The Future, This Week 29 June 2018

Disclaimer: We would like to advise that the following program contains real news, occasional philosophy and ideas that may offend some listeners.

Introduction: This is The Future, This Week on Sydney Business Insights. I'm Sandra Peter and I'm Kai Riemer. Every week we get together and look at the news of the week. We discuss technology, the future of business, the weird and the wonderful, and things that change the world. Okay let's start. Let's start.

Kai : Today on The Future, This Week: intrapreneurship, marshmallows and why it's so hard to recall an idea.

Sandra: I'm Sandra Peter, Director of Sydney Business Insights.

Kai : I'm Kai Riemer, professor at the business school and leader of the Digital Disruption Research Group. So Sandra, what happened in the future this week?

Sandra: Well actually a lot happened in the future this week, not least of which was we launched a report that the University of Sydney has prepared for the New South Wales Department of Education on the key implications for school education of artificial intelligence and other emerging transformations. It's part of the Future Frontiers series and it's called 'Preparing for the best and worst of times'.

And this was really a cross disciplinary effort within the University of Sydney bringing together not only business academics but also people from social sciences, from engineering, from psychology, from mental health, really looking at the impacts of artificial intelligence and automation and asking some really critical questions about what should we be teaching our students, how should we be thinking about the education system as a whole. And I don't want to pre-empt the findings of that report which we will include in the show notes because we have a special episode coming up just to talk about this very topic in detail. But one thing that was quite obvious to us was that some notions that we hold very dear in education and some concepts and theories quite often need to be rethought or recalled altogether and that sparked for the two of us a conversation around the number of articles we've seen over the past week that make this very case.

Kai : It is really uncanny that there should be a number of articles in a week or a two week period that all seemed to touch on the same topic but from very different angles so the overarching theme that we want to discuss across a number of articles today is the fact that ideas, theories, common wisdoms seems to linger on live on well past their due dates sometimes theories have been discredited, research has been debunked as fraudulent, theories are no longer valid because the world has moved on or we seem to have collectively agreed on common wisdom that on closer scrutiny doesn't hold up. Yet those ideas are very hard to recall.

Sandra: And they become entrenched not only in the courses that we teach in universities, maybe in our strategy courses but in the strategy of organisations in the way media uses them to analyse current events or current business practices.

Kai : Or indeed in undergraduate textbooks when the field has long recognised that a theory does no longer hold, those ideas seem to vanish much more slowly from the textbooks that are published for undergraduate students for example.

Sandra: The first such concept that we wonder discuss is the 'intrapreneur'. And our first article is from the Harvard Business Review - it's from a couple of days ago called 'The Myth of the intrapreneur'.

Kai : So the author argues that for quite a while now intrapreneurship has been a hyped topic. The idea of the individual inside established organisation who with through entrepreneurial creativity and innovation comes up with a market changing idea.

Sandra: And let's not forget we have some very popular examples. Everyone remembers the story of the post-it note that was developed at 3M through a mistake but then became one of their most valuable products. Facebook's "like" button has a similar story. The Sony Playstation...

Kai :...or indeed in Google with its famous 20 percent rule that gives employees the freedom to experiment which has given us gmail for example as initially a hobby project.

Sandra: So this term has been around since the 1980s, this is when intrapreneurship was coined and it's lived on in organisations and in strategy classes as really the holy grail of innovation within organisations. If you could just foster a culture where people would be encouraged to contribute their brilliant ideas to the organisation then all would be saved and we would all have innovative companies. These people are supposed to be the rule breakers, the rebels, the ones who stick out, who manage to single handedly change the fortunes of companies.

Kai : But the author goes on to say that their own research does not really support this. Yes we have high profile anecdotes of single individuals who change the course of their companies but by and large the author says this concept doesn't hold up. The evidence does not hold up. In most companies, those individuals would not ever find a fair hearing and he points to Kodak and the small group of engineers who invented digital photography and gave Kodak the patents for digital photography that famously Kodak never made use of because the company found it hard to recognise what they had in front of them and in the process indeed failed to latch on to the paradigm shift to digital photography more broadly.

Sandra: So the authors studied innovation through more than 600 interviews at Fortune 100 companies including places like G.E. and Pepsi and what they found out is that really this idea of the single individual and no matter how brilliant the individual is or how brilliant indeed the idea is never really comes through to deliver on the innovation promises that the intrapreneurship literature promotes.

Kai : And the reason for this is that large organisations per say are not very good at change and especially not at recognising and taking on board disruptive or revolutionary ideas because that's not what organisational structures in large organisations are built for, yet the idea of the intrapreneur is still very much alive. You can find it at conferences, in textbooks, in airport literature.

Sandra: As we've seen did the same excitement about things like internal incubators or innovation labs which quite often end up isolated from the rest of the organisation and really suffer from the same fate as the innovative entrepreneur. So the author really makes the case that for innovation to be game changing, for innovation to scale it really must be a company wide engagement and they go on to detail how that could be achieved.

Kai : And while you could argue that even that will be difficult when it comes to truly disruptive change, what we want to highlight is that even though this latest research finds that intrapreneurship might not hold up to empirical scrutiny that this is an idea that might make intuitive sense to us but does not really describe the reality of innovation in organisations. It will be very hard to actually debunk that myth and there's been a number of other studies this week that actually showed that.

Sandra: Indeed so we talked a bit about how it's hard to recall the idea of intrapreneurship. The other story again from the HBR this week was on why network effects matter less than they used to. And while with intrapreneurship we've seen one reason to retire an idea which is that we've conducted more research, we managed to better understand the phenomenon and the two actually find that there is no support or no grounding in larger studies. Retiring the idea of network effects is actually a bit more complicated. As I mentioned this article comes again from the HBR, from Catherine Tucker, and it asks us to reconsider this idea of network effects. And just to recap network effects are really used to describe these instances, this context where you have a good or a service whose benefit increases the more users it has. So think social media platforms.

Kai : Or tools such as Microsoft Word. The more people use the same platform the more you can exchange documents with others. Think about technology such as fax machines, if you are the only person with a fax machine it's pretty lonely. The more people adopt the service the more your own machine becomes valuable.

Sandra: And same thing theoretically with companies like AirBnB or Uber or Slack or Facebook or Instagram.

Kai : Which faced the additional network effect that the more customers on the platform, the more vendors will be attracted and vice versa. So network effects mean that the more the platform grows the more it becomes attractive which can lead to a self reinforcing effect and therefore drive growth. That's the idea and this is why it's so popular among entrepreneurs.

Sandra: So why this partial recall then of this idea of network effects? Because really network effects is one of those things that every MBA student studying strategy will have covered at some point, it's something that has been preached religiously out of Silicon Valley and beyond as this sort of silver bullet of strategy, that this is one thing that we can always rely on. And to be fair for a very long time we could. These network effects we could observe and companies have become extremely profitable based on these principles. So what has changed?

Kai : So the author says that it used to be that network effects could guarantee a company's success so the more users you had, the bigger the user base, the more compelling the proposition became for attracting new users. But the more services have become purely digital, the more it has become clear that it wasn't just network effects that were at work it was also the stickiness of the platform. So take iTunes for example. iTunes is big, it makes sense to adopt iTunes, many users are on iTunes. There's lots of vendors there. All the musicians are there. And when you then have all your music and all your MP3s in iTunes that pretty much used to be a grand tour of company success because who would forgo being able to listen to all this music or using it on the iPod when all the music was already in iTunes. But then the game changed because we had streaming and Spotify came along and devalued the stickiness of the platform and by exploiting network effects itself it became very big very quickly. So while network effects are still a good theory to explain the growth of a platform, the author makes the argument that in order to understand its ongoing sustained success we need other theories as well. So what has happened is now we are drawing new boundaries around the theory...

Sandra: And we are understanding differently the role that they play in conjunction with other competitive advantages or other strategies that a firm might employ. So whilst the idea of network effects used to sound like the magic bullet it no longer carries the same weight which again makes it very difficult to rethink concepts in business because we have infused them with a certain meaning and now that that meaning has shifted together with how businesses have evolved and how markets have changed how, industry structures have changed, it becomes increasingly difficult to attach new value or new meaning to these concepts especially in business.

Kai : And this is not the only article - HBR seems to be in the business of rethinking and recalling ideas this week.

Sandra: Yes indeed. One of the biggest ones to get recalled was the triple bottom line. This was an idea that was coined 25 years ago by John Elkington and he is actually the one who is calling for the recall. The article's titled: "25 years ago I coined the phrase triple bottom line. Here's why I'm giving up on it."

Kai : And for those listeners not familiar with the idea triple bottom line refers to a more holistic measurement of a company's impact and success not just in financial terms but also in social and environmental terms so the idea was that entrepreneurs, companies, corporates should measure their success equally in terms of financial, social, and environmental performance.

Sandra: Triple bottom line really has become part of the business lexicon and part of the vocabulary and the vernacular of every single business these days. The concept has been around as we've mentioned for 25 years and there have been various variations on the concept but it has been adopted both by organisations and by consultants and by accountants to really describe these days pretty much the activity of every single business. So why this recall?

Kai : Because John Elkington points out that the idea of triple bottom line has become immensely successful but it has been misappropriated as a mere accounting measure, as somewhat of a justification for companies to say we're not just financially successful, we are also keeping an eye on these other things, when indeed the author originally intended it to be a way to fundamentally rethink the system in which we do business as a way for capitalism to evolve, to take account of and really rethink the way in which business is being done so the recall happens because of the frustration of the author in that it has not achieved its original intention.

Sandra: So triple bottom line rather than delivering on its initial goal which was around systems change and really aren't rethinking systems has become pretty much an accounting system. Although some companies have actually managed to deliver on its original intent and the author mentions companies like Denmark's Novo Nordisk or Unilever which have actually delivered on the initial promise by and large the concept has been recruited to deliver on accounting practices hence the recall.

Kai : Now what we want to do is we want to ask the question: given that there's a lack of evidence for the ideas of intrapreneurship, network effects do not hold the same relevance that they once did. The author recalls triple bottom line because he says it has been misappropriated. What are the chances for these very popular and very widespread ideas to indeed be put back in their box, to be changed or to be rethought. And we want to look to the field of social psychology which has undergone a big crisis recently. We've heard a lot about the failure to replicate where a large number of studies that have done in experiments in the past sometimes 20, 30, or more years ago have been found to be unable to be replicated, where some studies have been found to be outright fraudulent, yet these ideas seem to be very sticky, they linger around, they are part of the popular vernacular, part of popular folk psychology but they are also still found in undergraduate textbooks so let's take a look at a few examples here.

Sandra: So from this large replicability crises in social psychology we want to first pick out one very famous study that's actually resurfaced in the news over the past two weeks and that is the marshmallow test. And this is something that has permeated from social psychology into a variety of domains from education to motivation to lifelong learning to predicting success. And it relies on research done back in the 1960s that looked at how long children were able to delay gratification.

Kai : So the article we're discussing is in the Los Angeles Times and for those of you not familiar with the tests it goes somewhat like this: a child between the ages of 3 and 5 is placed in front of a marshmallow and the child is asked to hold off on eating the marshmallow. And the longer the child can wait the more the reward will be and the child will get two or three marshmallows at the end and what the research did is look at how well those children who performed in the test were doing later in life and it was found that there is a strong correlation between children who were able to delay their gratification with the marshmallow and their success later in life. And the reasoning was that they would for example go and study, put off earning an income and instead invest in their education and therefore become more successful and that therefore the test would serve as an indicator of how people have this innate ability to delay gratification and therefore be more successful.

Sandra: The original study from the 1960s looked at these children down the line and, compared to the kids who ate the marshmallow straight away, the ones who managed to hold off got better test scores, had better coping skills, were less likely to abuse drugs, were less likely to be overweight, in general had better health and higher incomes. So for the past almost 60 years this study has underpinned our ideas of what determines long term success.

Kai : Even though a number of studies since have failed to actually replicate those results and people have come out and argued that it was indeed the sample of children originally used in the study and that is the children of colleagues in the university department that skewed the results because most children were from well-educated and affluent backgrounds.

Sandra: So the initial run of experiments only included one hundred and sixty five children from Stanford University families so a fairly homogenous group of people. The new study however conducted by a group of researchers now at Columbia University but includes the original author re-did the study with a much larger sample and actually failed to replicate the results.

Kai : What they did find however is that socio economic background of the children was a good predictor of both the ability to hold off on eating the marshmallow and success in later life and the explanation of course is that children who are used to getting treats and lollies in their daily life are easier able to delay eating the marshmallow than those for whom the marshmallow presented something quite special.

Sandra: So this would actually make for a really good recall of the marshmallow test because whilst we have debunked the idea that innate ability to delay gratification will make you more successful in life we have a better explanation for why some kids are better at this than not.

The problem however lies in the fact that yes we recalled it in academic journals but these notions are still very much part of undergraduate textbooks and of the ways in which we think about success in organisations or about success in society.

Kai : Which brings us to our last article in Vox which discusses the probably most surprising and crassest example of a study that has been debunked because it has been found to be outright fraudulent and we're talking about the very famous Stanford Prison Experiment. There has been a lot of work around this recently but also looking back we want to say there has always been a lot of criticism of this research which is nonetheless very widely known and also very famous for finding explanations for why people in the right circumstances become evil and engage in certain actions that are objectively morally wrong and that they would not have engaged in in any other circumstance.

Sandra: So let's recall the Stanford Prison Experiment which after all is one of the most famous and most compelling psychological studies. The study took place back in 1971 at Stanford University and the study pitched two groups of students against each other in what was supposed to be a mock prison so half of them got to be inmates and the other half of them got to be guards and got to enact what it would be like in a prison.

Kai : And the experiment famously got shut down after only a few days, way before it's intended two week duration, because guards started to supposedly abuse inmates to the point of psychological breakdown.

Sandra: So the authors had claimed at this point that actually evil is something that is brought out by circumstances and that under the right conditions anyone can become evil and commit things that they otherwise normally wouldn't.

Kai : So the base of the claim was that the guards on their own account just by way of being in the role of guards started to display abusive behaviours and prisoners by way of being incarcerated as prisoners submitted to their role and also started to really show the kind of signs of prisoners being abused.

Sandra: So since then the Stanford Prison Experiment was not only part of probably every single introductory psychology textbook but it also has been cited in media, in courts of law. It's been the subject of movies, of documentaries, of our interpretation of historical events such as the Holocaust or the torture at Abu Ghraib prison.

Kai : And we must say the results do make intuitive sense to us and they do also correspond to events such as Abu Ghraib so that's plausible but it turns out it's all been a lie and we don't want to go into all the details but we will put the links to the article and another article in Medium into the show notes which present a really fascinating piece of investigative journalism and also shows that all along since the experiment has been published in the 1970s there have always been people who have been very critical of the method famously the research was presented in the New York Times magazine not in a peer reviewed journal. But it turns out now that the reality is much darker than that. For example the guards in the experiment they were explicitly briefed to behave cruel. Interestingly only one or two of the guards actually did follow those orders. The inmates' interviews have shown now with the students back then that they enacted and acted out their hysteria. So overall it turns out it's all been a great big lie. The science behind it doesn't hold up...

Sandra: And yet it is so much part of our everyday understanding of this phenomena that it's an incredibly difficult idea to recall.

Kai : And so we want to say that this doesn't mean that the conclusions drawn from this supposed experiment aren't true, what we're saying is that the experiment as such was bogus. That of course doesn't mean that it couldn't be like that. But it means that the science behind it is just not there. And the Vox article goes on to list a whole number of ideas and theories and past experiments that all found in contemporary textbooks still yet have in one way or the other been debunked, discredited, or simply been found not to be replicable and makes the argument that this is a problem of course because we're basing advice, we're basing management practice, public policy on ideas that in those scientific fields have been found not to hold up.

And importantly we want to make the point that this does of course not discredit those sciences because the fact that we now know that these experiments were either fraudulent or lacked rigour goes to show the advances that we have made in scientific method in these areas that we're actually able to expose the kind of theories and experiments that do not hold up to the rigor of the scientific method.

Sandra: And indeed it doesn't. It also highlights the really fraught relationship between academic research and the pace at which research is going and the fraught relationship it has with our public understanding of these concepts and the way they're disseminated in public media, in conversations within our organisations or within our governments and indeed it highlights the role of initiatives such as this one in trying to bridge that gap between what is currently happening in academia and how we understand those concepts and how they're brought to life whether it's in our personal lives or in our business lives.

Kai : Which also points to the ongoing question that we're engaged in here on the podcast to weed out the kind of bullshit and the worst of ideas from the best of ideas.

Sandra: And that's almost all we have time for today. But just before we go, speaking of bullshit, turns out Google Duplex was actually for real. It begins testing this winter or in northern hemisphere this summer, if you don't recall Google Duplex is that system that makes human sounding voice calls on your behalf to book a restaurant or a haircut appointment for you and it seems the rollout will be phased. We're hoping to get a first trial on it on The Future, This Week and this will first be about restaurant reservations and about haircut appointments and asking for opening hours and holiday hours which is what Google was trained on to begin with.

Kai : And here we have another clip that Google has shared so this is some real progress people - you don't have to make your restaurant bookings yourself going forward.

Audio (Woman's voice): Hey Google - book a table for two at El Cocotero on Tuesday at seven.

Audio (Google Assistant): Alright. Just in case that's not available, can I try between 7:00 p.m. and 8:00 p.m..

Audio (Woman's voice): Sure.

Audio (Google Assistant): Alright I'll call to book under your name and phone number and I'll update you in the next 15 minutes. Is that okay?

Audio (Woman's voice): Perfect. Thanks.

Audio (Restaurant): El Cocotero, how may I help you?

Audio (Google Assistant): Hi I'm the Google Assistant calling to make reservation for a client. This automated call will be recorded. Can I book a table for Tuesday the 12th?

Audio (Restaurant): Okay cool and how big is the party?

Audio (Google Assistant): It's for two people.

Audio (Restaurant): And when did you say they want to come in?

Audio (Google Assistant): Um Tuesday at 7 p.m.

Audio (Restaurant): Ok let me check. I don't have seven but we can do eight.

Audio (Google Assistant): Yeah 8pm is fine.

Audio (Restaurant): Perfect. And can I get their name?

Audio (Google Assistant): Ah, first name is Anna.

Audio (Restaurant): Okay we'll see Anna Tuesday thank you.

Audio (Google Assistant): Okay awesome. Thanks a lot.

Kai : And that's all we have time for today. Thanks for listening.

Sandra: Thanks for listening.

Outro: This was The Future, This Week made awesome by the Sydney Business Insights Team and members of the Digital Disruption Research Group. And every week right here with us our sound editor Megan Wedge who makes us sound good and keeps us honest. Our theme music is composed and played live from a set of garden hoses by Linsey Pollak. You can subscribe to this podcast on iTunes, Stitcher, Spotify, SoundCloud or wherever you get your podcasts. You can follow us online, on Flipboard, Twitter or sbi.sydney.edu.au. If you have any news that you want to discuss please send them to us at sbi@sydney.edu.au.