How to make good ideas great and the scale of great ideals: “The tension effect”

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What do high-growth companies like Amazon, Microsoft, and Apple have in common? All of these companies started with just their founders working on their idea in their humble garages, to grow their market capitalization beyond the trillion dollar range in just a few decades. While each of these unicorns’ business trajectories is unique, their common secret sauce is to create products and services that scale.

According to data from the Bureau of Labor Statistics, nearly half of all businesses fail in their first year. And there are many reasons why a business can go bankrupt, including poor management, insufficient capital, or not a big enough market. An often overlooked reason for failure is over-expansion. This is because scaling is difficult. Really hard.

And it’s not just businesses that can have big problems. As many governments, research institutes and charities are painfully aware, a policy, study or campaign that works brilliantly in a particular market or demographic can fail miserably when it attempts to replicate the same success on a large scale. ladder. The COVID pandemic, for example, is a living testament to this, as evidenced by the largely successful vaccine deployment that has seen over 10 billion vaccines delivered across the world at lightning speed by WHO standards. industry, as well as the disappointing contact tracing program carried out by many of the countries.

Indeed, the road from local to global is paved with many pitfalls. Unless you watch your step, you could be badly bruised. But what are these pitfalls?

The Tension Effect: How to Make Great Ideas Big and Big Scale Ideas
List of John A.
Currency, 288 pages | Buy on Amazon

In his latest book, The Tension Effect: How to Make Great Ideas Big and Big Scale Ideas, John A. List, Kenneth C. Griffin Distinguished Service Professor in Economics at the University of Chicago, provides not only an overview of the major, but often underestimated, factors that can make or break business scaling. an idea, but also describes ways to supercharge it. It also explains the name of the book, the analogy being that evolving ideas – whether it’s a new government policy to improve learning outcomes, a wildlife conservation program to help to repopulate an endangered species or a new chain of restaurants – experience a ‘tension gain’ as they evolve, meaning it gets easier and easier as you grow. Meanwhile, ideas that fail to evolve suffer “surges,” operations becoming increasingly inefficient to the point of reaching inevitable collapse.

Professor List should know a thing or two about scaling. He served in the White House on the Council of Economic Advisers in the early 2000s during the Bush administration, where he designed policies that would produce the greatest positive impact on the greatest number of American citizens at a fair cost, but also as Chief Economist. from Uber and, later, Lyft – two startups that almost became an art form. This is in addition to the more than 200 studies published by List as a behavioral economist, studying what drives people to make the decisions they make, from Florida to Costa Rica or from Asia to Africa.

Many think that evolutionary ideas have a “quick fix” quality that makes them a hit, but as Professor List ably explains, that thinking is wrong. In the first part of the book, the author describes and develops the most important pitfalls that cause voltage drops when scaling an idea, called the five vital signs. These are: false positives, poor appreciation of the representativeness of a population or of an initial situation, repercussions and prohibitive costs. Along the way, you’ll learn, for example, how celebrity chef Jamie Oliver did whatever it took to expand his restaurant chain to more than a dozen countries and why it all fell apart when he changed its scaling recipe.

Part two discusses winning concepts that, when applied well, can lead to tension gain like a particle accelerator, including using the right incentives (the bread and butter of any behavioral economist), thinking marginal, scaling culture and knowing when it’s time to quit. a lost idea. That’s the way to make good ideas a big part.

It’s all deftly achieved thanks to List’s flair for compelling prose and storytelling. Reading this comprehensive book, I found myself turning page after page as I sifted through a lot of excellent research and case studies, many of which were personally implicated by Professor List.

Careful, complete and fun, The tension effect excels at turning a seemingly boring niche topic into a compelling book for everyone, from CEOs and policy makers to naturally curious people with a taste for learning how the economy shapes our lives in the real world.

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