Learn from business about risk and failure, governments told

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Learn from business about risk and failure, governments told

Dubai - Reid Hoffman speaks about risks, entrepreneurship and startups at WGS

by

Bernd Debusmann Jr.

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Published: Tue 14 Feb 2017, 2:04 PM

Last updated: Tue 14 Feb 2017, 4:12 PM

Governments around the world would be well-advised to learn from businesses about the management of risk and the potentially positive impact of failures, according to Reid Hoffman, the Executive Chairman of LinkedIn.
During a one-on-one session with author Fred Kofman at the WGS, Hoffman noted that modern businesses such as LinkedIn have "multiple, flexible circumstances by which we try things."
"We have an ability to do that testing and iteration, and then generate principles that guide what we do," he said. "I think one of the key things that's actually in fact one of the patterns of what happens when you have a network, like a number of different start-ups or a venture capital portfolios, is to actually take risk."

"The vast majority of governments tend to have groups and committees and penalties for taking risk. There are challenges to that," he said. "But big jumps, big evolutions in terms of trying something new, usually involve some form of risk...you want to have more of a portfolio or venture capital approach, where you invest in a number of things."
Failed projects or investments, Hoffman noted, can be positive for businesses and governments in the long term.
"People sometimes say that Silicon Valley celebrates failure. We don't actually celebrate failure, we celebrate learning," he said. "We understand that failure is a path to learning."
"You need to create a culture where we expect that people who try to do big things will find that there will failures along the path," he added, noting that in Silicon Valley venture capitalists often see previous failed start-ups as a "good thing" when examining investment opportunities.

As an example, Hoffman pointed to his own experiences with SocialNet.com, a company which he founded in 1997 and is considered an early form of an online matchmaking and social networking.
"I had the classic model that entrepreneurs have. You have good vision for the product to be, you build that product, and that product works out," he said. "I had similar ideas that brought LinkedIn to bear, but I was lacking one critical one."
"Not only do you need a great idea for a product, you need to have a great idea for how you go to market," he added. "We put in all this energy to build this relationship with this one newspaper, and they launched (SocialNet) with a huge amount of promotion."
In the first month of SocialNet, Hoffman recalled, the website had exactly five people sign up.
"If we had just pulled out the phone book and called people at random in the Phoenix area, we would have been 100 to 1,000 times more successful," he noted. "That made me learn."
bernd@khaleejtimes.com


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