Levitt at DIFC: Build business to learn

Best-selling ‘Freakonomics' author Steve Levitt has told businesses in the Gulf to structure their businesses so they can improve their performance and make the right choices.

Speaking at the inaugural address of the Dubai International Finance Centre Week late on Saturday, Levitt said they businesses in general tend to have no idea how to obtain the correct information to base their operating choices on.

"Companies don't do nearly enough to collect information about how they run in order to improve the way they operate or earn profits," Levitt told the exclusive business audience in Dubai late on Saturday.

Levitt, who is also a Professor of Economics at the University of Chicago, proposed that even the simplest ideas on how to do business better can have a dramatic effort on profits.

"In life and business, many of the best ideas are the simplest ideas," Levitt said. "Most people are bound by the conventional wisdom that rules. When someone thinks differently, it (can) create innovation."

Levitt also proposed that companies change one element of how they do business, something which may not cost anything or very little, such as altering price and then monitoring the impact.

"The beauty of this kind of experiment is that just by doing their daily business, The company gets valuable information, and that's a lot cheaper than hiring a consulting firm," he added. "I think there are tremendous opportunities out there for experimentation and bringing feedback into businesses so that they can see how they are doing."

Levitt, who was visiting the Middle East for the first time, said Dubai had made gained an immediate advantage by innovating in business in the region.

"Being the first one is an enormous advantage - this is good news for Dubai," said Levitt. "If you can establish a foothold and become the destination, it's an advantage that may never be overcome."

He also praised the rule of law and property rights in Dubai, as well as its location, as being far more critical to economic development than democracy.

On the question of whether or not Dubai is going to create or import human capital, Leviit said that importing is naturally much easier.

"A lot of people believe that the single most important factor driving US growth in the 20th century was the free public education system and the way higher education was made available," he said.

"Sending your students abroad to the US, the UK and India may be the best way forward."

Please visit DIFCWeek for ArabianBusiness.com's exclusive coverage of the event.

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