From despite to because

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despite

Quite a few events in life happen in which their success is claimed by many fathers. But when you look closer and understand the facts, underlying that success are often people who succeed not because but despite the indoctrination of their forefathers.

Always question authority

For one, groundbreaking innovation is dependent upon the ignorance and even retaliation of the opinion of our forefathers, or at least the majority of them. Not because all of our forefathers were necessarily wrong, but because the majority misinterpreted (not unlike the telephone game) and simply echoed the opinion from one of their forefathers who may have been right. In other words, the descendants of those who were right provoke an arbitrage to their children that – unquestioned, uncalibrated and without proper nuance – is often simply wrong (a common problem with downstream thinking).

For that reason one should always question authority, not necessarily to prove the opinions of our forefathers wrong but to ensure their fresh legitimacy in this day and age. And to re-establish the merit that is needed to make a lasting positive impact on this world.

 

The past is wrong

Economic, social and financial systems are the derivatives of the opinions from those who came before us. Those systems are deemed to be valid to those who come after, and often remain unquestioned (but here). Yet according to the above described telephone theorem those systems are by definition regressive and become increasingly ineffective. Not just because time changes, but because the merit of the opinions of the few who were right was underestimated, misunderstood or misinterpreted.

And when we detect deficiencies in our systems we tinker with the outcome, artificially constrain unwanted behavior and artificially stimulate positivity to solve a problem quickly, and to score quick personal points without regards to the spiraling ramifications long-term. For decennia we do so until we find ourselves with no more quick buttons to push that change our economic outcome.

 

The future is right

It should come as no surprise that our children, as they grow up, do not look up at us and certainly do not want to follow in our footsteps. We have deployed opinions that in most cases appear to be untrue, and we deployed economic and financial systems that deliver artificial advantage or disadvantage based on that ill-conceived arbitrage. What we leave them with are systems that are poised to hold our children hostage in mediocre compliance, often for the rest of their lives. No wonder they resist.

We should not discount the opinion of our children (at the right age) who in search of developing their own merit, recognize that the systems we set up for them have lost theirs. Because only from those who disagree with the status quo can emerge the potential for a brighter future.

 

Misguidance

So, between the few of our founding forefathers with righteous desires for freedom and the implementation of a future that is right lies a minefield littered with economic “geniuses” who brought us the economic malaise we face today, and who seem to have all but disappeared in offering a viable and pragmatic economic path forward.

We remain a resilient people, because we still harbor the most ingenious global entrepreneurial capacity:

  • Despite that we have implemented our forefathers dream of a free-market economy as a silly laissez-faire implementation of an economic free-for-all, void of the regulations that make every participant adhere to and be protected by the same definition of freedom.
  • Despite that we allow the arbitrage of our implementation of a “meritocracy” to be in flagrant violation of free-market principles and artificially (and cunningly) constrain the dynamic range of the definition and recognition of such merit.
  • Despite the overwhelming sub-priming of Venture Capital (along with other financial systems), the few entrepreneurs who escape its wrath prove capable of producing socioeconomic value that continues to change this world.

We have succeeded despite our flawed economic implementation of economic freedom. And now is the time for us to develop a new, more disciplined economic framework so our capacity to innovate can excel, not despite but because of it.

 

We encourage comments that are relevant to our observations, conclusions and the specific topics discussed in this blog, either in agreement or disagreement. Leaving your insightful comments here will ensure others can learn from them too.  Keep in mind however this is not a place to spew your own theories (go write your own blog), but the best place to question or approve our observations.

About Georges van Hoegaerden

Georges is a serial entrepreneur, venture catalyst, 4x CEO, board director turned innovation economist (by fate). His ideas have raised $14M in venture capital and produced over $100M in returns. More.

  • konstantyn

    If history is any guide, new frameworks are best if they use the old ones for basement.

    Soviet Russia made it to a point to destroy the old world order and build a new one on the ruins. A green field project was promising the speed while approaching the target. It really did provide high speed. In the first 40 years into the project the average per capita productivity was three times that of the capitalistic semi-sphere. But there was no point of reference in the new system. When the last idealist died, the system turned to be a quick sand – not a concrete highway. The systems has shown structural deficiencies, i.e. being less systemic than the one previously destroyed.

    In physics and true sciences there is a principle that a new theory should include the old theories as cases. There is no point to negate what has been proven. The Einstein’s theory includes Newton’s theory as a case at low speeds and low speed differences between the object and observer.

    Developing new approaches means resolve questions. Don’t create questions. If there are cases where the old theories show some inadequacy, the old theory has to be updated. The update resolves inaccuracy without demolishing what has worked properly. Even a paradigm shift can be introduced this way.

    I appreciate your push on the financial system and uncovering the inadequacy. The next step is to show the clear limits where the system works and where there is a need for add-on. A bazooka shot at the entire system has no clear benefits. You may improve the haircut but kill the baby. Alternatively, adding some complexity without distraction will definitely open up opportunities. As soon as people see that nice babies are better than wild grown hair, there will be a shift. Providing options adds value and is the better way to pull resources from failed instruments.

    • http://venturecompany.com/ Georges van Hoegaerden

      I appreciate your comments as they reflect the pushback I get now and then, but I need to pop your scientific bubble (again).

      Science is not the end all be all to innovation. In fact quite the opposite, and even Einstein may be proven wrong in the end. No theory in life is absolute. And major economic advantage is often delivered by those who have unique and outlier foresight before everyone else and science proves it be acceptable or recognizable within the boundaries of what came before. Hence the name disruptive innovation. For that reason many smart investors will not hire scientists as CEOs, because in general they cannot “protrude a vision” before it has been “socialized” as true. Socialism is an awful framework for innovation.

      Everything in life is a proximity (“science” or otherwise). So, we cannot be in stalemate until we have the absolute truth, but we need to develop a better proximity to that truth. Rest assured, any proximity can be proven false. Great proximities are those in which upside far outweighs downside.

      The problem with our economic systems is not that the foundational principles were wrong but our implementation of them. I can prove without a shadow of a doubt (statistically and empirically) that the way we deployed our economic systems are not progressive but regressive to the underlying assets.

      A scientist like you could probably wrap a formula around it to scientifically support it, but most people with rudimentary life experience will not require that. Because it requires but elementary school experience to support that the telephone game of 10 levels of bottom heavy diversification in asset management will in most cases destroy the deployment of risk it was meant to deploy.

      But your time and curiosity is well taken.

      What I use my blog for is to highlight why the economic and financial systems we deploy are actually fundamentally flawed, and I will continue to fire the “bazooka” at anyone who keeps stating otherwise. The solution – a new economic framework – cannot be properly explained in a blog and will be unleashed in my upcoming book. Even though a smart reader should be able to stitch together from my posts the direction I am going.

      While I fundamentally disagree with your statement that all innovation and economic innovation requires a precedent (unless you normalize this to oblivion), my solution actually does. So, I trust that will comfort those who require such precedent and ease its adoption.

      I am happy to discuss your curiosity and well framed resistance offline, so do contact me to setup a call. I do enjoy sparring with intelligent people like you.

  • http://www.imagineabetterworld.com/ Constance Van Eaton

    May I humbly interject – does intelligent, innovative artistic expression foretell the direction, new thought forms/memes and/or values of cultural change? 

    • http://venturecompany.com/ Georges van Hoegaerden

      Not everyone has the merit to make fundamental change happen, but such merit can come from anywhere.

  • Global Edge

    A very forward thinking article that is sure to resonate
    with the next generation of leaders. The goal is not to lay blame on those who
    came before us, but to grow from their experiences. True innovation must often
    go against the grain, and swim upstream. Be brave enough to think differently
    and the ascent to higher ground becomes second nature. The next 30 years will
    be nothing like the last 30 years. The world is continuously evolving, and as GenYers, we have the power to orchestrate the new landscape.

    • http://venturecompany.com/ Georges van Hoegaerden

      Exactly. Change does not come falling from the sky, it takes deliberate action. Such as the one we are invoking, and despite the many protectionists who would like to prevent any of that from happening. 

      We have a choice now as to how our next 30 years are going to evolve, if we keep tinkering at the bottom of the economic food chain it will continue to get worse. If we fundamentally change (along the outlines I provide) our 30 year outlook will be brighter than we’ve ever seen.

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