Tim Harford on why it its good for new businesses to fail

Tim Harford, a regular presenter at tutor2u conferences, talks in this interview about several topics relevant to business students and teachers. One key question is whether governments can do more to support entrepreneurs? What do new businesses need from government support and why do so many feel that they don’t get it? Harford is somewhat sceptical that government has much of a role to play in encouraging enterprise, save for reducing “red tape” (legislation and other bureaucracy which gets in the way of running a business) and helping new businesses access fair finance.

Tim’s new book Adapt (highly recommended for summer reading) explores how the critical process of trial and error underpins almost all successful businesses and innovation. He makes a useful evaluative point which top students could bring into their exam answers - that it is good for new businesses to fail. In the US, business failure is almost a badge of honour; but in the UK it is less well received. A dynamic economic based on innovation-led growth should have a healthy flow of new businesses that tried - but failed. The interview is shown below: