Podcasts about captiveaire

Today, our guest is Bob Luddy, and we're discussing Educational Entrepreneurship. Bob is the founder of CaptiveAire, St. Thomas More Academy, Franklin Academy, Thales Academy, and Thales College, defines and discusses the "educational entrepreneur." He explains education's role in changing culture, the significance of finding the right people for leadership roles, and the value of persistence in building an organization. At the close of the episode, Bob explains why he wanted to found a college. Making entrepreneurs is, in one sense, impossible, but the conditions for entrepreneurship involve immersion in liberal education and vast experience in business. That's what Bob wants Thales College to be. This special episode with Bob Luddy was originally aired on the The Optimistic Curmudgeon podcast. Show resources: Thales College CaptiveAire Bob's autobiography, An Entrepreneurial Life Bob's latest book, The Thales Way Sponsors: Farrow Skin Care Salty Sailor Coffee Company Leader Connect The Qualified Leadership Series ____ Get all of Jon Rennie's bestselling leadership books for 15% off the regular price today! HERE Learn more about your ad choices. Visit megaphone.fm/adchoices

The pandemic changed the way a lot of us think about indoor air quality. Did you know, circulating the same air not only helps viruses spread, but it can make you more tired and less productive at work? Bob Luddy from CaptiveAire explains how his company is helping schools, restaurants and businesses bring in fresh, outside air to everyone's benefit. Also, Luddy, who has founded several schools, says he believes giving kids a classical education better prepares them to be successful.

John Henry Crosby, the president and founder of the Hildebrand Project, joins Bob Luddy in a discussion on "The Dethronement of Truth" by Dietrich von Hildebrand.Hildebrand (1889–1977) was a major personalist philosopher, heralded as "one of the great ethicists of the twentieth century" by Pope John Paul II. Amongst his numerous books and publications, Hildebrand was a prolific essayist, including his 1943 article, "The Dethronement of Truth." In the work, Hildebrand explains the nature and importance of truth and how the rejection of and indifference to truth tears apart the fabric of society. "The Dethronement of Truth" addresses issues of morality, epistemology, and relativism, as well as speaking out against the totalitarian ideologies of Communism and Nazism that Hildebrand, as a German philosopher, had publicly and heroically resisted. As Hildebrand articulates, and as Bob and John Henry discuss, we seek to understand the truth because human dignity and freedom are connected to us being the kind of beings who can seek and come to know the truth about reality. To put any other criterion in place of truth degrades the human person. Bob's Book Review is a periodic webinar led by Bob Luddy, the founder of Thales Academy, Thales College, and CaptiveAire. Learn more about upcoming webinars and all Thales Press events at https://www.thalesacademy.org/resources/thales-press.

Founder of Thales Academy and Thales College Bob Luddy discusses Adrian Bejan's book "Freedom and Evolution". Bejan is a J. A. Jones Distinguished Professor of Mechanical Engineering at Duke University, a notable author, and a leading scientist in the field of thermodynamics. In his work, Freedom & Evolution, Dr. Bejan explores the relationship between freedom and evolution through the lens of physics and thermodynamics and notably grounds freedom in the observable, natural world.Bob's Book Review is a periodic webinar led by Bob Luddy, the founder of Thales Academy, Thales College, and CaptiveAire. Learn more about upcoming webinars and all Thales Press events at https://www.thalesacademy.org/resources/thales-press

On this episode, reimaginED senior writer Lisa Buie talks with Bob Luddy, founder and president of CaptiveAire, a commercial ventilation system company in the Raleigh, N.C. area, and founder of several schools. The latest of these, Thales Academy, which Luddy started in 2007 in the CaptiveAire corporate office, enrolls 5,800[Read More...] The post podcastED: North Carolina entrepreneur offers affordable private education through network of classical schools in multiple states appeared first on reimaginED.

Bob Luddy began his business as a humble installer of kitchen ventilation hoods, and has since grown it into a market leader in both kitchen ventilation & general HVAC systems.  CaptiveAire, under Mr. Luddy's leadership, has been at the forefront of much of the technological advancement that has taken place within this world of kitchen ventilation & HVAC equipment.  More recently, Bob founded the Thales Academy, a revolutionary advancement in the world of private school childhood education and is perhaps Mr. Luddy's most important work.  Links to Bob's book, and everything else he is involved with are below:https://www.captiveaire.com/https://www.thalesacademy.org/https://mises.org/https://www.amazon.com/Entrepreneurial-Life-Startup-Market-Leader/dp/0989498905/

CaptiveAire un nostro cliente americano, che produce cappe aspiranti per cucine industriali.Queste macchine di aspirazione hanno una struttura in acciaio inox e i pannelli che le compongono possono essere lunghi anche cinque metri.Il principale problema che aveva Captive Aire era il grande spreco di materiale. Infatti, i pannelli avevano dimensioni e lunghezze continuamente diverse: questo rendeva necessario produrre a partire da un sistema laser.Il problema? Lavorando da foglio avrebbero avuto uno scarto di materiale altissimo.

An interview with Bob Luddy and Amity Shlaes, author of four "New York Times"-bestsellers including "Coolidge" and "The Forgotten Man: A New History of the Great Depression." In "Great Society," Amity Shlaes examines the 1960s and the advent of Lyndon Johnson's Great Society as a means of better understanding our contemporary challenges and the lamentable, avoidable consequences of economic planning and social welfare programs.Amity Shlaes chairs the board of the Calvin Coolidge Presidential Foundation, a national foundation based in the birthplace of President Coolidge. Find out more about Amity Shlaes and her work at the Coolidge Foundation at http://www.amityshlaes.com/bio.php"Bob's Book Reviews" is hosted by Bob Luddy, President of CaptiveAire Systems and the founder of Thales Academy, a network of private schools in North Carolina, Tennessee, Virginia, and beyond. In Bob's Book Reviews, Bob provides a short overview of the book, explains why this book answers pressing issues of our time, and facilitates a discussion on topics that challenge and enlighten the human mind.

Bill Griffin, Vice President of Manufacturing at CaptiveAire Systems, discusses engineering and the ways in which Thales Academy helps prepare students for that career.Mr. Griffin currently oversees CaptiveAire manufacturing, engineering, and R&D and is based in Lancaster, PA.This webinar is also available to view on YouTube: https://www.youtube.com/watch?v=Wxmk13EjAZcThis webinar was streamed on September 23, 2021. Learn more about Thales Press and register for upcoming events and webinars at https://www.thalesacademy.org/resources/thales-pressNext Webinar: Loving and Learning Latin on October 21 at 4 pm with Will Begley of Thales Rolesville!

Strategy is not the formulation of a plan. It is emergent from a process of exploration and discovery. Austrian economics is the best guide for entrepreneurial firms to put in place the methods and organization that unleash the power of emergence. Matt McCaffrey joins Economics For Business for a detailed exposition of the Austrian approach to Business Strategy. Key Takeaways and Actionable Insights A firm is a vehicle for entrepreneurial action to generate value. All businesses and all firms are entrepreneurial. They start from — and continue with — an aspiration to generate value for both customers and the firm, and they act on this intention by assembling assets (resources, people, cash, machines, software, etc.) that are required to realize and deliver value. The goal is to bring a good or service to market that is valued by others. Value is the ultimate goal. There are clear conditions for this action to take place. There must be a decision-making authority for the firm, because someone (or some collaborative group) must decide how to select and assemble just the right combination of resources and make a specific product or service from the assembly. We call that decision-making authority the entrepreneur. A second condition is that someone or some group must bear the uncertainty of the action. It may not turn out the way that was expected. It may not be profitable. Less value may be generated, or none at all. This bearing of uncertainty is also the role of the entrepreneur. It's hard to get the operations of the firm just right, because of complexity and change. Why is all this so hard, and the outcome so uncertain? Two reasons: change and complexity. The subjective valuations of customers, who decide what is more valuable and what is less valuable, are changing and reshuffling continuously, depending on situation, mood, the choices of others, and a myriad of other influences. These changes can become trends, fads, segments, and competitive advantages and disadvantages. Continuous change contributes to the complexity of the resource assembly puzzle: there are innumerable ways in which resources can be combined and recombined in a firm, and getting the assembly just right is a difficult challenge that is never perfectly resolved. Therefore, the Austrian view of capital as a flow is a fundamental contribution to rethinking firm strategy. The resources assembled in an entrepreneurial firm are not valuable in themselves, but because they produce a good or service that the customer values and is willing to pay for. This value — translated into revenue through the customer's willingness to pay — flows back to the firm as income. The flow of income is affected by each element in the firm's capital combination and by the degree to which the combination is well-integrated for the value generation task. Customers drive the capital formation task. The entrepreneur is engaged in a never-ending process of combining different capital goods to find the combination that is the most serviceable in generating value. Treating capital as a value generating flow helps entrepreneurs in practice to manage the persistent process of applying resource combinations in the market to ascertain what value they generate. It's dynamic process with no pauses. There are four implications for firm strategy — and they all contrast starkly with the traditional business school view of strategy. The business school view of strategy takes the form of sophisticated data-fueled top down planning models. Only a few special minds can take on this intellectually and computationally difficult challenge. Historically, the list of models has included Michael Porter's Five Forces Model (a model of industry structure and how to create barriers to entry and competition); SWOT analysis (a model of strengths, weaknesses, opportunities and threats from the firm's point of view, with strategic implications for the management of each element); PESTEL analysis of the business environment (political, economic, social, technological, environmental, legal factors) and how they affect firm performance. The common thread for these models is that they are implemented top-down: the strategists apply the tools, draw conclusions, and instruct the rest of the organization how to act. Matt McCaffrey's contrasted this top-down strategy approach to the Austrian strategy approach across four dimensions. Learning versus Rational Design The top-down models attempt rationalization: they view strategy as a rational design problem, to shape a distinctive internal competence to seize an external opportunity and evade external threats. This approach overlooks the crucial problem of learning. In circumstances of uncertainty, unpredictability, complexity and change, learning is the essential method of making progress. Changing conditions can never be known fully enough or fast enough by people at the center (in the strategic planning department) compared to front line employees. Firms must find a way to make use of this front line knowledge, through learning. Dispersion versus Centralization To enable the freedom to learn and to apply learning, decision making must be dispersed through the organization. A single mind or single planning unit can not centralize all the knowledge and can't centralize decision making. A strategic plan is not feasible. Organizational design and decision-making processes must be decentralized and dispersed. Implementation versus Formulation. A comprehensive plan is impossible. Firms must seek a more adaptive framework. Processes and methods and forms of organization must be capable of adaptation to unforeseen events and new information. Continuous deliberate adjustments must be made in the light of new circumstances, which may arise every day. Therefore, Austrians see strategy as emergent not formulated via a planning process. Adaptive firms implement entrepreneurial actions, and then adapt to the learning, new knowledge and new circumstances that present themselves as a consequence. Structure versus Strategy The business school approach is that strategy must be fully formulated, and only then can it be used to shape the structure and processes of an organization. Austrians take the opposite approach: the structure of the firm (its organization, processes and interfaces with the external environment) shapes strategy. Hayek used the term “structure of production”. This structure can be changed, but not instantly or seamlessly. Structure and strategy influence each other to some extent, but business schools tend to make strategy prior: that a firm is organized in response to the CEO's vision. Austrians understand that this is not realistic because it's not possible to restructure an existing organization every time a new vision comes along. There's a high cost to structural change, and strategy must adjust. Emergent strategy is based on business rules. What, then, replaces top-down strategic planning? Austrians use the term “rules”. Rules are an internal device to help managers and employees make decisions on the spot in response to learning and new knowledge. Matt McCaffrey gave an example: whenever there is a break in the supply chain, repurpose old capital goods and bring them into the production process as a low cost way to fill the gap. It's a broad and simple rule, and it enables decision making to go forward at the point of the supply chain break. People close to the action can use their local knowledge to solve the problem within the guideline of the rule. Another example was given by Bob Luddy, CEO of CaptiveAire, who set the rule for his firm to always have the best price in the marketplace. It's a simple rule that requires tremendous local knowledge about prices of systems and components, of competitive offerings, and about turnaround time (a cost element of price) among many others. Sales and marketing people as well as engineers can make decisions following this rule. Rules sustain firm uniqueness. Business school strategists often focus on competitive advantage as the goal of strategy. But the concept of competitive advantage comes from neoclassical economics and the depiction of markets as bounded cage-fights for market share between similarly-resourced rivals. Austrian strategy focuses more on firm uniqueness. A firm's distinctive rules can result in a unique mode of delivering value, and a unique perception in the eyes of customers. A brand is a set of rules that generates such a unique perception. The ultimate distinction: strategy is exploration. Strategy is emergent, not planned. Strategy is entrepreneurial. It's a continuous process of learning through action and discovery. Sometimes, firms discover things they really wish they hadn't. That's part of the process through which, eventually, strategy evolves. It's emergent. Over time, a firm can adopt some simple rules that seem to bring some order, but adaptation to new circumstances is always required. Profit is the signal that adaptation is successful. We use the term explore and expand to capture the Austrian approach to strategy. Firms are always exploring, seeking ways to improve performance. When some experiments yield promising results, they can be expanded. Explore and expand is a trade-off: how much of the available resources should be allocated to each type of activity. Entrepreneurs manage the trade-off in order to succeed. There's no strategic plan from on high to make the trade-off for them. Additional Resources "Emergent Strategy Process Map" (PDF): Mises.org/E4B_127_PDF Austrian Perspectives on Entrepreneurship, Strategy, and Organization by Nicolai J. Foss, Peter G. Klein, and Matthew McCaffrey: Mises.org/E4B_127_Book "Entrepreneurship and Firm Strategy: Integrating Resources, Capabilities, and Judgment through an Austrian Framework" by Matthew McCaffrey and Ulrich Möller (PDF): Mises.org/E4B_127_Paper1 "'When Harry Met Fritz': Rules as Organizational Frameworks for Emergent Strategy Process" by Nicolai J. Foss, Matthew C. McCaffrey, and Carmen Elena Dorobăț (PDF): Mises.org/E4B_127_Paper2

Strategy is not the formulation of a plan. It is emergent from a process of exploration and discovery. Austrian economics is the best guide for entrepreneurial firms to put in place the methods and organization that unleash the power of emergence. Matt McCaffrey joins Economics For Business for a detailed exposition of the Austrian approach to Business Strategy. Key Takeaways and Actionable Insights A firm is a vehicle for entrepreneurial action to generate value. All businesses and all firms are entrepreneurial. They start from — and continue with — an aspiration to generate value for both customers and the firm, and they act on this intention by assembling assets (resources, people, cash, machines, software, etc.) that are required to realize and deliver value. The goal is to bring a good or service to market that is valued by others. Value is the ultimate goal. There are clear conditions for this action to take place. There must be a decision-making authority for the firm, because someone (or some collaborative group) must decide how to select and assemble just the right combination of resources and make a specific product or service from the assembly. We call that decision-making authority the entrepreneur. A second condition is that someone or some group must bear the uncertainty of the action. It may not turn out the way that was expected. It may not be profitable. Less value may be generated, or none at all. This bearing of uncertainty is also the role of the entrepreneur. It's hard to get the operations of the firm just right, because of complexity and change. Why is all this so hard, and the outcome so uncertain? Two reasons: change and complexity. The subjective valuations of customers, who decide what is more valuable and what is less valuable, are changing and reshuffling continuously, depending on situation, mood, the choices of others, and a myriad of other influences. These changes can become trends, fads, segments, and competitive advantages and disadvantages. Continuous change contributes to the complexity of the resource assembly puzzle: there are innumerable ways in which resources can be combined and recombined in a firm, and getting the assembly just right is a difficult challenge that is never perfectly resolved. Therefore, the Austrian view of capital as a flow is a fundamental contribution to rethinking firm strategy. The resources assembled in an entrepreneurial firm are not valuable in themselves, but because they produce a good or service that the customer values and is willing to pay for. This value — translated into revenue through the customer's willingness to pay — flows back to the firm as income. The flow of income is affected by each element in the firm's capital combination and by the degree to which the combination is well-integrated for the value generation task. Customers drive the capital formation task. The entrepreneur is engaged in a never-ending process of combining different capital goods to find the combination that is the most serviceable in generating value. Treating capital as a value generating flow helps entrepreneurs in practice to manage the persistent process of applying resource combinations in the market to ascertain what value they generate. It's dynamic process with no pauses. There are four implications for firm strategy — and they all contrast starkly with the traditional business school view of strategy. The business school view of strategy takes the form of sophisticated data-fueled top down planning models. Only a few special minds can take on this intellectually and computationally difficult challenge. Historically, the list of models has included Michael Porter's Five Forces Model (a model of industry structure and how to create barriers to entry and competition); SWOT analysis (a model of strengths, weaknesses, opportunities and threats from the firm's point of view, with strategic implications for the management of each element); PESTEL analysis of the business environment (political, economic, social, technological, environmental, legal factors) and how they affect firm performance. The common thread for these models is that they are implemented top-down: the strategists apply the tools, draw conclusions, and instruct the rest of the organization how to act. Matt McCaffrey's contrasted this top-down strategy approach to the Austrian strategy approach across four dimensions. Learning versus Rational Design The top-down models attempt rationalization: they view strategy as a rational design problem, to shape a distinctive internal competence to seize an external opportunity and evade external threats. This approach overlooks the crucial problem of learning. In circumstances of uncertainty, unpredictability, complexity and change, learning is the essential method of making progress. Changing conditions can never be known fully enough or fast enough by people at the center (in the strategic planning department) compared to front line employees. Firms must find a way to make use of this front line knowledge, through learning. Dispersion versus Centralization To enable the freedom to learn and to apply learning, decision making must be dispersed through the organization. A single mind or single planning unit can not centralize all the knowledge and can't centralize decision making. A strategic plan is not feasible. Organizational design and decision-making processes must be decentralized and dispersed. Implementation versus Formulation. A comprehensive plan is impossible. Firms must seek a more adaptive framework. Processes and methods and forms of organization must be capable of adaptation to unforeseen events and new information. Continuous deliberate adjustments must be made in the light of new circumstances, which may arise every day. Therefore, Austrians see strategy as emergent not formulated via a planning process. Adaptive firms implement entrepreneurial actions, and then adapt to the learning, new knowledge and new circumstances that present themselves as a consequence. Structure versus Strategy The business school approach is that strategy must be fully formulated, and only then can it be used to shape the structure and processes of an organization. Austrians take the opposite approach: the structure of the firm (its organization, processes and interfaces with the external environment) shapes strategy. Hayek used the term “structure of production”. This structure can be changed, but not instantly or seamlessly. Structure and strategy influence each other to some extent, but business schools tend to make strategy prior: that a firm is organized in response to the CEO's vision. Austrians understand that this is not realistic because it's not possible to restructure an existing organization every time a new vision comes along. There's a high cost to structural change, and strategy must adjust. Emergent strategy is based on business rules. What, then, replaces top-down strategic planning? Austrians use the term “rules”. Rules are an internal device to help managers and employees make decisions on the spot in response to learning and new knowledge. Matt McCaffrey gave an example: whenever there is a break in the supply chain, repurpose old capital goods and bring them into the production process as a low cost way to fill the gap. It's a broad and simple rule, and it enables decision making to go forward at the point of the supply chain break. People close to the action can use their local knowledge to solve the problem within the guideline of the rule. Another example was given by Bob Luddy, CEO of CaptiveAire, who set the rule for his firm to always have the best price in the marketplace. It's a simple rule that requires tremendous local knowledge about prices of systems and components, of competitive offerings, and about turnaround time (a cost element of price) among many others. Sales and marketing people as well as engineers can make decisions following this rule. Rules sustain firm uniqueness. Business school strategists often focus on competitive advantage as the goal of strategy. But the concept of competitive advantage comes from neoclassical economics and the depiction of markets as bounded cage-fights for market share between similarly-resourced rivals. Austrian strategy focuses more on firm uniqueness. A firm's distinctive rules can result in a unique mode of delivering value, and a unique perception in the eyes of customers. A brand is a set of rules that generates such a unique perception. The ultimate distinction: strategy is exploration. Strategy is emergent, not planned. Strategy is entrepreneurial. It's a continuous process of learning through action and discovery. Sometimes, firms discover things they really wish they hadn't. That's part of the process through which, eventually, strategy evolves. It's emergent. Over time, a firm can adopt some simple rules that seem to bring some order, but adaptation to new circumstances is always required. Profit is the signal that adaptation is successful. We use the term explore and expand to capture the Austrian approach to strategy. Firms are always exploring, seeking ways to improve performance. When some experiments yield promising results, they can be expanded. Explore and expand is a trade-off: how much of the available resources should be allocated to each type of activity. Entrepreneurs manage the trade-off in order to succeed. There's no strategic plan from on high to make the trade-off for them. Additional Resources "Emergent Strategy Process Map" (PDF): Mises.org/E4B_127_PDF Austrian Perspectives on Entrepreneurship, Strategy, and Organization by Nicolai J. Foss, Peter G. Klein, and Matthew McCaffrey: Mises.org/E4B_127_Book "Entrepreneurship and Firm Strategy: Integrating Resources, Capabilities, and Judgment through an Austrian Framework" by Matthew McCaffrey and Ulrich Möller (PDF): Mises.org/E4B_127_Paper1 "'When Harry Met Fritz': Rules as Organizational Frameworks for Emergent Strategy Process" by Nicolai J. Foss, Matthew C. McCaffrey, and Carmen Elena Dorobăț (PDF): Mises.org/E4B_127_Paper2

Strategy is not the formulation of a plan. It is emergent from a process of exploration and discovery. Austrian economics is the best guide for entrepreneurial firms to put in place the methods and organization that unleash the power of emergence. Matt McCaffrey joins Economics For Business for a detailed exposition of the Austrian approach to Business Strategy. Key Takeaways and Actionable Insights A firm is a vehicle for entrepreneurial action to generate value. All businesses and all firms are entrepreneurial. They start from — and continue with — an aspiration to generate value for both customers and the firm, and they act on this intention by assembling assets (resources, people, cash, machines, software, etc.) that are required to realize and deliver value. The goal is to bring a good or service to market that is valued by others. Value is the ultimate goal. There are clear conditions for this action to take place. There must be a decision-making authority for the firm, because someone (or some collaborative group) must decide how to select and assemble just the right combination of resources and make a specific product or service from the assembly. We call that decision-making authority the entrepreneur. A second condition is that someone or some group must bear the uncertainty of the action. It may not turn out the way that was expected. It may not be profitable. Less value may be generated, or none at all. This bearing of uncertainty is also the role of the entrepreneur. It's hard to get the operations of the firm just right, because of complexity and change. Why is all this so hard, and the outcome so uncertain? Two reasons: change and complexity. The subjective valuations of customers, who decide what is more valuable and what is less valuable, are changing and reshuffling continuously, depending on situation, mood, the choices of others, and a myriad of other influences. These changes can become trends, fads, segments, and competitive advantages and disadvantages. Continuous change contributes to the complexity of the resource assembly puzzle: there are innumerable ways in which resources can be combined and recombined in a firm, and getting the assembly just right is a difficult challenge that is never perfectly resolved. Therefore, the Austrian view of capital as a flow is a fundamental contribution to rethinking firm strategy. The resources assembled in an entrepreneurial firm are not valuable in themselves, but because they produce a good or service that the customer values and is willing to pay for. This value — translated into revenue through the customer's willingness to pay — flows back to the firm as income. The flow of income is affected by each element in the firm's capital combination and by the degree to which the combination is well-integrated for the value generation task. Customers drive the capital formation task. The entrepreneur is engaged in a never-ending process of combining different capital goods to find the combination that is the most serviceable in generating value. Treating capital as a value generating flow helps entrepreneurs in practice to manage the persistent process of applying resource combinations in the market to ascertain what value they generate. It's dynamic process with no pauses. There are four implications for firm strategy — and they all contrast starkly with the traditional business school view of strategy. The business school view of strategy takes the form of sophisticated data-fueled top down planning models. Only a few special minds can take on this intellectually and computationally difficult challenge. Historically, the list of models has included Michael Porter's Five Forces Model (a model of industry structure and how to create barriers to entry and competition); SWOT analysis (a model of strengths, weaknesses, opportunities and threats from the firm's point of view, with strategic implications for the management of each element); PESTEL analysis of the business environment (political, economic, social, technological, environmental, legal factors) and how they affect firm performance. The common thread for these models is that they are implemented top-down: the strategists apply the tools, draw conclusions, and instruct the rest of the organization how to act. Matt McCaffrey's contrasted this top-down strategy approach to the Austrian strategy approach across four dimensions. Learning versus Rational Design The top-down models attempt rationalization: they view strategy as a rational design problem, to shape a distinctive internal competence to seize an external opportunity and evade external threats. This approach overlooks the crucial problem of learning. In circumstances of uncertainty, unpredictability, complexity and change, learning is the essential method of making progress. Changing conditions can never be known fully enough or fast enough by people at the center (in the strategic planning department) compared to front line employees. Firms must find a way to make use of this front line knowledge, through learning. Dispersion versus Centralization To enable the freedom to learn and to apply learning, decision making must be dispersed through the organization. A single mind or single planning unit can not centralize all the knowledge and can't centralize decision making. A strategic plan is not feasible. Organizational design and decision-making processes must be decentralized and dispersed. Implementation versus Formulation. A comprehensive plan is impossible. Firms must seek a more adaptive framework. Processes and methods and forms of organization must be capable of adaptation to unforeseen events and new information. Continuous deliberate adjustments must be made in the light of new circumstances, which may arise every day. Therefore, Austrians see strategy as emergent not formulated via a planning process. Adaptive firms implement entrepreneurial actions, and then adapt to the learning, new knowledge and new circumstances that present themselves as a consequence. Structure versus Strategy The business school approach is that strategy must be fully formulated, and only then can it be used to shape the structure and processes of an organization. Austrians take the opposite approach: the structure of the firm (its organization, processes and interfaces with the external environment) shapes strategy. Hayek used the term “structure of production”. This structure can be changed, but not instantly or seamlessly. Structure and strategy influence each other to some extent, but business schools tend to make strategy prior: that a firm is organized in response to the CEO's vision. Austrians understand that this is not realistic because it's not possible to restructure an existing organization every time a new vision comes along. There's a high cost to structural change, and strategy must adjust. Emergent strategy is based on business rules. What, then, replaces top-down strategic planning? Austrians use the term “rules”. Rules are an internal device to help managers and employees make decisions on the spot in response to learning and new knowledge. Matt McCaffrey gave an example: whenever there is a break in the supply chain, repurpose old capital goods and bring them into the production process as a low cost way to fill the gap. It's a broad and simple rule, and it enables decision making to go forward at the point of the supply chain break. People close to the action can use their local knowledge to solve the problem within the guideline of the rule. Another example was given by Bob Luddy, CEO of CaptiveAire, who set the rule for his firm to always have the best price in the marketplace. It's a simple rule that requires tremendous local knowledge about prices of systems and components, of competitive offerings, and about turnaround time (a cost element of price) among many others. Sales and marketing people as well as engineers can make decisions following this rule. Rules sustain firm uniqueness. Business school strategists often focus on competitive advantage as the goal of strategy. But the concept of competitive advantage comes from neoclassical economics and the depiction of markets as bounded cage-fights for market share between similarly-resourced rivals. Austrian strategy focuses more on firm uniqueness. A firm's distinctive rules can result in a unique mode of delivering value, and a unique perception in the eyes of customers. A brand is a set of rules that generates such a unique perception. The ultimate distinction: strategy is exploration. Strategy is emergent, not planned. Strategy is entrepreneurial. It's a continuous process of learning through action and discovery. Sometimes, firms discover things they really wish they hadn't. That's part of the process through which, eventually, strategy evolves. It's emergent. Over time, a firm can adopt some simple rules that seem to bring some order, but adaptation to new circumstances is always required. Profit is the signal that adaptation is successful. We use the term explore and expand to capture the Austrian approach to strategy. Firms are always exploring, seeking ways to improve performance. When some experiments yield promising results, they can be expanded. Explore and expand is a trade-off: how much of the available resources should be allocated to each type of activity. Entrepreneurs manage the trade-off in order to succeed. There's no strategic plan from on high to make the trade-off for them. Additional Resources "Emergent Strategy Process Map" (PDF): Mises.org/E4B_127_PDF Austrian Perspectives on Entrepreneurship, Strategy, and Organization by Nicolai J. Foss, Peter G. Klein, and Matthew McCaffrey: Mises.org/E4B_127_Book "Entrepreneurship and Firm Strategy: Integrating Resources, Capabilities, and Judgment through an Austrian Framework" by Matthew McCaffrey and Ulrich Möller (PDF): Mises.org/E4B_127_Paper1 "'When Harry Met Fritz': Rules as Organizational Frameworks for Emergent Strategy Process" by Nicolai J. Foss, Matthew C. McCaffrey, and Carmen Elena Dorobăț (PDF): Mises.org/E4B_127_Paper2

Economics is an animating science. Economics is treated by many as an arid field of mathematical modeling. Human beings are treated as data in the model, almost the way physics regards atoms and molecules. This approach to economics doesn't help people much; it doesn't help us understand the world, and isn't helping us build a better future. Austrian economics is humanistic; it treats humans as people, pursuing their hopes and dreams, frequently changing, seldom predictable, and never acting like data in a model. That's why we see our brand of economics as animating: helping people to understand better how to identify the best means for their chosen ends. For businesspeople, that translates into knowledge, processes and tools to help businesses grow and thrive. The role of the entrepreneur Entrepreneurship is the animation of business. It's action; the exciting process of turning business knowledge and market signals into commercial solutions with the application of imagination, insight, creativity, resource assembly, and agile adjustment. A big part of what makes Austrian economics different and better for business application is the understanding of the role of the entrepreneur and the entrepreneurial function in the economy. Jeff Deist articulated this role as a nexus between capital and markets, and the entrepreneur as the individual taking risk, employing their own property and having skin in the game. It's an exciting role. Entrepreneurship and value Entrepreneurial business is the intentional pursuit of new economic value. The pursuit requires a deep understanding of the concept of value, an understanding that Austrian economics provides. Ever since Carl Menger established the concept of subjective value, Austrian economists have been deepening their understanding still further. Today, we recognize more than ever the role of the customer in value creation; since value is their experience, they are active collaborators. Entrepreneurs harness this collaboration. Think of an iPhone. Apple designs and assembles it, and then a large part of the value experience comes from the user adding apps, composing and sending and receiving messages and e-mails, choosing videos to watch and podcasts to listen to, eagerly contributing to the value experience that they themselves enjoy. Value is what users make it. Individualism and diversity Entrepreneurial economics recognizes the role of the individual. It respects and honors the individual choice. Each individual, in the role of both consumer and producer, exhibits different preferences, personality, and psychology; we live in different places and in different contexts; we each have different needs and wants. There are many favorable outcomes from individualism. One is the vast global diversity of the marketplace, whether exhibited on amazon or Alibaba or Grainger.com for industrial supplies. Another is economics as an engine of humanity and peace, which is the context for entrepreneurs providing goods and services globally to customers. Specialization, achievement and satisfaction Economics For Business aims to help all businesses and all entrepreneurs to find their specialization in this global ecosystem. We apply the economic principles of the specialized division of knowledge and division of labor. We all have knowledge that is unique to us, and we can all find an application of that knowledge in business. Bob Luddy, who has been a guest on our podcast, founded CaptiveAire, a company that specializes in restaurant ventilation systems, providing benefits of safety, comfort, clean air and regulatory compliance to a broad range of foodservice customers. Bob stresses the value of specialization to become the leader in a category - a share leader and a knowledge leader and an innovation leader. And he'll tell you that the non-material rewards of economic specialization are delightful, including satisfaction, achievement, earned respect. CaptiveAire is a great example of considered specialization – it's not in a high tech category (although there is a lot of tech incorporated in CaptiveAire's product and service bundle), or an internet business or a software business. Find your customers, find a need that is not being filled, and build from there. Big data versus big empathy and big insights We live in an era where more and more data is being collected, compiled, processed and analyzed by producers (as well as non-economic actors such as governments, of course). As the sources of data, many of us have concerns about this trend. The economic principle that is more important for businesses, however, is that, no matter how “big” the data sets are, they do not have value (they are not causal data) until they provide or reveal some qualitative understanding of customer feelings, motivations or attitudes. These are the data that are genuinely useful to businesses. The Economics For Business method to develop this understanding is empathy, and we have a full toolset to help entrepreneurs apply it. MBA-ization versus products, people and active learning Jeff quoted Elon Musk on the subject of MBA-ization of business: too much focus on financial modeling and spreadsheets, and not enough on deploying engineers on the factory floor to develop, introduce and continuously improve great products that provide the customer with a delightful experience. Jeff concurred that MBA programs and business schools have become bogged down with a lot of dead weight, and have obscured some of their market-facing functions. They don't provide the value they ought to provide for the tuition charged. Economics For Business can provide the 20% of business school knowledge that's actually valuable, and add new content – informed with Austrian insight - that's even more relevant, plus the methodology and tools to apply the knowledge in business practice. This approach is based on the educational science of active learning. In this view, learning is not achieved via books and lectures (which are necessarily backward-looking) but via the receipt of tools and methods and techniques, applying them oneself in real-life situations, and learning from the feedback received from people and markets and business results. Building experience and sharing experience. Active learning is the accumulation of experience. It is the unique experience of entrepreneurs and their teams gained from the operation of their businesses that constitutes the division of knowledge flywheel that continuously reinforces their advantaged position in the marketplace. There is a time value to experience; it takes time to accumulate. On the Economics For Business platform, we'll aim to identify ways to share experience to speed up the experience-gathering timeline. Q&A and discussion within our entrepreneurial community is one way. Another is mentoring, whereby experienced business people can share what they've learned over time. Economics as a route to work and life satisfaction. In his book Dynamism, Economic Nobel prizewinner Edmund Phelps tells us that, according to individually reported life satisfaction scores (e.g. Pew Research Center surveys and other similar surveys), the greater part of life satisfaction results from production activities rather than consumer activities. The purpose and meaning of taking on challenges, achieving results, making discoveries, self-reliance, and success in meeting goals are found in participation in the production side of the economic system. We hope to play our part in the stimulus of those satisfactions via the Mises Institute's Economics For Business project. Entrepreneurial GPS Economics For Business utilizes a journey metaphor for the entrepreneurial process. Take a look at our visual summary at Mises.org/E4B_100_PDF.

Economics is an animating science. Economics is treated by many as an arid field of mathematical modeling. Human beings are treated as data in the model, almost the way physics regards atoms and molecules. This approach to economics doesn't help people much; it doesn't help us understand the world, and isn't helping us build a better future. Austrian economics is humanistic; it treats humans as people, pursuing their hopes and dreams, frequently changing, seldom predictable, and never acting like data in a model. That's why we see our brand of economics as animating: helping people to understand better how to identify the best means for their chosen ends. For businesspeople, that translates into knowledge, processes and tools to help businesses grow and thrive. The role of the entrepreneur Entrepreneurship is the animation of business. It's action; the exciting process of turning business knowledge and market signals into commercial solutions with the application of imagination, insight, creativity, resource assembly, and agile adjustment. A big part of what makes Austrian economics different and better for business application is the understanding of the role of the entrepreneur and the entrepreneurial function in the economy. Jeff Deist articulated this role as a nexus between capital and markets, and the entrepreneur as the individual taking risk, employing their own property and having skin in the game. It's an exciting role. Entrepreneurship and value Entrepreneurial business is the intentional pursuit of new economic value. The pursuit requires a deep understanding of the concept of value, an understanding that Austrian economics provides. Ever since Carl Menger established the concept of subjective value, Austrian economists have been deepening their understanding still further. Today, we recognize more than ever the role of the customer in value creation; since value is their experience, they are active collaborators. Entrepreneurs harness this collaboration. Think of an iPhone. Apple designs and assembles it, and then a large part of the value experience comes from the user adding apps, composing and sending and receiving messages and e-mails, choosing videos to watch and podcasts to listen to, eagerly contributing to the value experience that they themselves enjoy. Value is what users make it. Individualism and diversity Entrepreneurial economics recognizes the role of the individual. It respects and honors the individual choice. Each individual, in the role of both consumer and producer, exhibits different preferences, personality, and psychology; we live in different places and in different contexts; we each have different needs and wants. There are many favorable outcomes from individualism. One is the vast global diversity of the marketplace, whether exhibited on amazon or Alibaba or Grainger.com for industrial supplies. Another is economics as an engine of humanity and peace, which is the context for entrepreneurs providing goods and services globally to customers. Specialization, achievement and satisfaction Economics For Business aims to help all businesses and all entrepreneurs to find their specialization in this global ecosystem. We apply the economic principles of the specialized division of knowledge and division of labor. We all have knowledge that is unique to us, and we can all find an application of that knowledge in business. Bob Luddy, who has been a guest on our podcast, founded CaptiveAire, a company that specializes in restaurant ventilation systems, providing benefits of safety, comfort, clean air and regulatory compliance to a broad range of foodservice customers. Bob stresses the value of specialization to become the leader in a category - a share leader and a knowledge leader and an innovation leader. And he'll tell you that the non-material rewards of economic specialization are delightful, including satisfaction, achievement, earned respect. CaptiveAire is a great example of considered specialization – it's not in a high tech category (although there is a lot of tech incorporated in CaptiveAire's product and service bundle), or an internet business or a software business. Find your customers, find a need that is not being filled, and build from there. Big data versus big empathy and big insights We live in an era where more and more data is being collected, compiled, processed and analyzed by producers (as well as non-economic actors such as governments, of course). As the sources of data, many of us have concerns about this trend. The economic principle that is more important for businesses, however, is that, no matter how “big” the data sets are, they do not have value (they are not causal data) until they provide or reveal some qualitative understanding of customer feelings, motivations or attitudes. These are the data that are genuinely useful to businesses. The Economics For Business method to develop this understanding is empathy, and we have a full toolset to help entrepreneurs apply it. MBA-ization versus products, people and active learning Jeff quoted Elon Musk on the subject of MBA-ization of business: too much focus on financial modeling and spreadsheets, and not enough on deploying engineers on the factory floor to develop, introduce and continuously improve great products that provide the customer with a delightful experience. Jeff concurred that MBA programs and business schools have become bogged down with a lot of dead weight, and have obscured some of their market-facing functions. They don't provide the value they ought to provide for the tuition charged. Economics For Business can provide the 20% of business school knowledge that's actually valuable, and add new content – informed with Austrian insight - that's even more relevant, plus the methodology and tools to apply the knowledge in business practice. This approach is based on the educational science of active learning. In this view, learning is not achieved via books and lectures (which are necessarily backward-looking) but via the receipt of tools and methods and techniques, applying them oneself in real-life situations, and learning from the feedback received from people and markets and business results. Building experience and sharing experience. Active learning is the accumulation of experience. It is the unique experience of entrepreneurs and their teams gained from the operation of their businesses that constitutes the division of knowledge flywheel that continuously reinforces their advantaged position in the marketplace. There is a time value to experience; it takes time to accumulate. On the Economics For Business platform, we'll aim to identify ways to share experience to speed up the experience-gathering timeline. Q&A and discussion within our entrepreneurial community is one way. Another is mentoring, whereby experienced business people can share what they've learned over time. Economics as a route to work and life satisfaction. In his book Dynamism, Economic Nobel prizewinner Edmund Phelps tells us that, according to individually reported life satisfaction scores (e.g. Pew Research Center surveys and other similar surveys), the greater part of life satisfaction results from production activities rather than consumer activities. The purpose and meaning of taking on challenges, achieving results, making discoveries, self-reliance, and success in meeting goals are found in participation in the production side of the economic system. We hope to play our part in the stimulus of those satisfactions via the Mises Institute's Economics For Business project. Entrepreneurial GPS Economics For Business utilizes a journey metaphor for the entrepreneurial process. Take a look at our visual summary at Mises.org/E4B_100_PDF.

What is technological deflation, and how can entrepreneurs take advantage of it? By combining already available and easily accessible technologies to facilitate the accelerated information flows that constitute value in the 21st Century: higher quality, faster speeds, lower costs. Jeff Booth explains. FREE DOWNLOAD: "Value Then vs. Value Now" (PDF): Mises.org/E4E_89_PDF Key Takeaways and Actionable Insights Technology reduces the labor factor, lowers costs, and frees up time. These are the components of deflation: less labor and effort for any unit of output, faster speed, lower material costs, and re-allocation of time from lower to higher productivity activities. The speed at which this technological change is happening is “staggering” in Jeff Booth's words, and will accelerate. More and more time will be freed up to allocate to higher uses. The result is deflation: higher quality for lower cost at faster speeds. The only reason price deflation is not pervasive throughout the economy is the status quo governmental system. Federal Reserve money printing, more and more debt, lower interest rates — these are actions designed to drive price inflation. This scheme defies the natural order of technological deflation. It is the great fight of our time, says Booth, to end the inflationary scheme. But for entrepreneurs, the right action is to embrace and harness tech deflation. There is tremendous leverage for entrepreneurs in the current economy of technological change. Jeff uses his “folding analogy”. If you could fold a piece of paper 50 times, it would reach the sun. Technological change is at the early folding stage today, but each new fold doubles the growth rate and the impact. The way for entrepreneurs to put this folding analogy to work for them is by combining technologies. Several folds at once. One of Jeff's examples is Elon Musk. In Jeff Booth's words, Musk forecast three exponentials: the exponential improvement in battery technology, the exponential increase in the role of software in automotive engineering, bringing information flow into the vehicle, and the exponential improvement in A.I. to bring self-driving features to automobiles. Taken together, these three widely available technologies made Tesla a revolutionary venture, surpassing GM in market capitalization. The same “crazy opportunities” are available to all entrepreneurs. We don't all have to be Elon Musk. The possibility to increase customer value and reduce costs at the same time are available to all entrepreneurs. One of the keys to success is to direct technology towards increasing data capture: more and more data signals to drive deep learning via algorithms, leading to better and better and faster and faster decision-making. Data collection platforms managed with A.I. algorithms can generate the exponential growth that Jeff refers to. Google and Amazon are the examples everyone talks about; but here on E4E, in episode #84 (Mises.org/E4E_84), Bob Luddy talked about sensor-based data collection in his CaptiveAire restaurant ventilation systems, feeding performance data back to the central platform for increased learning and improvement. The opportunity is available to all types of business. Value looks different today than in the past, and it will look different again in the future. “What will value look like in the future?” is one of the questions Jeff Booth urges all entrepreneurs to ask for themselves and their business. He cited one example from history: the Blockbuster video rental business. To Blockbuster's owners and managers, value looked like the convenience for consumers of movie entertainment of 9000 stores across the country, each with a huge selection of videotapes to choose from. Their idea of adding value was to provide popcorn and candy in the checkout aisles. But when Netflix came along, value starts to look different. It's the convenience of streaming movies directly to your digital TV or tablet in your home or on the go, with constant additions to the offering, both of original content and content from other channels. The 9000 Blockbuster stores no longer look so convenient. Information flow and digitization make value look different. Another example Jeff cited is the university education business. Traditionally, its value is based on real estate — an exclusive set of physical buildings in one specific place to which students must travel (or rent a dorm room) in order to access an exclusive faculty of high-reputation teachers. Now, with technology and information flow, the core knowledge is accessible anywhere/anytime, and is tending towards free. Offline educational ventures can hire teachers to make video classes available to the world, and virtual reality will make the experience even more vivid and more enjoyable. The knowledge is the same. Students' questions are probably the same. The cost structure is totally different. Three principles for entrepreneurs to facilitate new value in the future. Given these examples, and given the trends of accelerating digitization, data flow, multiplicative combinations, and algorithmic analysis and intelligence, what are the principles for business to follow to be able to facilitate new value for customers? 1) Aim for 10X improvement in the customer experience. The rate of acceleration is so fast, and the exponential potential of new combinations of technology is so great, that innovators must aim for a 10X improvement in customer-perceived benefit to command attention, turn heads and dislodge customers from their current choices (Curt Carlson made the same point in episode #37: Mises.org/E4E_37). 2) Make your thinking boundary-less. One of the great restrictions on entrepreneurial creativity is the institutionally and historically imposed tradition of thinking in silos, and thinking that industries have boundaries. Universities have their faculty departments and corporations have their divisions, and they tend to put silos around thinking. But the Elon Musk example of batteries + software + A.I. crosses industry boundaries, technology boundaries, performance boundaries, and financial boundaries. Boundary-less thinking can open up endless new possibilities. Entrepreneurial economics teaches the re-combination of assets, not necessarily the creation of new ones. Busting silos can lead to new combinations. 3) Forecast the exponential. Where in your frame will exponential change occur? Use your imagination to try to forecast it. The future can't be predicted but it can be imagined. The challenge is to imagine the next fold of the paper and the next one and the next one; and the next combination of two or three or four or more new technologies. The idea of the exponential can be applied everywhere. Additional Resources "Value Then vs. Value Now" (PDF): Mises.org/E4E_89_PDF Purchase Jeff Booth's book, The Price of Tomorrow: Why Deflation is the Key to an Abundant Future: Mises.org/E4E_89_Book

What is technological deflation, and how can entrepreneurs take advantage of it? By combining already available and easily accessible technologies to facilitate the accelerated information flows that constitute value in the 21st Century: higher quality, faster speeds, lower costs. Jeff Booth explains. FREE DOWNLOAD: "Value Then vs. Value Now" (PDF): Mises.org/E4E_89_PDF Key Takeaways and Actionable Insights Technology reduces the labor factor, lowers costs, and frees up time. These are the components of deflation: less labor and effort for any unit of output, faster speed, lower material costs, and re-allocation of time from lower to higher productivity activities. The speed at which this technological change is happening is “staggering” in Jeff Booth's words, and will accelerate. More and more time will be freed up to allocate to higher uses. The result is deflation: higher quality for lower cost at faster speeds. The only reason price deflation is not pervasive throughout the economy is the status quo governmental system. Federal Reserve money printing, more and more debt, lower interest rates — these are actions designed to drive price inflation. This scheme defies the natural order of technological deflation. It is the great fight of our time, says Booth, to end the inflationary scheme. But for entrepreneurs, the right action is to embrace and harness tech deflation. There is tremendous leverage for entrepreneurs in the current economy of technological change. Jeff uses his “folding analogy”. If you could fold a piece of paper 50 times, it would reach the sun. Technological change is at the early folding stage today, but each new fold doubles the growth rate and the impact. The way for entrepreneurs to put this folding analogy to work for them is by combining technologies. Several folds at once. One of Jeff's examples is Elon Musk. In Jeff Booth's words, Musk forecast three exponentials: the exponential improvement in battery technology, the exponential increase in the role of software in automotive engineering, bringing information flow into the vehicle, and the exponential improvement in A.I. to bring self-driving features to automobiles. Taken together, these three widely available technologies made Tesla a revolutionary venture, surpassing GM in market capitalization. The same “crazy opportunities” are available to all entrepreneurs. We don't all have to be Elon Musk. The possibility to increase customer value and reduce costs at the same time are available to all entrepreneurs. One of the keys to success is to direct technology towards increasing data capture: more and more data signals to drive deep learning via algorithms, leading to better and better and faster and faster decision-making. Data collection platforms managed with A.I. algorithms can generate the exponential growth that Jeff refers to. Google and Amazon are the examples everyone talks about; but here on E4E, in episode #84 (Mises.org/E4E_84), Bob Luddy talked about sensor-based data collection in his CaptiveAire restaurant ventilation systems, feeding performance data back to the central platform for increased learning and improvement. The opportunity is available to all types of business. Value looks different today than in the past, and it will look different again in the future. “What will value look like in the future?” is one of the questions Jeff Booth urges all entrepreneurs to ask for themselves and their business. He cited one example from history: the Blockbuster video rental business. To Blockbuster's owners and managers, value looked like the convenience for consumers of movie entertainment of 9000 stores across the country, each with a huge selection of videotapes to choose from. Their idea of adding value was to provide popcorn and candy in the checkout aisles. But when Netflix came along, value starts to look different. It's the convenience of streaming movies directly to your digital TV or tablet in your home or on the go, with constant additions to the offering, both of original content and content from other channels. The 9000 Blockbuster stores no longer look so convenient. Information flow and digitization make value look different. Another example Jeff cited is the university education business. Traditionally, its value is based on real estate — an exclusive set of physical buildings in one specific place to which students must travel (or rent a dorm room) in order to access an exclusive faculty of high-reputation teachers. Now, with technology and information flow, the core knowledge is accessible anywhere/anytime, and is tending towards free. Offline educational ventures can hire teachers to make video classes available to the world, and virtual reality will make the experience even more vivid and more enjoyable. The knowledge is the same. Students' questions are probably the same. The cost structure is totally different. Three principles for entrepreneurs to facilitate new value in the future. Given these examples, and given the trends of accelerating digitization, data flow, multiplicative combinations, and algorithmic analysis and intelligence, what are the principles for business to follow to be able to facilitate new value for customers? 1) Aim for 10X improvement in the customer experience. The rate of acceleration is so fast, and the exponential potential of new combinations of technology is so great, that innovators must aim for a 10X improvement in customer-perceived benefit to command attention, turn heads and dislodge customers from their current choices (Curt Carlson made the same point in episode #37: Mises.org/E4E_37). 2) Make your thinking boundary-less. One of the great restrictions on entrepreneurial creativity is the institutionally and historically imposed tradition of thinking in silos, and thinking that industries have boundaries. Universities have their faculty departments and corporations have their divisions, and they tend to put silos around thinking. But the Elon Musk example of batteries + software + A.I. crosses industry boundaries, technology boundaries, performance boundaries, and financial boundaries. Boundary-less thinking can open up endless new possibilities. Entrepreneurial economics teaches the re-combination of assets, not necessarily the creation of new ones. Busting silos can lead to new combinations. 3) Forecast the exponential. Where in your frame will exponential change occur? Use your imagination to try to forecast it. The future can't be predicted but it can be imagined. The challenge is to imagine the next fold of the paper and the next one and the next one; and the next combination of two or three or four or more new technologies. The idea of the exponential can be applied everywhere. Additional Resources "Value Then vs. Value Now" (PDF): Mises.org/E4E_89_PDF Purchase Jeff Booth's book, The Price of Tomorrow: Why Deflation is the Key to an Abundant Future: Mises.org/E4E_89_Book

Key Takeaways and Indicated Actions Bob Luddy is founder and CEO of CaptiveAire (CaptiveAire.com), the US market leader in commercial kitchen ventilation systems. It's a $500MM+ business with 1,000+ employees and a 40+-year success record. Bob explains to Economics tor Entrepreneurs how these principles of Austrian economics, applied as active processes, played a part. Say's Law Say's Law is a fundamental proposition in support of a production-driven market system as opposed to a consumption-driven view. It's quite difficult to interpret and pithy summaries like “production creates its own demand” and “production precedes demand” don't help entrepreneurs very much. Bob Luddy doesn't interpret, he applies. His application formula is this: new supply that is brought to market can solve problems that have not so far been solved. In that case, demand will result. He gave this example: in the 1980s, many of the harmful effluents from cooking in a restaurant were escaping into the kitchen and sometimes even into the dining room. Those effluents could contain carcinogens, and at the very least, they're very unpleasant. That was a problem – but it was the status quo. So Bob thought, in Say's Law mode: if CaptiveAire could solve that problem, and bring the solution to market at an acceptable price, demand (i.e., lots of customers) would follow. That turned out to be exactly right. Implied in this formula, of course, is attention to market signals regarding unsolved problems, a problem-solution design process, and a communications and customer interaction capability to inform the market of the new solution. Say's Law applies, but not in isolation from other entrepreneurial actions. Those actions, Bob tells us, include accuracy and completeness in solving the problem, since many competitors may be trying to address it at the same time. Small details can make a big difference in applying Say's Law. Subjective Value Many podcast listeners have asked whether the concept of subjective value — which holds that it is the subjective and emotional evaluation by customers of an entrepreneurial offering that determines its market acceptance – applies equally in B2B markets as in B2C markets. Isn't subjective value more relevant to consumers' choices of fashion and food than it is to business customers' choice of service es from vendors and suppliers? Bob's response: The subjectivity of value is very, very clear, and it's reinforced in the market every single day. He used the example of bringing an integrated ventilation system to a restaurant. CaptiveAire might be successful in explaining all of the problems it's going to solve, its sustainability, and all relevant features and functions. Completion of a sale still comes down to the user subjectively assessing the exchange value, by asking “Am I willing to pay X amount of money to solve these problems?” The customer very well could say, "No, I'd rather live with some of the problems and depart with that much money.” Bob emphasized the importance of communications in addressing the challenges raised in calibrating subjective value appraisal. A strategy of “solving all the problems” requires clear communications to the customer of how CaptiveAire solves the problems, so that the user can make a fully-informed decision. “If we don't communicate well, the value of the product in the user's mind may be lower. So part of the issue of getting a higher subjectivity of value is to have a full understanding of what the product does.” Clear communication is a component of value. Comparative Advantage There's a big difference between competitive advantage and comparative advantage. Bob explains it this way: competitive advantage lies in striving to provide the same service and same solution in a better way than a competitor. Such an advantage may be achievable from time to time, but it is temporary and quite easily taken away by a hard working competitor. The market signals are clear and unobscured, telling the competitor where they must improve and the incentives to do so are compelling. No competitive advantage is sustainable over the long term. Comparative advantage is different. It's an unmatched capability, often built over time by accumulating unique knowledge and experience and applying them in a unique capital structure. Such an advantage is longer term, maybe not absolutely invincible, but very hard to overcome. Bob cited an example outside of his field: winemaking in Napa Valley, California. “If you decided you wanted to make wine and compete with Napa Valley, it's going to be a hard way to go.” In the case of CapitveAire, “over time, we've been able to develop those design technologies, techniques, automated equipment and software, and when you marry all those things together and you integrate them, we gain a major comparative advantage. It's very hard to overcome because it's not one thing. It's many things, and they're all well thought out and have been developed over a number of years.” Bob refers to on important element of CaptiveAire's comparative advantage as “technique”. An example is “bending metal in real time and dynamically stacking it right up on the assembly line”, resulting in elimination of inventory, and very rapid turnaround time. It's CaptiveAire's unique methodology, developed over many years. Competitors can attempt to emulate but they fail. It's a comparative advantage. Opportunity Cost The cost of any choice or decision includes its opportunity cost: what option must be declined or given up in order to make the choice you prefer. Bob explains: Understanding opportunity costs means turning down opportunities that would divert resources, and, instead, focus on getting the best utilization out of your human resources possible, and making the most sustainable solutions, which are going to save time and money over a period of time. We make 10 major categories of products. No more. To keep those products at the right price, at a high level of performance and sustainability requires all of our time. So if we divert any of that time, opportunity costs might result in us failing at our most primary mission. He gave the example of a line of business that required extensive customization. The benefit of customization is that each customer feels that they enjoy unique value. The opportunity cost is that it's impossible to be all things to all people — it absorbs too much time and too many resources. CaptiveAire addressed the opportunity cost problem by replacing customization with software-enabled adjustability of certain key inputs like voltage and phase. They found that this solution could effectively address 95% of customer-requested flexibility. While competitors asked, “Just tell us what you want, we'll figure it out” and spent resources on responding, CaptiveAire was able to stay focused on its core mission and core products and services. Every opportunity that comes a firm's way must be examined through the lens of opportunity cost. Austrians see opportunity cost as an active process — the same way they see value and resource allocation and pricing and many other elements of business. Pricing Pricing is a discovery process. At the same time, it's an element of business strategy. Bob made a strategic decision at the outset to price “lower than the market,” while aiming for highest quality. The market informs CaptiveAire of what the pricing norm is, and therefore what “lower than the market” is. The discovery part is: how low to go to maximize unit sales and revenues. The second part of Austrian pricing theory is that producers choose their own costs. Bob chose to seek ways to keep costs low enough to sustain his pricing and quality strategy, which led him to the efficiencies, automation, speed, inventory-reduction, high technology, and opportunity-cost sensitivity that characterize CaptiveAire. Price, cost, and profit are integrated in a strategic formula that's tested every day by the customer's willingness to pay the price of high quality. Additional Resources "Bob Luddy's Effectuation Process" (PDF): Mises.org/E4E_84_PDF1 "Five Active And Integrated Processes Of Austrian Economics" (PDF): Mises.org/E4E_84_PDF2 Entrepreneurial Life: The Path From Startup to Market Leader by Bob Luddy: Mises.org/E4E_84_Book

Key Takeaways and Indicated Actions Bob Luddy is founder and CEO of CaptiveAire (CaptiveAire.com), the US market leader in commercial kitchen ventilation systems. It's a $500MM+ business with 1,000+ employees and a 40+-year success record. Bob explains to Economics tor Entrepreneurs how these principles of Austrian economics, applied as active processes, played a part. Say's Law Say's Law is a fundamental proposition in support of a production-driven market system as opposed to a consumption-driven view. It's quite difficult to interpret and pithy summaries like “production creates its own demand” and “production precedes demand” don't help entrepreneurs very much. Bob Luddy doesn't interpret, he applies. His application formula is this: new supply that is brought to market can solve problems that have not so far been solved. In that case, demand will result. He gave this example: in the 1980s, many of the harmful effluents from cooking in a restaurant were escaping into the kitchen and sometimes even into the dining room. Those effluents could contain carcinogens, and at the very least, they're very unpleasant. That was a problem – but it was the status quo. So Bob thought, in Say's Law mode: if CaptiveAire could solve that problem, and bring the solution to market at an acceptable price, demand (i.e., lots of customers) would follow. That turned out to be exactly right. Implied in this formula, of course, is attention to market signals regarding unsolved problems, a problem-solution design process, and a communications and customer interaction capability to inform the market of the new solution. Say's Law applies, but not in isolation from other entrepreneurial actions. Those actions, Bob tells us, include accuracy and completeness in solving the problem, since many competitors may be trying to address it at the same time. Small details can make a big difference in applying Say's Law. Subjective Value Many podcast listeners have asked whether the concept of subjective value — which holds that it is the subjective and emotional evaluation by customers of an entrepreneurial offering that determines its market acceptance – applies equally in B2B markets as in B2C markets. Isn't subjective value more relevant to consumers' choices of fashion and food than it is to business customers' choice of service es from vendors and suppliers? Bob's response: The subjectivity of value is very, very clear, and it's reinforced in the market every single day. He used the example of bringing an integrated ventilation system to a restaurant. CaptiveAire might be successful in explaining all of the problems it's going to solve, its sustainability, and all relevant features and functions. Completion of a sale still comes down to the user subjectively assessing the exchange value, by asking “Am I willing to pay X amount of money to solve these problems?” The customer very well could say, "No, I'd rather live with some of the problems and depart with that much money.” Bob emphasized the importance of communications in addressing the challenges raised in calibrating subjective value appraisal. A strategy of “solving all the problems” requires clear communications to the customer of how CaptiveAire solves the problems, so that the user can make a fully-informed decision. “If we don't communicate well, the value of the product in the user's mind may be lower. So part of the issue of getting a higher subjectivity of value is to have a full understanding of what the product does.” Clear communication is a component of value. Comparative Advantage There's a big difference between competitive advantage and comparative advantage. Bob explains it this way: competitive advantage lies in striving to provide the same service and same solution in a better way than a competitor. Such an advantage may be achievable from time to time, but it is temporary and quite easily taken away by a hard working competitor. The market signals are clear and unobscured, telling the competitor where they must improve and the incentives to do so are compelling. No competitive advantage is sustainable over the long term. Comparative advantage is different. It's an unmatched capability, often built over time by accumulating unique knowledge and experience and applying them in a unique capital structure. Such an advantage is longer term, maybe not absolutely invincible, but very hard to overcome. Bob cited an example outside of his field: winemaking in Napa Valley, California. “If you decided you wanted to make wine and compete with Napa Valley, it's going to be a hard way to go.” In the case of CapitveAire, “over time, we've been able to develop those design technologies, techniques, automated equipment and software, and when you marry all those things together and you integrate them, we gain a major comparative advantage. It's very hard to overcome because it's not one thing. It's many things, and they're all well thought out and have been developed over a number of years.” Bob refers to on important element of CaptiveAire's comparative advantage as “technique”. An example is “bending metal in real time and dynamically stacking it right up on the assembly line”, resulting in elimination of inventory, and very rapid turnaround time. It's CaptiveAire's unique methodology, developed over many years. Competitors can attempt to emulate but they fail. It's a comparative advantage. Opportunity Cost The cost of any choice or decision includes its opportunity cost: what option must be declined or given up in order to make the choice you prefer. Bob explains: Understanding opportunity costs means turning down opportunities that would divert resources, and, instead, focus on getting the best utilization out of your human resources possible, and making the most sustainable solutions, which are going to save time and money over a period of time. We make 10 major categories of products. No more. To keep those products at the right price, at a high level of performance and sustainability requires all of our time. So if we divert any of that time, opportunity costs might result in us failing at our most primary mission. He gave the example of a line of business that required extensive customization. The benefit of customization is that each customer feels that they enjoy unique value. The opportunity cost is that it's impossible to be all things to all people — it absorbs too much time and too many resources. CaptiveAire addressed the opportunity cost problem by replacing customization with software-enabled adjustability of certain key inputs like voltage and phase. They found that this solution could effectively address 95% of customer-requested flexibility. While competitors asked, “Just tell us what you want, we'll figure it out” and spent resources on responding, CaptiveAire was able to stay focused on its core mission and core products and services. Every opportunity that comes a firm's way must be examined through the lens of opportunity cost. Austrians see opportunity cost as an active process — the same way they see value and resource allocation and pricing and many other elements of business. Pricing Pricing is a discovery process. At the same time, it's an element of business strategy. Bob made a strategic decision at the outset to price “lower than the market,” while aiming for highest quality. The market informs CaptiveAire of what the pricing norm is, and therefore what “lower than the market” is. The discovery part is: how low to go to maximize unit sales and revenues. The second part of Austrian pricing theory is that producers choose their own costs. Bob chose to seek ways to keep costs low enough to sustain his pricing and quality strategy, which led him to the efficiencies, automation, speed, inventory-reduction, high technology, and opportunity-cost sensitivity that characterize CaptiveAire. Price, cost, and profit are integrated in a strategic formula that's tested every day by the customer's willingness to pay the price of high quality. Additional Resources "Bob Luddy's Effectuation Process" (PDF): Mises.org/E4E_84_PDF1 "Five Active And Integrated Processes Of Austrian Economics" (PDF): Mises.org/E4E_84_PDF2 Entrepreneurial Life: The Path From Startup to Market Leader by Bob Luddy: Mises.org/E4E_84_Book

This episode is part history of kaizen, part interview with Mr. Robert Luddy, about how he incorporates this philosophy of continuous improvement into the culture at CaptiveAire and Thales Academy.

Robert Luddy, founder and CEO of CaptiveAire Systems and Thales Academy, speaks about the habits of entrepreneurship and the lessons he's learned in founding, running, and building his own business.

The Henry Hazlitt Memorial Lecture, sponsored by Hunter Lewis. Recorded at the Mises Institute on March 22, 2019. Includes an introduction by Joseph T. Salerno. The Austrian Economics Research Conference is the international, interdisciplinary meeting of the Austrian School, bringing together leading scholars doing research in this vibrant and influential intellectual tradition. The conference is hosted by the Mises Institute at its campus in Auburn, Alabama, and is directed by Joseph Salerno, professor of economics at Pace University and academic vice president of the Mises Institute. Lecture Text: In 1946, a book named Economics in One Lesson was written by a man who did not think it would have a great impact beyond the economic fallacies of his day. That amazing man was Henry Hazlitt. Now over one million copies have been sold and it remains in print. It is a personal honor to lecture about Hazlitt: He is one of my favorite writers on economics, political economy, and ethics. Economics in One Lesson, which was based in part on Bastiat's essay, “What Is Seen and What Is Not Seen,” debunks the most prominent economic fallacies of the past and the present, summing up economics as long-term versus ephemeral thinking. He wrote more than twenty books and was the principal editorial writer on finance and economics for The New York Times for twelve years and a columnist for Newsweek for twenty years. More importantly, his writing was thoughtful, incisive, and influential, and he played a significant role in supporting, introducing, and explaining the ideas of Mises and also Hayek. He is a stellar example of the impact one person can have on our society. My mentor, Dr. Bill Peterson (a student and colleague of Mises) and his wife Mary were good friends of Hazlitt, so although I never met Henry, I did receive first-hand knowledge of his life and work from the Petersons. I am thankful to Laura Bennett Peterson, Bill and Mary Peterson's daughter, for assisting me with this lecture. Laura grew up knowing Hazlitt and she has been exceptionally helpful with her knowledge and insights about him. Dr. Peterson was very complimentary of Hazlitt's writing and personal courage, especially when he opposed the Bretton Woods agreement. Hazlitt knew Bretton Woods would cause inflation. The New York Times had no interest in criticizing this agreement, and that sent Hazlitt looking for a new job. Hulsmann indicates in Mises: The Last Knight of Liberalism that Hazlitt may have been one of Mises' first close American friends. In 1940, Hazlitt received a call from “Mises speaking,” and he described the encounter as if “John Stuart Mill were speaking.” This was the beginning of a long-term friendship between Hazlitt and Mises. By explaining economic theory, Hazlitt enabled many entrepreneurs to think clearly and correctly. Most of the time the world promotes compliance with existing ideas and punishes critical thinking and new ideas. This was Germany's mentality in the early 20th century, Mises was treated miserably because of what he thought; this is common today. Profound thinkers are rarely appreciated and often scorned. Today we are witnessing this in our universities, which were created for thinkers but now suppress original thoughts. This talk focuses on three of Hazlitt's central concerns: His book, The Foundations of Morality, established a high standard of morality. Current events demonstrate a widespread lack of morality in our society.His book, Thinking as a Science, elevates thinking to a new level. Today everyone is “thinking outside of the box.” The problem is, most people are not thinking most of the time.His book, Economics in One Lesson, introduces us to classical-liberal thinking, which is foreign to most Americans He wisely pointed out, along with Mises, that economics “is a description, explanation, or analysis of the determinants, consequences, and implications of human action and human choice.” Hazlitt's economic thinking is thus grounded on human behavior. The recent gyrations of the stock market, based on fears of tariffs or higher interest rates, illustrate how markets react in real time to the effects of current policies. Hazlitt was a giant in financial journalism, as noted in Jim Grant's Hazlitt lecture. But Hazlitt was also a public intellectual with unique insights on morality, thinking, and political economy. We will begin with Hazlitt's understanding of morality as embodying long-term thinking, his foundational theme. This is his most powerful message. Morality For Hazlitt, “morality is essentially, not the subordination of the ‘individual' to ‘society' but the subordination of immediate objectives to long-term ones.” Hazlitt realized that the long-term interests of the individual would serve the long-term interests of society. The long-term interests of the individual depend on social cooperation, as Hazlitt points out: “Social cooperation is the foremost means by which the majority of us attain most of our ends.” (The Foundations of Morality, 13) CAS stresses cooperation as the primary way we can progress as a company. It can be challenging and requires humility. We witness the parade of lobbyists seeking government favors: lobbyists from GM, the U.S. steel industry and Tesla, to name just a few. I might add our universities to this list, since the federal government helps to fund their excessive spending. These companies and institutions are rent seekers and tariff promoters. German and Asian automakers, which also manufacture in America, received no bailouts and don't want tariffs. In fact, BMW exports 75 percent of the SUVs it makes in South Carolina. Hazlitt reminds us to let the market decide, as “dying industries absorb labor and capital that should be released for growing industries.” Hazlitt believed that bailouts and tariffs are short-term solutions to long-term industry problems. Hazlitt's concept of morality can be summed up in two of his own sentences: “The conduct we call moral is the conduct we consider likely to lead to the most satisfactory situation in the long run.” And “immoral action is nearly always short-sighted action.” These important principles are lost on our society today. The challenge for entrepreneurs: We must focus on the long term in spite of tremendous pressure to think only over the short term. Markets are very competitive, and sometimes promote short-term thinking and solutions. But we know, short-term decisions can be very costly in the long run. It is imperative to teacher our students about Hazlitt. Many domestic steel manufacturers raised prices over this past year even higher than the steel tariffs. It did not work, Users take notice and take action. In the long term our domestic steel industry will be harmed by tariffs. This is human action in the marketplace. We are witnessing a parade of successful entrepreneurs, as well as leaders in all walks of life, fall from grace because they lacked morality. These individuals may have brilliant ideas, but they lost sight of the long term and failed to learn Hazlitt's most important lesson on morality: High integrity is required for the sustainability of an enterprise over the long term. Our society promotes and praises loud and unethical leaders such as Elizabeth Holmes, Elon Musk, but companies and investors suffer. Companies suffer because of these unethical individuals in charge: think of VW, Lehman Brothers, Tesla, and now Boeing. Conversely, Warren Buffet is not an Austrian Economist but he is an excellent investor, capital allocator has an exceptional reputation for honesty and became rich in the long run. Companies and Investors flock to him. The market requires moral leaders because the market cannot function without integrity. In addition to morality, Hazlitt makes the need for freedom very clear: This freedom applies to entrepreneurs: In order to have the freedom to succeed, we must have the freedom to fail. For Hazlitt, capitalism allows for freedom, It does not hinder freedom: Modern capitalism is not an inevitable or inescapable system but one that has been chosen by Americans. It is a system of freedom. In America, some 300 million people produce 24 percent of the world's goods. America leads the world in innovation, which is the essence of American exceptionalism. Too Many countries undermine freedom and the results are clear. The EU has slow growth and high unemployment. In Venezuela, freedom is denied to the point of starvation. There is concern that the free market creates inequities and failures. But Hazlitt points out that “a free-market system tends to give to every social group, and to every individual within each group, the value of what it or he has contributed to production.” Hazlitt sums it up perfectly. Socialists refuse to understand free markets. They fail to see that production is based on incentives, not coercion. Some politicians live off the fat of the land but hate producers, freedom and success. It would be entertaining to read what Hazlitt might write about the lunacy of the Green New Deal and massive government debt. Successful businesses must have a strong record of morality and must think long term to survive in a competitive marketplace. The CEO of Boeing would probably affirm this statement, at least right now. Unfortunately, Boeing's marketing group convinced the FAA the 737 Max was the same as the old reliable 737. This wasn't true. Even many pilots were not aware of the complexity of the new MCAS software. The FAA did not understand the new Boeing technology, so why are they regulating. The 737 Max's software relied on a single sensor, which failed. Some important safety features were sold as “options,” not standard equipment. Those options weren't chosen by Lion Air or Ethiopian Air, but you can count on them being standard in the future. Internal concerns from Boeing engineers and pilots' reports to the NASA system were ignored. Why? Boeing was focusing on competing with Airbus, which had the lead; morality and long-term thinking be damned. No one will ever think of Boeing in the same way and there could be criminal as well as civil liability. Lesson learned: One must bear in mind, as Hazlitt taught, the long-term consequences of conduct. Industries must be 100 % responsible 100 % of the time. Thinking H. L. Mencken described Hazlitt as "one of the few economists in human history who could really write." Hazlitt wrote well because he thought well. Hazlitt, affirms in his book, Thinking as A Science, that most people are not thinkers. I love Hazlitt's observation that if there is a problem and a solution is needed, “They want to look it up.”In today's world, they'd want to “Google it.” Too many of our educational institutions are propaganda centers and not cultivators of thinking people. Many institutions suppress thinkers and demand compliance with politically correct, non-thinking popular culture, which undermines an entrepreneurial America. I often tell our students and our interns: How you think will determine your future. Good thinking and cooperation are critical to making progress in life. Hazlitt was a great thinker by analyzing the long-term consequences of economic policies, such as tariffs and monetary and fiscal policy. He knew that our thinking will have major consequences, for good or evil. His book, The Failure of the New Economics, masterfully refutes Lord Keynes's General Theory by showing Keynes's theories as nothing more than bad thinking. Two great thinkers in the 20th century were the Wright brothers. The Wright brothers were successful in flight because they visualized the need for “suitable controls” to balance the plane once it is in the air. Our government sponsored Samuel Langley who failed to realize the need for suitable controls in flight. The Wright Brothers took no government money, they are a perfect future model for Entrepreneurs. Thinking ability is the greatest single advantage of the entrepreneur. “The greatest resource,” as Julian Simon put it, “is the human mind.” Thinkers in business applied the principles of “exit” and disruption. Think of technologist Balaji Srinivasin in genomics and mobile money, and of UBER, Airbnb, and self-driving cars. Harvard business professor Clayton Christensen is among those who have studied old industries that were disrupted by new companies with a better approach. Nucor Steel, an upstart in 1960 with its minimills, is now the largest steel company in the U.S. Our only task as entrepreneurs is to serve the user. CaptiveAire thinks in the long-term, continuously. Even with the steel tariffs in effect since 2018, CaptiveAire has refused to raise prices beyond our normal level. We gain market share because we think long-term, and we generate profits by always putting our users' interests first. We witness short-term ideas and fallacious claims every day. Socialism is being sold hard as a solution to a problem that does not exist in America.There is a Green New Deal to save our planet, which is doing pretty well.Debt and deficits do not matter, as long as interest rates are low. Congress does not even attempt to balance the budget.Free trade is portrayed as the enemy of prosperity but in fact it has made us rich. Hayek in The Road to Serfdom described those who would “buy” such fallacious claims as the gullible. Problems and solutions must be well-thought out and understood before changes are made. Good decisions require real thinking, which is hard and time-consuming.. Yet without good thinking, the consequences may be catastrophic. Long-Term Economics Hazlitt sets a clear path for entrepreneurs who think long term. The entrepreneur must make the hard decisions at the right time, based on the known facts that are often sparse in the creative world. In 1978, when we began making kitchen ventilation hoods, the machines to create more hoods faster did not exist… In 1983, the computerized hydraulic-press brakes we needed were invented by Darley in Holland. This technology revolutionized the sheet metal industry. Hydraulic-press brakes increased productivity four times and the now fully-automated machines produce eight times what they did in 1982. In 1988, international alloy prices were spiking, causing stainless steel prices to increase dramatically. My solution was to find an stainless steel product less vulnerable to volatile alloy price spikes. CaptiveAire adopted two important changes that transformed the industry: We light-weighted Commercial hoods, saving 20% of the metal.We changed the standard from 304 to 430 stainless steel, saving another 20%. In 2008, most of the food service industry adopted our 1988 standards using 430 metal when possible. CaptiveAire was a little-known manufacturer with sales of nine million dollars in 1988. These and other decisions propelled us to a half-billion dollars in sales last year. Changes are risky, but the long-term outcome was that CaptiveAire became the leading producer of commercial kitchen hoods in North America. In 1925, Treasury Secretary Andrew Mellon and President Calvin Coolidge applied a supposedly “scientific” method in determining the marginal federal income tax rate. They chose 25 percent. The decreased income tax rate helped America to enjoy the Roaring Twenties' economy. After the stock market crashed in 1929, Hoover prolonged the Great Depression by raising the marginal rate to 63 %. Tariffs averaged 40 % with the Smoot-Hawley Act. Hazlitt clearly describes the tax dilemma: When the total tax burden grows beyond a bearable size, the problem of devising taxes that will not discourage and disrupt production becomes insoluble. Hazlitt cautioned that tariffs do not raise the standard of living; they have the opposite effect, which we witness today. Tariffs are self-inflicted wounds and the current trade wars are slowing economic growth here and abroad. Growth is slowing internationally because of tariffs. On free trade, Hazlitt quotes Adam Smith: In every country it always is and must be the interest of the great body of people to buy whatever they want of those who sell the cheapest. Free trade should be intuitive, especially with the example of the 50 American states, which comprise the largest unilateral free-trade zone in history. But despite the value of free trade, large numbers of Americans believe tariffs raise our standard of living and create jobs. The steel tariffs under President George W. Bush were meant to help American steel companies, but ended up hurting even more companies and causing the loss of 200 thousand jobs in industries using steel. This exemplifies how a short-sighted policy hurts entire industries in the long term. Hazlitt's long-term approach is imperative for America. Three things we desperately need to think about in regard to the long term are: Eliminating fiscal deficitsEducating our childrenFocus on integrity to the market place, not special interests. These policies would greatly benefit our economy: The more the deficit Reducing Government spending allows more investment capital, allocated by entrepreneurs not government. The better our students are educated, the more productive our workforce will be. U.S. K-12 public schools are one of the largest monopolies in history. Costs are high, quality is low, discipline and character formation are gone. In America's public schools, you don't get what you pay for. In 2007, I opened a private K-12 chain of private schools named The Thales Academy. Hazlitt's morality, thinking, and long-term outcomes formed our philosophy. The Thales standard is the highest possible academic quality and character formation for each student at the lowest possible cost. The cost for K-5 is $ 5,000.00 per year and has not changed since the founding. Today we have 8 campuses and 3,100 students. My goal is to grow Thales to 25,000 students as an example of what can be done. The Thales model is changing the way parents think of K-12 education. One important lesson I have learned, which is contrary to conventional wisdom, is that it takes a very long time to establish a great company. And the process never ends! Individuals, companies, and our government must think about the long-term effects of their actions. Conclusion: Why Hazlitt Matters for the Entrepreneur Hazlitt states that an entrepreneur is "a capitalist willing to take unusual risks." His theories of morality and long-term economics are found in every story of a successful entrepreneur. When an entrepreneur is able to achieve excellence, society is benefited as a whole. However, the entrepreneur can only achieve excellence when freedom prevails. Calls for the government to provide its citizens with every necessity, whim, and craving lead to chaos. Venezuela is a leading example of this. This is why the moral entrepreneur is critical to the market: He is not concerned with garnering the most rights for himself, but rather gaining the most customers by serving. Hazlitt explains, “the rules of morality are those rules of conduct that tend most to increase human cooperation, happiness and well-being” The entrepreneur's morality directly correlates with society's well-being; the job is never done for entrepreneurs and economists. Hazlitt never went to college: his thoughts were not dependent on what he already knew, but rather on trying to explore things he did not know. Edwin Land affirmed this way of learning and thinking when he said: “Creativity begins at the edge of the known.” This is how successful entrepreneurs operate: They make guesses and take risks off of the edge of what they already know. They apply their thinking skills to make the best possible decisions using the information they have today to positively influence the long-term future. My Message to entrepreneurs: Maintain humility in realizing that you don't and can't know everything. In the words of Dr. Bill Peterson, “None of us get it all right.” No matter how much you know, it will always be a fraction of what is already known. In the 40 plus years that CaptiveAire has existed, we have made many mistakes but our policy is that if we are wrong, we pay the price, not our users. In 2016, we designed a new leading-edge Roof Top Heating and Cooling unit for commercial buildings. This new technology uses a modulating compressor so it's very efficient and can provide 100 % outside fresh air to buildings. We learned from past errors and elected to have a three-year BETA testing of this product. We know we are 100 % responsible for the performance of this product for the next 20 plus years. Hazlitt's long term philosophy does work in the market and it fact this is how the market works. Entrepreneurs aggressively seek new knowledge and rethink everything: they carry the torch of Hazlitt. We live at a time where Entrepreneurs & Producers are the villains and the heroes are the Government and Politicians. I quote Bill Peterson: “Entrepreneurs are every bit the heroes of our society.” I might add, the takers are the real villains. As we witness rallies and hear cheers for the short-term economic policies, we must think of the long-term to achieve the American dream. Hazlitt, Mises and Hayek lived in more challenging times, but our society is on the road to Serfdom unless the Austrian School prevails; as economic illiteracy rules the day. Hazlitt's morality through long-term thinking is hard to sell to the public because Human Nature lives in the present and wants it now. Our country's foundation is being shaken by the lack of and therefore it is imperative that we integrate long-term thinking into our homes, our schools, our places of work. I challenge you to take up the mantle of Hazlitt and be a courageous writer, debater and teacher of morality and long-term thinking. We could use an army of Hazlitts today: men and women of courage and wisdom, who are unafraid to speak and write the truth. I conclude with Hazlitt's words. The times call for courage. The times call for hard work. But if the demands are high, it is because the stakes are even higher. They are nothing less than the future of liberty, which means the future of civilization.

It's a fallacy for an entrepreneur to believe in chasing the biggest possible audience or the largest possible market. Why? Because your business will get pulled in the direction of “all things to all people”, and you may end up pleasing none. The opposite rule applies: identify and gather specialized knowledge, and apply it in a specialized market to a select group of customers. Aim to be the best in your specialization. To do so requires discipline, application, and—as we discovered when we talked to Bob Luddy—time. Bob is the founder and CEO of CaptiveAire, a business specializing in commercial kitchen ventilation systems. It's a fast growing business, now generating hundreds of millions of dollars in revenue and hailed by its customers as best-in-class. It didn't get there overnight, and it didn't get there without some difficult moments along the way. Bob shares his experience with us on Economics For Entrepreneurs. Show Notes Bob Luddy's case history represents an approach to starting an entrepreneurial business that is sometimes called Effectuation, illustrated in this handout. See also Bob's book, Entrepreneurial Life: The Path from Startup to Market Leader. Your first business may not be your ultimate business. Bob started in the fire suppression business. He aimed to be the best in that niche, but realized that there was a better opportunity in kitchen ventilation, so he made the switch. The new business was a slower build, but in a more fruitful market. He felt a positive tipping point in year 9. He obtained a commercial bank loan — prior to that he had been short on capital. Now he felt he could accelerate growth. That didn't mean he had “made it”, but that he was on slightly firmer footing. Nine years is a long time to find firmer footing — be patient! It takes a long time to build a great business. Patient specialization is a critical component of success. So-called “serial entrepreneurs” never spend enough time to be the best at the business they're engaged in. By being patient, Bob was able to identify weaknesses in the market on which he could capitalize: long lead-times (shorten them!), high prices (lower them!), imperfect performance (improve!), and poor service levels (invest in service!). These were innovations a new entrant could bring. Be the best in your specialization — not all things to all people. Bob's specialization methodology has been to create the highest industry standards for the products and services he sells, and then don't deviate. Don't make “wild” sales promises that are not standard. Keep to a tight range of products so as to drive down costs, and shorten execution times. Competitors who try to be “All things to all people” go out of business. Specialization is a basic economic concept that is key to success. Systems thinking brings growth to specialization. Thinking like a customer means systems thinking: what is the complete solution the customer is seeking? Specialization does not mean being a tiny piece of the solution. By integrating the entire system, you become more valuable to the customer. The future of entrepreneurship is in integrating systems, and defining integration is the job of the entrepreneur. A business can keep growing by advancing towards greater integration. Innovation is ephemeral — you never stop. Innovation is important, but don't think of it as an event. It's an activity that is continuous. Every single innovation will be competed away. You've just got to keep on doing it, and always be alert to new ideas, new combinations of existing ideas, and changes in customers wants and needs. All decisions are subject to re-evaluation. None of us gets it right every time. Most decisions are made with incomplete information. But that's necessary — an entrepreneur needs to make high velocity decisions. If they are wrong, own up to it, fix the consequences and re-evaluate based on new information. The purpose of a business is profit. With no profit, there is no business, no jobs for employees, and no innovation. Make profit in a fair and moral way. And make profit in the long term, not necessarily maximizing profit in the short term. Everyone — the whole society — benefits. Entrepreneurs don't plan: they execute a vision. Entrepreneurs have a vision they are working towards. They have aspirational goals for sales or revenues. But they know they can't plan the future. It's hard to plan a month or even a day, let alone five years. What they can do is execute with excellence. The key question is, did you get it done today? As the world of business closes in on real time, execution is primary. The winning entrepreneurial trait is brute determination. Sometimes, all you have is your own determination to succeed. You define what are the things that MUST be done, and you execute with no exceptions. Vision is good, but execution is hard. Doing the hard things, correctly and consistently, is what makes an entrepreneur. Additional Resource Bob Luddy's Effectuation Process (PDF): https://Mises.org/E4E_04_PDF

Bob Luddy is CEO of CaptiveAire.  CaptiveAire Systems is the largest privately held manufacturer of commercial kitchen ventilation systems in the U.S. Today Bob discusses with us his passion for entrepreneurship and education and how that led him to establish an innovative network of charter and private schools in and around Raleigh, NC.

CaptiveAire's commercial ventilation systems are putting the Raleigh-based company among the fastest growing in the country. Baseball legend Jim "catfish" Hunter is immortalized in a NC museum. John Manual talks about NC 's continuing role in baseball both locally & nationally. And Danbury offers outdoor enthusiasts a variety of opportunities to get back to nature.

Raleigh-based CaptiveAire's custom ventilation systems outfit commercial kitchens across the country. Project SEARCH provides work experience to students with developmental disabilities. Dr. Azra Shaikh has tips for all of us as we sniffle our way through allergy season.