Our Current World: Paradigm Shift

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October 11, 2022 ~ Written by: W.B. “Bud” Kirchner

Approx. read time: 6 minutes

“The difficulty lies not so much in developing new ideas as in escaping from old ones.” – John Maynard Keynes

Background

Depending on your perspective, optimism, and finally your exposure to scientific theory – you might describe our current business environment as:

  • Gasping for breath
  • Going to hell in a handbasket

Or for those with a bit of exposure to ‘scientific theory’ one might say we are in the midst of paradigm shifts (plural) that are (not necessarily) interrelated but related in such a way they influence each other.

I recently came across an article (#3) that flagged the 50th anniversary of a book that had a significant impact on how I formed my thinking about scientific/business some decades ago. If I can be so bold as to distill “The Structure of Scientific Revolution”, it can be summarized as: anomalies appear that cannot be resolved and eventually get to the point where some practitioners begin to question the original paradigm. It likely goes without saying that I see direct parallels to the world of business.

In the same article Naughton also mentioned another intellectual that brought a relevant perspective – Karl Popper, author of “The Structure of Scientific Revolution”. Just to point out the obvious, Popper had a similar impact on my thought process.

Inevitably, I find myself thinking about current world (e.g., business) events in the context of these works.

My thought in spending a bit of time on the authors and their work is to provide perspective on changes in the school of thought. In fact, Kuhn coined the phrase “paradigm shift” as it relates to turmoil such as what we are seeing.

Salient Points

“There is nothing permanent except change.” – Heraclitus

First let me say: I give a strong personal recommendation that any businessperson gets acquainted with the following:

  • Kuhn
    • A paradigm shift involves complete change and is directly relevant to our current school of thought.
  • Popper
    • The Falsification Principle suggests that for a theory to be considered scientific it must be able to be tested and conceivably proven false.
    • According to Popper, real scientists are differentiated by the fact that they tried to refute rather than confirm their theories.
    • Often over longer periods unresolved anomalies accumulate and eventually get to the point where some scientists begin to question the paradigm itself.
    • Ultimately, the crisis is resolved by a significant change in worldview.

What was the preceding all about?

“If you change the way you look at things, the things you look at change.” – Wayne Dyer

What is to be gained from reviewing these aspects of the current world dynamics in two “scientific” (I would add cultural, philosophical, and of course, business) contexts? I quote from two experts:

  1. Paradigm shifts happen by trickles of questioning and then in a flood of changes. Thomas Kuhn believed scientific research stays within a certain subset of beliefs (a scientific paradigm) most of the time. Scientists rely on these broad assumptions about the world and their field of study to do their work. Kuhn called this “normal science.” But as time progresses, scientists occasionally discover new data that presents paradoxes or directly contradicts this dominant paradigm. These contradictions build and build until theoreticians arrive to make sense of them by proposing entirely new assumptions and beliefs, sweeping away the previous paradigm and replacing it with a new one. (#3)
  2. Thomas Kuhn attacks “development-by-accumulation” views of science which hold that science progresses linearly by an accumulation of theory-independent facts. Kuhn looked at the history of science and argued that science does not simply progress by stages based upon neutral observations (e.g.: Positivism). (#4)

Why are these concepts relevant?

“The secret of change is to focus all of your energy not on fighting the old, but on building the new.” – Socrates

The relevance of paradigm shifts is succinctly summarized by a MasterClass Staff member (Paradigm Shift Definition: 6 Examples of Paradigm Shifts):

“In the present-day, paradigm shifts refer just as easily to surprising political outcomes or new artistic movements as they do to the arrival of a new baseline assumption and methodology in chemistry or astronomy. Still, the definition of paradigm shift remains the same no matter which field it crops up in: a radical change from previous prevailing attitudes that forms the basis of a new orthodoxy.” (#3) (Emphasis is mine)

Additional Perspective

I quote two takeaways from an article by Indeed Editorial Team (Paradigm Shift in Business: Definition and Examples ) (#1):

  1. “A paradigm shift in business is a major change or development in how a company or business produces their goods or services. They often benefit businesses in the efficiency and quality of their products while changing the key concepts of how they operate.”
  2. “A paradigm shift is a major change in how people think and get things done that upends and replaces a prior paradigm. A paradigm shift can result after the accumulation of anomalies or evidence that challenges the status quo, or due to some revolutionary innovation or discovery.”

I could fill this article with examples of business (never mind others) processes/categories where paradigm shifts are in full force. However, the salient point is that paradigm shifts are for all practical purposes inevitable.

Illustrations

“The measure of intelligence is the ability to change.” – Albert Einstein

For the purpose of this article, the following serve as illustrations of the contexts of areas where paradigms are clearly in flux and some of the contributing factors:  

  • Inflationary effects on sales results
    • Ukraine conflict continuing through 2022
    • Lingering COVID
    • Interest rates
  • Capital Markets
    • Capital raises
    • Exit windows
    • Fair value volatility
    • Longer hold period
  • Liquidity
    • Cash flow synchrony
    • Erosion of confidence
    • Mismatched supply/demand

Getting into the weeds

“Change before you have to.” – Jack Welch

What is a (business) person to do? I would argue:

  1. Recognize paradigms do shift
    1. An inevitable process
  2. Identify the dynamics of the shift underway
    1. Look under the covers
  3. Position yourself to capitalize on the dynamics
    1. Perhaps, the most appropriate heuristic comes from the world of hockey.

“I skate to where the puck is going to be, not where it has been.” – Wayne Gretzky

Bibliography

  1. Indeed Editorial Team – Paradigm Shift in Business: Definition and Examples
  2. Thomas S Kuhn – The Structure of Scientific Revolutions
  3. MasterClass Staff –  Paradigm Shift Definition: 6 Examples of Paradigm Shifts
  4. Dr. Saul McLeod – Thomas Kuhn – Science as a Paradigm
  5. John Naughton – Thomas Kuhn: the man who changed the way the world looked at science
  6. Karl Popper – The Logic of Scientific Discovery (Routledge Classics)
  7. Karl Popper – Conjectures and Refutations: The Growth of Scientific Knowledge

About the Author: W.B. “Bud” Kirchner is a serial entrepreneur and philanthropist with more than 50 years of business success. He is not a scientist or an academic but he does have a diversified exposure to neuroscience, psychology and related cognitive sciences. Generally speaking, the ideas he expresses here are business-angled expansions of other people’s ideas, so when possible, he will link to the original reference.