The tension effect is a guide on how to get rid of bad ideas and improve on good ones.
I have a ritual on Saturday, I clean while listening to podcasts. One of my favorite Saturday podcasts is Freakonomics. In a recent episode, they interviewed John List about his book, The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale.
After hearing that interview, I had to get a copy.
Why so many ideas can’t scale?
Ahhhh… “Scale” your business. Every entrepreneur’s dream. But why do so many ideas fail to scale? That is the key question at the heart of “The Voltage Effect”.
The celebrity world has made scaling your business something of a holy grail. Scaling has become a buzzword, without much understanding of how to prepare yourself for success.
And this is where “The Voltage Effect” comes in. This book provides a framework for increasing the odds that your business will actually achieve that all-too-rare thing called “scale.”
John List turns assumptions upside down
John list is a professor at the University of Chicago, where he collaborated with Freakonomics co-author Steven Levitt. With that kind of partnership, you know that the book and the concepts in it will tickle your brain and make you see things from a new perspective.
But List is more than a professor. He gained a lot of hands-on experience in scaling up when he served in the White House on the Council of Economic Advisers under the Bush administration in the early 2000s.
This is where he designed policies that would have the greatest positive impact on the greatest number of American citizens at a reasonable cost. He was also the chief economist at Uber and later at Lyft — two startups that have been scaled down almost to a science.
List’s mantra is: “The only ideas worth pursuing are those with the potential to have a significant impact on people’s lives. And to translate an idea into broad impact, it needs to be replicated widely.”
How the tension effect works
The premise of the book is this: Ideas only scale when they have what List calls “tension.” And to scale successfully, you need to know IF the idea can be scaled, and if so, what the critical success factors are.
In the first part of the book, List discusses whether your idea is scalable or not. He introduces what he calls the five vital signs;False Positives: Where it never really had any tension in the first place. In other words, it was an idea that worked in one situation, but didn’t work in another. Misjudging the representativeness of an initial population or situation: This is when the initial idea is executed with “the best” people, equipment, or management – which is difficult to duplicate and replicate on a large scale. Overflow: This often happens when you try to solve one problem, but circumstances (and people’s behavior) undo what you’ve tried to scale. Higher Costs: Teacher Salaries Are a Good Example. Let’s say you want to attract the best teachers to schools, but to do that, you have to pay teachers $200,000. This is not scalable.
The second part of the book explores the ingredients for successfully scaling an idea. Here, List discusses the four “secrets” of scaling:Find the right incentives: Money can’t always buy behavior change. Instead, think of social stimuli or unconscious motivators such as fear of missing out or losing something. Don’t just use averages: Averages don’t tell you much about scaling. The real gold is in the margins. Know when to quit: Think about what opportunities you’ll give up when you quit. Are you being pushed or pulled to stop? About every six months, look for better opportunities and push for change. Build a culture of scale: If you want to scale, you must have a culture that supports scalability. It must be diverse, inclusive and sustainable at scale
To scale or NOT to scale
Here’s the best part: Not everything has to scale! That’s right. There are people who are not scalable, some products or services are not designed to scale on purpose. In other words, scalability is not for everyone.
The tension effect is a guide on how to get rid of bad ideas and improve on good ones. So whether you choose to scale or not, understanding the techniques behind scalability will help you in all aspects of your business.
This post Will it scale or fail? Read the tension effect to find out was original published at “https://smallbiztrends.com/2022/04/the-voltage-effect-book-review.html”