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The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale



The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale PDF

Author: John A. List

Publisher: Currency

Genres:

Publish Date: February 1, 2022

ISBN-10: 0593239482

Pages: 288

File Type: PDF

Language: English

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Book Preface

t was never my plan to work for Uber. To be honest, it had never even occurred to me.
In the summer of 2016, I was busy with one of the most ambitious projects of my career. Six years earlier, alongside my teaching responsibilities in the Economics Department at the University of Chicago, I had led a team that opened a preschool for three- to five-year-olds that also functioned as a living research laboratory—a huge logistical and scientific endeavor I hadn’t planned on undertaking and didn’t exactly have the training for. While I had learned a few things raising five of my own kids, I had zero formal expertise in early childhood education. On the other hand, observing and studying people “in the wild” has been my lab for over thirty years now. And launching a preschool full of wonderful, crazy kids is as wild as it gets, albeit in a whole different sort of way.
Many people believe that the discipline of economics is all about money, or how capital flows through society. But my work as an economist doesn’t involve things like analyzing fiscal data or predicting stock market trends. My specialty is conducting fieldwork in behavioral economics, going out into the real world to study the hidden, often surprising motivations behind big and small decisions we make every day.
This was why Tom Amadio and other administrators of the school district of Chicago Heights had approached me several years earlier. They knew about experiments I had done incentivizing people to adopt all kinds of positive behaviors, so they wanted to see if I might have any ideas on how to incentivize teachers and students in ways that would improve the students’ performance. A town of close to thirty thousand people a half hour’s drive south of Chicago proper, Chicago Heights is a place society has left behind.

Boarded-up storefronts abound, and violent crime is disproportionately high compared to the rest of the United States. Today, over a quarter of the population lives below the poverty line, almost double the statewide average of 13 percent when I first visited Chicago Heights. Unsurprisingly, these economic disadvantages take their toll on children there. High school graduation rates are low, and many high-schoolers are at a third- or fourth-grade level in reading and math. And this, of course, excludes them from numerous future opportunities; life is an entirely different game without a high school diploma.
Eager to get involved in a project that sought to reverse these trends, I teamed up with economists Steven Levitt (of Freakonomics fame) and Sally Sadoff (my PhD student at the time) in early 2008. Thanks to a generous gift from the Kenneth and Anne Griffin Foundation, we got to work conducting experiments with students and teachers at a Chicago Heights high school. Sure enough, our interventions produced gains in achievement standards and test scores, yet the results weren’t as dramatic as we had hoped. We concluded that by working with high-schoolers we had missed a critical window in these kids’ development, during which we could have altered their life trajectories. Showing up so late left much of their potential on the table; in fact, it had already been lost, years earlier. In other words, we were dealing with the wrong student population to truly tackle this problem.
So we proposed starting our own preschool, which would double as an experimental research lab on childhood education and development. We once again received support from our angel donor—a whopping $10 million from the Griffin Foundation—and that is how the Chicago Heights Early Childhood Center (CHECC) was born.
By the spring of 2010, we were on to the next phase of our work in Chicago Heights, and were joined by Roland Fryer, then a rising star at Harvard who studied the impact of economic inequality on academic performance, and Anya Samek, a postdoctoral student of mine. From 2010 to 2014, our preschool served nearly 1,500 students annually. The bedrock of our four-year pedagogical experiment was a curriculum that emphasized important noncognitive skills that have been shown to have a profound impact on later success in life, such as socialization, active listening, and delayed gratification. Our curriculum of choice was called Tools of the Mind. Crucially, we also had created a new program called Parent Academy, which incentivized parents to involve themselves in their children’s early educational development in specific ways. Once the four years came to an end, we shuttered the school, as had always been our intent. But we continued collecting data on the children who had attended—and we plan to continue collecting these data for decades to come—to compare it against the performance of children who had the standard curriculum and whose parents did not receive any behavioral nudges from Parent Academy.
In other words, we had come up with a hypothesis about improving long-term outcomes for the children in Chicago Heights. We had designed a study to test it, and now we gathered and analyzed the results up to this point, which were quite impressive so far. “Our” kids were doing great and taking strong developmental strides. Ultimately, our goal was to take the key features of Tools of the Mind and combine them with our other findings to create a new curriculum model that we could expand to other communities in the United States, and even some abroad.
So in the midst of all this, when a recruitment officer from Uber called to explain that they wanted to interview me for the newly created position of chief economist, I dismissed the idea immediately. It would be one more set of responsibilities in my already jam-packed life. On top of the Chicago Heights research keeping me busy, I was about to remarry and would soon have a happy but frenzied new household full of eight kids, along with two grandparents. Plus, what did my research on early childhood education have to do with the pursuit of world domination by a ride-sharing company in Silicon Valley? The more I thought about it, however, the more I realized that my research project and Uber had one central goal in common.
Scale.
If you’ve spent any time around entrepreneurs, you’re probably aware that “scale” has become a bit of a buzzword in the business world, where it typically refers to the process of growing a company. But scaling isn’t just the domain of scrappy start-ups. It isn’t simply about accumulating more users or capturing more market share. Defined more broadly, “to scale” means to achieve a desired outcome when you take an idea from a small group—of customers, students, or citizens, for example—to a much larger one.
Through my research and time working with policymakers, my personal credo had become that the only ideas worth pursuing are the ones with the potential to make a significant impact on human lives. And translating an idea into widespread impact requires replicating it at scale. The urgency of scaling up important ideas and enterprises impacts us every day, whether it’s by protecting the health and safety of a community, improving the viability of a business, or enhancing the education and opportunities of a future generation, as I hoped to do in Chicago Heights by establishing a model that other school districts around the world might someday be able to implement.
Scale underlies all social and technological progress, since the innovations that change the world are those that reach the largest number of people. A social movement needs to scale to have an impact just as much as a new medical intervention does. But the scaling process isn’t simple; there are pitfalls every step of the way, from the moment the seed of an idea is planted to well after you’ve launched a project, and even once you’ve successfully replicated that project again and again. Yet it wasn’t until 2016 that I realized a secret had been hiding in plain sight in Chicago Heights: for several years, my research aimed at improving kids’ educational outcomes had also been a study on scaling—why it sometimes worked, while other times it didn’t. I wondered if working at Uber, a company that had managed to scale at lightning speed to some seventy countries and serve nearly 100 million customers, might reveal new insights that could be applied elsewhere.
I also knew that Uber had a whole lot of data, and for an economist like myself, big data isn’t just my bread and butter. It’s my professional playground. It was rumored that Uber even tracked the colors of customers’ residences, which side of the backseat men and women sit in, and the friendship networks among riders. I wondered what secrets about scaling lay buried in all of that information that I could translate into academic research. Pretty soon I began to think that maybe working for Uber wasn’t such an out-there idea after all. Also, I like a challenge, and the Uber recruiter had warned me that they had already interviewed several other economists for the position and none had made the cut, so I shouldn’t assume I would, either. So I flew from Chicago to San Francisco for the interview.
After walking through the doors of the sleek, muscular building on Market Street that housed Uber’s global headquarters at the time, I took the elevator up, and was promptly whisked into a conference room for my interview. That was when I noticed a slogan printed on pillars in Uber’s offices: Data is our DNA.
I had thought such reverence for data was reserved for the ivory tower. Had I died and gone to heaven? This was clearly a place where the people spoke my language. I could immediately tell that just on that floor alone there was more science going on than at your average company.
Then the interview started and I no longer felt so at home.
During my opening presentation, one of the five executives in the room wouldn’t stop interrupting me. He was a youngish guy, dressed in a T-shirt and jeans, with his hair beginning to show silver on the sides. After a few minutes, I realized it was Travis Kalanick, Uber’s thirty-nine-year-old founder.
Travis struck me as the most confident person I had ever met. Which made sense; after all, you don’t change the face of urban transportation worldwide and catapult a start-up to a valuation of $66 billion in a mere seven years if you aren’t confident in your ideas and, above all, your own instincts. He did have a charm to him, but nevertheless, he was making it hard for me to get through the PowerPoint slides I had carefully prepared.
As I talked about different studies I had done on loss aversion—a favorite concept of behavioral economists, one that explains why loss is such a powerful motivator for decision-making—Travis interjected to question my results seemingly every other minute, all the while pacing at the back of the conference room like a lion poised to pounce on its unwitting prey. I was beginning to see why previous economists hadn’t made it past the interview stage.
“That doesn’t make sense,” he said about an experiment I had done at a factory in China.


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