Book Review: The Voltage Effect by John A. List

Grab your hat and coat for a ride along with expert economist and professor, John List, author of The Voltage Effect, for an inside view of how top executives at companies such as Uber and Chrysler make crucial decisions. You’ll get a real-world perspective about figuring out which ideas will scale and change the world—and which won’t. Regardless of your professional pursuits, the real-life stories make for a captivating read even if you’re just coming along for the ride.

Why are we reading this book?

We love books that let us in on the whys and wherefores of big ideas and campaigns, especially when the examples range from Fortune 500 companies to well-known Silicon Valley starlets to African NGOs. In List’s book, he deconstructs the thinking process used to determine which ideas will work, and which will fail—and more importantly, why each idea sounded good and how the decisions were made concerning ideas that could scale. Who couldn’t benefit from that insight?

Backstory:

An economist for 30 years, List saw a genuine need to draw conclusions based upon studies of real people making decisions out in the real world rather than arbitrary theories or correlations. In 2016 when he was busy with his most ambitious project, Uber asked him to interview for their new chief economist position which he surprisingly accepted. This unexpected career direction suddenly had List applying his economic fieldwork to the real-world nature of hyper speed twenty-first century business.

Challenge:

The book’s premise is addressing the challenge of how to make good ideas great and great ideas scale. Marketers have their methods and economists have their stats. John List studies this question from multiple perspectives to uncover the undermining pitfalls to successful scaling. He identifies three culprits–statistical false positives, confirmation bias and the duper effect. The first is interpreting evidence or data as proof when in fact it isn’t. The second is driven by the desire to conform and overlook potential downsides, and the third is a function of deliberate misrepresentation of information to achieve desired outcomes.

Solution:

List claims the “silver bullet” to achieve successful scaling of an idea is to watch out for the Five Vital Signs that can be misleading. If just one element exists, the project will fail sooner or later. The elements are:

False positives – where there is no voltage in the first place.
Overestimating – misjudging what will be the market share size.
Failing to evaluate – whether or not initial success depends on unscalable aspects.
Implementation – has unintended consequences, spillovers that backfire against the idea.
Supply-side economics – will idea be too costly to maintain at scale?

Summary:

List is a spectacular storyteller who offers golden nuggets of knowledge that can solve the most far-reaching problems humans have had to deal with—from medical to philanthropic, business to your school PTA, to the latest call for advocacy. The Voltage Effect is a must-read for founders, executives, researchers, concerned citizens and parents. This author’s in-depth experience combined with brilliant smarts comes together in a book that can guide anyone “to scale positive change within your community, your company, your family or society at large.”