Professor Amar Bhidé of Columbia University discusses his new book “Uncertainty and Enterprise”, published by Oxford University Press. It emphasizes the limitations of standard economic models that rely on probability distributions. He argues that entrepreneurship involves dealing with unique, non-quantifiable uncertainties, which require imagination and narrative skills. Bhide critiques the over-reliance on incentives and statistical analysis, advocating for a more imaginative and contextual approach. He highlights the importance of routines and the need for accountability in expert decision-making, particularly in areas like public health and monetary policy. Bhide also discusses the role of narratives in business success and the challenges posed by tech monopolies.

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About this episode’s guest Professor Amar Bhidé

Professor of Health Policy and Management at Columbia University Irving Medical Center

Bhidé has researched and taught about innovation, entrepreneurship, and finance for over three decades. He now focuses on teaching, developing, and disseminating case histories of transformational technological advances.

A member of the Council on Foreign Relations, a founding member of the Center on Capitalism and Society at Columbia – and a founding editor of Capitalism and Society, Bhide is the author of the forthcoming book Uncertainty, Judgment, and Enterprise (Oxford). His earlier books include A Call for Judgment: Sensible Finance for a Dynamic Economy (Oxford, 2010), The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World (Princeton, 2008), The Origin and Evolution of New Businesses (Oxford, 2000) and Of Politics and Economic Reality (Basic Books, 1984). Starting in the early 1980s, he has written numerous articles for the Harvard Business Review, the Wall Street Journal, the New York Times, and The Financial Times. He has periodically appeared on Bloomberg TV and CNBC.

Bhidé was previously the Lawrence Glaubinger Professor of Business at Columbia University and the Thomas Schmidheiny Professor of Business at Tufts University. He has also taught at Harvard Business School (as an Assistant, Associate, and Visiting Professor)and at the University of Chicago's Booth School of Business.

His professional experience includes directorship of a FTSE 100 company. In the 1980s, Bhidé was a Senior Engagement Manager at McKinsey & Company, a Proprietary Trader at E.F. Hutton, and served on the Brady Commission staff, investigating the 1987 stock market crash.

Bhidé earned a DBA and MBA from Harvard Business School with High Distinction and a B. Tech from the Indian Institute of Technology (Bombay).

LinkedIn: https://www.linkedin.com/in/amar-bhide-8202ba10/

Timestamps for EP264

• Uncertainty in Economic Theory and Practice (0:00)
• The Role of Imagination in Economic Decision-Making (6:44)
• Narrative and Storytelling in Entrepreneurship (15:01)
• The Impact of Narratives on Markets and Investment (25:29)
• Challenges of Regulating Tech Monopolies (32:34)
• Accountability and Expertise in Governance (41:04)
• Building Narrative Skills for Entrepreneurs (48:31)
• Final Thoughts (52:14)

Takeaways

1. The Distinction Between Risk and Uncertainty: Frank Knight’s distinction highlights that risk is quantifiable, but uncertainty involves unknowns, requiring judgment and imagination.
2. The Importance of Narrative in Business: Entrepreneurs use storytelling to make ventures plausible to investors and stakeholders, even when data is incomplete or speculative.
3. Imagination is Key to Profit: Success in entrepreneurship often depends on the ability to imagine scenarios, adapt to setbacks, and create compelling business models.
4. Challenges of Accountability in Modern Institutions: Bhide critiques the lack of accountability among experts in fields like public health and monetary policy, advocating for more robust governance structures.
5. The Role of Plausibility in Decision-Making: Investors and entrepreneurs alike rely on plausible, if not always precise, projections to guide business choices.

Links relevant to the conversation

Amar’s new book Uncertainty and Enterprise:

https://www.amazon.com.au/Uncertainty-Enterprise-Venturing-Beyond-Known/dp/0197688357/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=&sr=

Corralling the Info-Monopolists (Project Syndicate Op-ed):

https://sites.tufts.edu/amarbhide/2018/05/14/corralling-the-info-monopolists-project-syndicate-op-ed/

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Full transcripts are available a few days after the episode is first published at www.economicsexplored.com.