. Your system action could be as simple as checking back with employees regarding assignments very quicky and providing feedback. This shows that their behavior is observed, appreciated and valued – a motivational environment to which they will adapt positively. A different environment can be demotivating, with negative long term consequences.

Fast, tight feedback loops are the engines of adaptive systems.

Feedback is the energy of adaptive systems, and Luca urges that the feedback loops must be fast and tight. After-action feedback should be as close to immediate as possible, so that there is no uncertainty about whether action is praiseworthy or not. Dashboards and end-of-period bonuses are too delayed for motivational purposes. Similarly, feedback should be highly specific to the action in question, as opposed to a general – and, even worse, vague or unclear – evaluation. These “motivational moments” or “mission moments” can contribute to the sense of a shared mission and vision.

The opposite case can generate “motivational losses”.

When a team member or colleague shifts from motivated and engaged to unmotivated and disengaged – ready to quit perhaps – it’s a motivational loss. These can be avoided. Treat these occasions as incidents, to be investigated and addressed. Usually, the best solution is productive clarity, because motivational losses usually occur in the event of unclear objectives or unclear directions. The solution to lack of clarity is to make it impossible to be misunderstood, and to do so from the very outset, so that there is never a need to be remedial.

People have mental contracts, and it’s important to understand and empathize with them.

We all have two contracts, the one we sign, and the one in our mind which includes a host of intangibles that are unexpressed in the written contract. We might expect to receive promotion after an appropriate period of hard work, even though there’s nothing in the written contract to that effect, nor has anyone made us that promise. It’s an implicit contract. It’s important to identify and understand these mental contracts, and to end, through clear communications that can’t be misunderstood, all misconceptions that can lead to unfulfilled expectations.

Signaling must be clear and costly.

Leadership behaviors act as signals to the rest of the organization. The signals must be clear and unambiguous. Words can be misunderstood or can be perceived as self-contradicting when there is inconsistency. Behaviors can be more clear and more consistent. Luca gave a safety example: instead of instructing individuals to wear helmets in unsafe areas, managers should go to wear the work is being done, and demonstrate the behavior. The more “costly” the signaling behavior to the manager, the more clear the signal. Luca gave the example of the founder of the Dupont explosives businesses living with his family at the factory where explosives were made. He put “skin in the game” to demonstrate the importance of safety in a notoriously unsafe industry – a costly signal, and one that had the desired effect.

How to become a systems thinker: practice adaptive thinking and apply it to yourself.

Adaptive thinking can be practiced. It can become an expertise. Think through every reality to determine how other individuals are adapting to behaviors of others that concern them or affect their work. How do people adapt to the words that are spoken to them, or the instructions that are given to them? What are the likely second and third order effects? Always ask yourself, how is the system adapting?

Then apply adaptive principles to yourself. Fashion tight and specific feedback loops for yourself so that your actions generate immediate feedback. How are people adapting to your actions? Make sure you are using the right mental models. Check your assumptions.

Additional Resources

Luca’s website: https://www.luca-dellanna.com

Managing Adaptive Systems – Our E4B Knowledge Graphic

The Power Of Adaptation by Luca Dellana

Teams Are Adaptive Systems by Luca Dellanna

Antifragile by Nassim Nicholas Taleb

The Coming Dominance Of Small Business.

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Anyone can create value with anyone else from anywhere: value is freely created. That’s the new feature of the emerging digital age of business. Digital technologies have been around for a while, but the digital business economy is just getting going.

More significantly, tomorrow’s structure of business promises to be much different than today’s. The path forward to a new, high-productivity future in the digital age is more likely to be paved by micro-startups than tech giants.

But the new structural patterns in business are not confined to technology industries. One example that comes to mind is the craft beer industry. Growing from a minuscule level of commercial significance in its industry in the last century, craft beer now represents about 25% of beer revenues in the US. Moreover, this new segment has introduced dynamic innovation in recipes, flavors, label design, bottle style, and usage occasions (like beer flights on brewery visits). Craft beers command higher unit prices and higher unit dollar profits. The big brewers are scrambling to keep up.

Size and scale are not the economic variables that matter for craft brewing. And industry dominance by a few mega brewers turns out not to be the natural structure for the beer industry. Creativity and innovation are what count, rather than manufacturing scale. In fact, according to Beverage Daily, “small is the new big” in brewing. 

Recipes are free – they come from the imagination. Raw materials are low cost. Brewing equipment can be purchased at low cost, borrowed, rented or made. There’s a flourishing online community of enthusiasts and experts and mentors to help with everything from P&L structure to sourcing. Entry to the industry is open. It’s easy to be a micro startup in brewing.

The trend in favor of micro startups is even more marked, of course, in digital technology industries. When production capital is code, which, like beer recipes, is a creative product that can be made from the imagination, then the “manufacture” of digital products is open to all.

More broadly, there is a raft of reasons for a surge in small business in the economy, in all industries.

A new relationship between people and capital.

In the traditional left-leaning depictions of capitalism, there are two separate groups: capitalists and the rest of us. Capitalists are privileged and endowed owners of production capital and financial capital, and the rest of us work for them. We can’t cross the divide from worker to capitalist. Nothing is further from the truth in 2022. Capital is now highly distributed and available and accessible for all. What used to be fixed capital is now rentable via the cloud – Amazon Web Services being the most notable example. No need to own servers and infrastructure. Entrepreneurs don’t need real estate or a storefront. Nor do they need a factory when they can 3D-print products, or rent factory time. Product designers are available for projects or by-the-hour through high-trust apps and services. 

It’s a similar world in financial capital. Lending platforms, angel investor networks, fintech apps and crowdsourcing are all available to channel investor money to promising startup ideas. The new relationship between people and capital operates in financial capital equally as well as it does in production capital, distribution capital and human capital.

Tho power of networks.

One of the great breakthroughs of the digital age is that anyone can connect to anyone else, and to any other resource. There’s no need to build a big firm; just assemble all the components required for one via digital interconnection. Entire supply webs from component manufacture to assembly to shipping to retailing and home delivery, plus the requisite financial services such as insurance, can be woven together digitally without any requirement for infrastructure ownership. There are expert, experienced organizers and integrators and managers for hire. Digital reporting facilitates real-time monitoring and control. 

Micro-specialization. 

Because all the support services are available and on-call, the startup entrepreneur is able to focus tightly and entirely on their one unique value-creation contribution. Peter Thiel in the book Zero To One, a foundational text for high tech startups, recommended that every business seek to be a monopoly, i.e. so highly differentiated that no competitor could match or replicate or under-price their product or service. 

Ever since 1776, when Adam Smith wrote about the division of labor in a pin factory that raised output by 1000%, business has understood that specialization can drive local productivity. Now, in the digitally networked economy, micro specializations can be interconnected for unprecedented multiples of global productive capacity. The individual nodes in this network, entrepreneurial businesses, seek more and more highly focused specializations to maintain and reinforce their differentiation, their pricing power, and their brand uniqueness.

What kind of businesses can sustain such productive specialization? Small businesses.

Knowledge availability.

Peter Drucker famously stated that business is knowledge applied to knowledge by knowledge workers. In the digital world, knowledge is freely available and shared at speed, and as new knowledge is created by A.I. or machine learning or experimentation, it is instantly distributed. Entrepreneurs who need knowledge can find it, or can locate someone with the requisite knowledge who knows how to apply it and how to combine it with others’ knowledge in some new combination that represents an innovation. 

Knowledge becomes a universal resource and less easy for big corporations to claim for their own.

Technologies 

Technologies are evolving at speed. Small business entrepreneurs don’t need to invent technology or even originate new uses; they just need to keep up with the evolution. The cloud, IoT, data science and advanced analytics, and robotics are just a few examples of a broad array of evolving technologies. Participation in the technology ecosystem keeps entrepreneurs on a leading edge of innovation without needing to be inventors. Entrepreneurial firms can move quickly and compete effectively by treating technology as a flow that carries them along rather than an investment that locks them in.

This, then, is the future for small business: get smaller, all the way to micro. Integrate with evolving tech ecosystems for momentum. Network with other specialists to form powerful business systems. Get infrastructure capital from the cloud and the internet, and financial capital from the fintech universe. The future structure of business is small and networked, not big and dominant.

156. Yousif Almoayyed: How Austrian Economics Helps Me Make Best Use of All My Business Knowledge

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Business success is a function of knowledge — the right knowledge at the right time applied in the right way. But knowledge is always scarce and incomplete and sometimes wrong. It is best to regard knowledge as a process: continually gathering changing knowledge from a wide range of sources to integrate into decision-making and action. Austrian economics can provide that integration, helping businesspeople with sense-making in a complex, ever-changing world of knowledge. Yousif Almoayyed joins Economics For Business to share his knowledge journey and the ways in which Austrian Economics provided him with the required integrating theory.

Key Takeaways & Actionable Insights

Business knowledge is gathered from multiple sources and multiple disciplines.

Gathering knowledge that’s relevant for business success is a process, a journey, and an exploration. It’s not limited to business subjects. A rounded businessperson studies economics, of course, but also history, psychology, languages, culture, computer science, political science. Why are these all relevant? Because business is a social science, concerned with how people think and perceive and interact, and how they adapt to new knowledge and changes in context and changes in choices. All the knowledge disciplines impact business.

There’s an exploratory phase in every knowledge journey, where we cast our knowledge net wide.

Yousif Almoayyed describes how his early years of schooling included multiple schools both in his native Bahrain and in the US and other countries. He started to gather comparative knowledge of different countries and cultures. He decided to continue the process by traveling to and studying in China. He developed an elevated capacity for the critical business skill of empathy: seeing things as others see them, through others’ eyes, or rather, through others’ mental models. People who grow up with a different cultural and philosophical and religious and linguistic and institutional background develop different mental models. The facility to discern, analyze and understand those mental models helps businesspeople in their interactions with customers, competitors, employees, partners, and suppliers.

The exploratory phase of knowledge gathering doesn’t require us to think about applying that knowledge in business at the time of gathering. It’s building up a knowledge inventory.

Different fields of knowledge can yield different business skills.

Yousif told us how he studied computer science and developed a deeper understanding of the clarifying explanatory power of logic. Via the discipline of computer programming, which requires efficient navigation to an answer that is both right and elegant, he was able to gather principles of logical reasoning that are highly applicable across disciplines.

He studied history and — by combining these studies with empirical observations in China and Cambodia and Africa as well as the Middle East — he was able to develop his skills in causal reasoning. What causes can be credibly and realistically and logically linked to what outcomes? What he observed on the ground did not always comport with what is taught in history books, since historians may use flawed or biased logic or incomplete knowledge. Best to construct your own reasoning chain and your own web of causality. This skill is highly applicable in business.

Linguistics helps with understanding the meaning that people intend when they speak. It helps with nuance and idiom, and with assessing people through their spoken words — another critical business skill.

Austrian economics is the system of thought and logic and insight that can integrate all this knowledge into a cogent way of understanding and explaining the business world.

Yousif felt that, even with his wide range of multidisciplinary knowledge and multicultural experiences, he still did not understand people and their decision making sufficiently for business. Yousif discovered Austrian economics by reading its definitive treatise, Human Action by Ludwig von Mises.

He told us that he found the insights in Human Action, derived from theory, were highly confirmable in the real world via observation. Anyone can make the same discovery. Over time, for example, you will be able to build more and more confidence in your understanding of how people make their decisions, as well as in your own decision-making about the future. By understanding how individuals’ value systems drive economic decision making, you will be able to interpret and anticipate their economic choices. You’ll deduce the theories or mental models through which people see the world, and analyze their actions that way.

Value systems are at work in firms, also. When a firm has a value system of trust and collaboration, there will be an alignment of interests among everyone who works there, and with suppliers and partners. If you take such a firm as a customer, you can apply the same values-based approach to building a strong business relationship.

Running your own business is an original and customized application of principles of Austrian economics.

You can’t read a book about how to run your own business, Yousif told us. Your analysis, using the principles, must be original. He gave the example of applying price theory in his domestic market of Bahrain. It’s an island, so it’s possible to track price fluctuations in inbound commodities — a special economic case. There are unique seasonal business patterns. Trading in oil has a disproportionate effect on economic conditions, and the oil industry is government controlled, so oil prices affect government spending. Boom and bust cycles are very real, and there is observable monetary distortion of firm-level accounts.

Yousif is able to plug these real and highly specialized data into his command of Austrian price theory to arrive at not only price decisions, but a wider range of decisions about when to build inventory and when to deplete it, and when and how to refresh his capital base, replacing older high-maintenance machines with new high-reliability upgrades. Theory is applied in practice in a very real way and in very real decisions. The results have been impressive: a turnaround of a firm to become a growth business and a market leader.

This is our aim at Economics for Business: applying economic principles to help you to improve and accelerate your business.

Creativity Is Protest.

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Where does creativity come from? Ex nihilo – from nothing. Neurons in your brain somehow reassemble themselves into a new pattern, following a new path to a different arrangement. You recognize the pattern as different than those that have gone before. Presto! You are creative! Everyone can be creative. Everyone is creative.

Next up is the way in which you apply your creativity. In business, we usually associate it with newness and novelty: invention, innovation, improved products and services, better communications, greater efficiency, emergent ways to generate value, grow business and widen margins and make customers feel better. Creativity is a pathway forward, a way to open new doors, see new vistas, and open up new possibilities.

Creativity also does the opposite. It reveals how the old ways of doing things were inadequate, or at minimum how they can be improved or replaced. The opening of new doors is the closure of old ones. Creativity abandons error and leaves it behind. Creativity is the history of civilization, continuous movement in the direction of betterment. Sure, there are times when we can observe steps backwards, but creativity always makes us aware of them and relentlessly pushes in the other direction.

Creativity, therefore, is a form of non-compliance – non-compliance with erroneous beliefs, with bad policies, with lies and misinformation, with science that is non-scientific, with statistical analysis that draws the wrong conclusions and finds causation where there is none, and with bureaucratic regulations that limit choices. It’s non-compliance with the refusal to change, with the failure to adopt, with the reluctance to explore.

Creativity, then, is protest. It criticizes, not by pointing out the weakness and error of the status quo, but by imagining the future where the status quo is replaced. Imagination is the superpower of creativity. With imagination, we are able to conjure up future possibilities – counter-factual by definition, since they don’t currently exist – and examine them in our mind, size them and add shape and structure and color. We can connect and integrate our imagined possibilities with others, or with existing structures and institutions and contexts, and ascertain how the interface and interconnections might work. We can build a new machine in our imaginations and rotate it and view it from different angles and under different conditions. If we decide it’s better than what we’ve got now, then we are protesting the present, saying it’s not good enough, it won’t do.

In business, this is innovation. In research, it’s discovery. In the arts, it’s expression. Creativity is exciting and energizing. Creativity is the way forward.

But in politics and government, it’s unacceptable protest. The revelation that there can be a better way is not permitted. Creative people are to be suspected. They may even be terrorists, unleashing the terror of novelty and expanded boundaries and new frontiers. In politics, creativity is terrible knowledge: the knowledge that the current state of things is inadequate, moving in the wrong direction and condemned to inevitable ongoing decay.

What is bitcoin? Pure creativity – ex nihilo – and a protest against the institutional abuse of money and against central bank policies of continuous debasement of fiat currencies. What is e-commerce? Creativity – and a protest against inefficient brick-and-mortar retailing, poor in-store service, out of stocks, and mis-sizing. What is free entrepreneurial software? Creativity, and a protest against expensive, uncustomized, enterprise technology. What is cloud computing? Creativity, and a protest against inflexible server tech. Creativity is always a protest.

When we are faced with the rigidity of bureaucracy and government regulation, the answer is creativity. Not rioting in the street or burning down buildings or invading the Capitol. Not even voting – that doesn’t change anything. The right approach is creativity – asking what could be different, exploring how things can be different, trying out new ideas locally or in your community or in your church or your YouTube discussion group. Look at parallels in other industries and institutions. What rigidities did people face and what were the creative ideas that got around them? How did they grow and flourish? What did it take? What experiments were conducted?

A beautiful aspect of protest in the form of creativity is that it’s not a lonely fight against the majority. Because every creative protest is an exchange. Bitcoin is an exchange, otherwise it’s not an alternative money. E-commerce is exchange, otherwise it dies or never takes off. Free software is a valid alternative only if someone produces and someone else uses. Cloud computing needs a server bank in place and someone with a device to interact with it. Exchange requires two mutually aligned parties, the willing seller and the willing buyer. If you view your own creativity as protest, you’ll test your own validity and the validity of your ideas through exchange – who agrees, who understands, who supports, who adds new value by building more upon your foundation?

Please be creative. Make the world better. Protest what’s unacceptable by imagining what’s better. Share with others. When you find some that agree, you have a movement. Let’s get to it.