What Investors can learn from the Disruption Theory Debate. And from Football World Cup Predictions

The debate about the disruption theory highlights two forms of decision making.  Both work equally fine in most circumstances. However, when uncertainty is high, such as in dynamic markets one of them may be the one that prevents you from losing the plot.

There has been a lot of talk about the “disruptive innovation debate”. In an article for the The New Yorker, Harvard historian Jill Lepore attacked Harvard business professor Clayton Christensen’s well-established theory of “disruptive innovation”. She claims it “doesn’t explain change”.

The debate, which resulted from this article, might have given you some food for thought about disruption. You way also be wondering who is right or wrong in this debate. Yet, this is not what we will be discussing in this post. There isn’t a publishing company or blog who hasn’t already taken a position in this debate. Most of them are in favor of Clayton Christensen, for good reasons, as I think. You will find references on the discussion at the end of this post.

There is something else to this debate. See, what puzzled me when I followed the debate is why two high caliber academics with top-notch credentials can have so different views on the relevance of a well-established framework. In a way, the views in this debate resemble two types of decision making processes I have seen among investors. As a result, looking at how the approach of two top-notch academics differs can offer us a lesson for our decision making process as investors. A look at football/soccer World Cup Predictions will complement this lesson, as it tells us why one decision making process is more successful in a certain situation.

image credits: My Life Graphic /Shutterstock

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