The Poverty of Entrepreneurship: The Silicon Valley Theory of History

14 06 2017

 

That’s the title of an intriguing new piece on by Professor John Patrick Leary on a new historical heuristic that has been adopted by many people in Silicon Valley. A historical heuristic is a type of mental short cut that people use to make sense of the world. We use many heuristics. A historical heuristic is a theory derived from an understanding of history that allows one to understand the present and predict the future. Political scientists have shown that historical heuristics are used all the time by policymakers, especially those who make foreign policy. My own research is on how historical heuristics are used in business, an issue that has received very little attention in management journals until very recently but which is very important, in my view. [Political scientists and political psychologists, in contrast, have published a great deal on the use of historical heuristics by policymakers]. My current research (as yet unpublished) suggests that historical heuristics are not only pervasive in business (especially in finance and technology) but that if used correctly can be an important source of competitive advantage. I’m working on two papers in this area, one of which looks at historical heuristics and entrepreneurial cognition in an area of technology, the other is about historical heuristics and the making of bank strategy.  Readers will be aware that both of these sectors are characterized by very levels of uncertainty (Knightian uncertainty to be technical) and very complex systems.

Anyway,  the historical heuristic discussed by Professor Leary was created by Ben Horowitz, co-founder of the powerful venture capital firm AndreessenHorowitz. Horowitz’s day job is to evaluate the many applications for venture capital that his company receives and then decide which start-up is most worthy of investment. Horowitz presented this theory of history in a talk called Culture and Revolution that you can view online.  Horowitz’s theory of  the relationship between organizational change and success is based on a particular reading of the life and times of  Toussaint L’Ouverture, the slave who led a successful rebellion in Haiti in the 1790s. (Think of Spartacus but in the tropics).  Horowitz developed his theory of why certain insurgent organizations succeed in changing the world based on a reading of C.L.R. James’s Marxist history of the Haitian Revolution, The Black Jacobins. The implication of his historical heuristic is that a start up organization, be it a small conspiracy of slaves determined to revolt or a start-up firm that aims to disrupt an industry via an app (think Uber and taxis) is more likely to succeed if it is led by a dynamic, charismatic leader similar to Toussaint L’Ouverture.

toussaint_l27ouverture

Professor Leary  appears to object to the historical analogy Horowitz is drawing here because it is rather flattering to would-be disrupters in Silicon Valley: outside of perhaps a few hard-core conservatives in the Deep South who still regret the Emancipation Proclamation, most Americans who think about historical rebellions see the slaves as “the good guys” and the masters as the “the baddies”. (Certainly that’s the case in any Hollywood film about slave revolts– the rebel slaves are always depicted in sympathetic terms). By associating entrepreneurs with the leaders of slave rebellions, Horowitz is helping to legitimate entrepreneurship. Leary doesn’t like that.

Ok. Leary is entitled to his opinion, which is obviously rooted in a political point of view. As a management academic, I’m more interested in knowing whether Horowitz ever uses the historical heuristic based on the Haitian Revolution to evaluate the prospects of the firms that come to him for capital. If Horowitz’s historical theory does influence his business decision-making, it would be fascinating to determine the extent to which he is aware that this is taking place. The funny thing about historical heuristics and other forms of analogical reasoning is that once we start using a given heuristic (mental short cut) in one area of life, we may start using them in other domains without being aware that we are doing so.

I would love to interview Mr. Horowitz at some point about the issues I’ve raised here.





How Management Theory Helps Us to Understand Why the Canadian Government’s Celebrations of the 150th Anniversary of Confederation Ignore Confederation

3 06 2017

How Management Theory Helps Us to Understand Why the Canadian Government’s Celebrations of the 150th Anniversary of Confederation Ignore Confederation

Management academics are increasingly interested in the uses of the past (see here).  For a good gateway into this literature, see the very recent article in Administrative Science Quarterly by  Mary Jo Hatch and Majken Schultz (both of Copenhagen Business School). The focus of much of this research how managers and other social use ideas about history to get what they want in the present. In this blog post, I’ll try to show how this body of theory is useful in understanding a recent development in Canadian politics.

As long-time readers of this blog know, I’m now every interested in social memory (i.e., how perceptions of the past influence thought and action in the present). In an early stage of my academic career, I published extensively on the process by which the Canadian constitution of 1867 was created.  This process is called Confederation. British North America Act of 1867, which united several British colonies into a federal state, still forms the basis of Canada’s written constitution, which is why 2017 is considered to be the 150th anniversary of Canada.

can150intro

The 150th anniversary has been marked with public celebrations and commemorative projects all across the country, some of which are funded by a special program of the Canadian government. To mark the 150th anniversary of Confederation, the entry fees to all national parks have been temporarily lifted.  The government has decided to use the 150th anniversary of Confederation as an excuse to fund a variety of perfectly worthy projects that range from making playgrounds more accessible disabled children to orchestra tours to more funding for a ParticiPACTION, a campaign to make Canadians exercise a bit more.  (see full list here).

ns-centennial-pool-852x479-1-8col

Most of these fine projects have zero heritage or historical content and are thus similar to the civic projects that marked the 100th anniversary of Confederation in 1967. The 1967 Centennial project fund resulted in the construction of a string of municipal swimming pools, hockey arenas, roads,  libraries, etc all across Canada, all of which have the name Centennial.   As someone who was born in the 1970s, I was able to make use of some of the facilities built in 1967, so I would imagine that the facilities that will be opened this summer will benefit future generations.

170310worlds-largest-rubber-duck

[I must confess that I am less certain that the gigantic rubber duck that Toronto has rented for the summer to celebrate the 150th anniversary of Confederation will actually benefit future generations, or indeed current residents of that city. The plan is to let the duck drift around Toronto harbour for the summer in a “whimsical” fashion. Although we are assured that the duck does not pose a threat to navigation, its arrival in the city has generated some debates about cost effectiveness].

 

Ok, let me get back to my main point. Some people have observed that the projects that the government has funded to mark the sesquicentennial of Confederation do not have anything to do with the actual event being commemorated (Confederation). Some historical or heritage projects are being funded, but they are designed to share stories about many events and historical periods in Canadian history rather than the events of 1867 itself.  For instance, there has been an oral-history initiative called Red Couch, which invites people to sit on a sofa in a public place and reminisce about what they have observed during their lives. Since nobody born in the nineteenth century is still alive, of course, this form of heritage will say nothing about Confederation in 1867. Similarly, children are being invited to make short videos called Here’s My Canada in which they talk about whichever events in Canadian history are of interest to them. From what I can see, the children were not asked to speak about the events of 1867 and they probably weren’t even told of them.

 

The legal academic Leonid Sirota has recently noted that while academics are using the sesquicentennial of Confederation as occasion for debating Canada’s  past and future constitutional development , the same is not true of the non-academic events designed to mark the sesquicentennial. In other words, whilst law school professors and political scientists interested in the constitution have organized scholarly conferences and journal special issues about that discuss the events of the 1860s, the government-funded events for the public have avoided discussing this issue.   In management journals, we have the concept of “organizational forgetting.” My fellow business-school professors have published a great deal of work on this subect. That’s what appears to be taking place in Canada right now—a conscious desire to try to supress discussion of 1867 and to get people to forget about the snippets of historical knowledge they have from high school that relate to the process that resulted in Confederation in 1867.

fathers

An Iconic Image of the 1864 Quebec Conference

 

c006799

Another Canadian-Famous Picture. The London Conference 1866

Most Canadians vaguely remember a little a bit about the various constitutional conferences in Charlottetown, Quebec City, and London that resulted in Confederation in 1867. The iconic pictures of these conferences taking place used to be very common in Canadian history textbooks and can still be found hanging in Canadian public buildings. These conferences have also been depicted on postage stamps (see below).

canada_3_cents_1917

The organizers of the Canada 150 celebrations could have used this summer’s celebrations as a teachable moment for building on the public’s rudimentary knowledge of politics in the 1867 to teach people about the process by which their constitution was created. It appears that they consciously decided to avoid doing so.

 

 

So we have a very curious pattern: there is a concerted effort to  ensure that little is said about the making of the Canadian constitution of 1867 in a series of celebrations designed to mark the 150th anniversary of this constitution.  The journalist Andrew Coyne recently mocked the whole Canada 150 project for, er, forgetting about Confederation.  Lawyers, who are naturally inclined to think that the 1867 constitution is rather important, have also noted that the celebrations are skipping over the thing they are supposed to be celebrating.

In a recent issue of the magazine of the Canadian Bar Association, Sirota speculates that part of the Liberal government’s evidence reluctance to mention the events of 1867 may be a desire to avoid accusation of partisanship and the manipulation of the historical record. He notes that  “both Liberal and Conservative governments have a record of playing politics with history and refusing to honour figures associated with the other [main] party, and it would have been difficult to mark Confederation without talking John A. Macdonald and George-Étienne Cartier” who were both Conservatives.

I have a somewhat different explanation for the policy of not mentioning the war not mentioning Confederation.  Anniversary celebrations can themselves be “performative” to use a fancy social-science term. That means that discussing a historical events may encourage people to think about doing something similar.  The historical event or figure becomes a sort of role model.

Consider the case of the firm du Pont Company, which was founded in 1802. According to the historian Alfred Chandler (1962, p.52), the process of planning  the 100th anniversary in 1902 forced the firm’s senior leaders to reflect on the future of the firm and whether dramatic administrative reorganization was required to deal with certain real changes in the firm’s operating environment. In the next few years, Du Pont, dramatically changed its internal organization. The firm likely would have made the same changes  anyway had the anniversary not focused the minds of its leaders of fundamental issues, but it does appear that the anniversary had at least some impact on their thought process.

A more dramatic case of anniversary celebrations being a focal point that encourages people to think about institutional change is the 1967 centennial celebrations in Canada. The 100th anniversary of the introduction of a new constitution (the British North America Act of 1867) prompted the political leaders to think about whether the constitution needed to be changed. The public celebrations of Confederation coincided with a meeting of senior politicians called The Confederation of Tomorrow where future changes to the constitution were discussed.

tspa_0004929f

Confederation of Tomorrow Conference, 1967

Now there was no obvious reason why constitutional change was urgent in Canada in the mid-1960s: although a very small nationalist movement was present in Quebec, the existing institutional arrangement represented by the 1867 constitution appeared to be working well—the country was politically stable, GDP was growing rapidly, unemployment was low, etc. Canada was a net recipient of migrants from the US, which was another sign the existing institutional arrangements were performing well. In some societies, constitutional change is necessary. In Canada in the 1960s, it was a solution looking for a problem. However, I can understand why Canadian politicians of the 1960s wanted to hold meetings and change the constitution. That’s because they had been brought up in a political culture that valorizes well, politicians who sit around in conferences and talking about changing the constitution. In some countries, they way to get your face on a postage stamp is to lead your country into war. In Canada, the way earn a place in the historical record is to attend meetings where you negotiate changes to the constitutional order. The men in the picture from 1967 I’ve pasted above may well have grown up licking postage stamps that celebrated the men who attended the 1864 constitutional conference in Quebec City. (I’ve also pasted a 1917 Canadian postage stamp that celebrated this meeting and the men who attended it).  Come of think of it, the politicians who attended the 1967 Confederation of Tomorrow Conference probably did see the 1917 postage stamp as boys.

 

I would speculate that staring at pictures of the Canadian constitutional meetings of the 1860s inspired Canadian politicians of the 1960s to become constitution-makers themselves. They had a role to perform! At around the time of the 1967 confederation celebrations, Canada’s federal and provincial leaders began a series of grand conferences devoted to the subject of how the constitution should be modernized.   These meetings were, visually, rather similar to the constitutional meetings that led to Confederation in 1867: they involved representatives of all of the provinces sitting together to talk about details of the constitution. The clothing styles were different and there were TV cameras rolling, but in other ways the process was basically similar to the earlier constitutional conferences.

constitutio_cp_1696322

1981 Constitutional Conference Meeting

Constitutional politics came  to dominate Canadian politics from the 1970s to the early 1990s, when the last of these attempts at macro-constitutional change failed, when the they so-called Charlottetown Accord, a package of constitutional amendments was rejected in a deeply divisive national plebiscite.  For symbolic reasons, this accord had been negotiated in the city of Charlottetown, which has also hosted the famous 1864 constitutional meeting (see pictures below).

From about 1993 to the present, the Canadian political class has sought to avoid  marco-constitutional politics—the use of the so-called C-word (i.e., “constitution”). The focus has been economic policy, healthcare policy, global warming, the war on terror,  and pretty much everything except the constitution. The focus of politics has been on making decisions within the existing constitutional framework rather than changing the constitutional issues themselves.

I have no insider knowledge of the process by which the planners of the Canada150 celebration decided to ignore the actual events of 1867. However, I suspect that they were thinking that any public events that commemorated earlier rounds of constitutional bargaining (e.g., high-profile visits by political leaders to the sites of the constitutional meetings of 1864 and 1866-7) might encourage political actors to re-open the subject of constitutional reform. The last thing any Canadian Prime Minister wants is to legitimate calls for another set of constitutional conferences.  Instead, the Prime Minister wants to simply enjoy the festivities, which will culminate on 1 July, Canada’s national holiday and the precise moment when the Canadian constitution turns 150 years old. There will be a massive party and outdoor music festival in front of the Canadian parliament.

As if on cue, the Quebec government announced on 1 June that it was seeking to re-open  the subject of the constitution. It proposed a gathering of political leaders from across Canada so that the constitution can be re-written so as to satisfy its five demands for constitutional change, along with demands that may come from Aboriginal Peoples. In releasing a document with its proposals for constitutional change, the Quebec government explicitly stated that the timing of its publication was connected to sesquicentennial celebrations. The government’s 200-page policy paper  (available in French here and in English here) refers to the sesquicentennial and the events of 1867 and declared that:  “We must work to re-establish what Quebecers have always wanted since 1867: a Canada that accepts them for who they are….” The first 40 or so pages of the document consist of a historical narrative covering Quebec history from before 1867 to the 1995 Referendum on Quebec independence.

The timing of the Quebec’s government decision to re-open the constitution strongly suggests that historical anniversaries can become performative. In my view, it illustrates the utility of the growing body of research in management, and indeed across the social sciences, on social memory and the power of history to shape action in the present.

 

 

 

 

 

 

 

 





Origins of the Term “Red Tory”

19 05 2017

A great deal has been written about Theresa May’s political philosophy, which combines a mixture of left-wing and right-wing ideas and which explicit repudiates the Thatcherite belief in individualism and the free market, which is now to be called “selfish individualism”. Searching for a label to describe this worldview, the media have found the term “Red Tory” (see here, here, and here). In a recent piece, the BBC’s Ben Wright credits  Phillip Blond with inventing the term in a 2008 article. The article became a book in 2010.  Blond,  a former lecturer in politics and theology, is the director of the thinktank ResPublica, which promotes a sort of collectivist conservative ideology.  The reality, as any long-term observer of Canadian politics will tell you, is that the term Red Tory is much older (see here, here, and here). Blond merely imported the term, which is of course a respectable intellectual innovation but not an act of pure creativity.

Readers: if any of you know when the term “Red Tory” first appeared in print, please contribute that information in the comments section.





Tworek on Cambridge Analytica

18 05 2017

Heidi Tworek of UBC has posted an excellent piece that puts the recent wave of hysteria about the role of Cambridge Analytica in swaying recent elections into historical perspective. She notes that fears of mass manipulation by new media are as old as mass media themselves. The advent of every new media technology provoked concerns about the contagious emotions and irrationality of the unwashed masses. Heidi writes:

Did “sinister” emotional manipulation by the data analytics company, Cambridge Analytica, decide the U.S. election? History suggests otherwise.

For over a century, there has been a recurrent theme of exaggerating and mythologizing the power of new communications technology to influence mass psychology. Take a deep breath and ensure that we don’t need to wait decades to debunk the new old fear of the manipulated masses.

Heidi has written a great piece, one that covers everything from the legendary War of the World’s broadcast to the rise of Big Data.





EDHEC Family Business Conference

12 05 2017

EDHEC

I just finished a fantastic two-day conference at EDHEC business school. I would like to thank the EDHEC Family Business Centre for organizing such a stimulating event  that included purely academic sessions, meetings with practitioners, and a behind-the-scenes tour of Les Galleries Lafayette.

I would particularly like to thank Prof. Fabian Bernhard for pointing me in the direction of an important paper that had previously escaped by attention. Kammerlander, N., Dessì, C., Bird, M., Floris, M., & Murru, A. (2015). The impact of shared stories on family firm innovation: A multicase study. Family Business Review, 28(4), 332-354.





How to Lose the Global War for Academic Talent: the Mismanagement of the Canada Research Chair Project

12 05 2017

41xeiwslcul-_sx321_bo1204203200_

In 2000, the Canadian government began investing resources in a project to attract top international researchers to Canadian universities. The Canadian Research Chair program essentially gives money to universities to allow them to induce promising and accomplished researchers to relocate to Canada. The creation of this program was motivated by a belief that Canadian universities were  losing talent to wealthier universities in other countries, chiefly the United States. The program may also have been inspired by the seminal 1997 book The War for Talent, although I don’t know whether McKinsey consultants actually played a role in its design (readers with insider knowledge are welcome to contribute in the comments section below). In any event, the creators of this program, who were in the centre-left Liberal government of the day, were aware that universities play a very important role in nurturing innovation and anchoring clusters. (Everyone knows that Stanford University played a crucial role in the rise of Silicon Valley). During the 1990s, there were complaints that Canadian universities were losing their top researchers to other countries and  that this loss of talent was ultimately going to undermine Canada’s capacity to raise the global research profile of its universities, engage in R&D,  and create entrepreneurial ecosystems. The Canada Research Chair project was thus a logical and targeted response to this perceived problem.  The CRC program has since been emulated by other countries, most notably by China’s famous Thousand Talents program, which provides big bucks to foreign researchers willing to move to Chinese universities.

More recently, a number of exogenous forces began to help Canada to compete more successfully in the global war for talent. In the wake of the UK’s vote to leave the EU, many foreign academics working in British universities have expressed the desire to leave the country. The people who are speaking of leaving include both researchers from continental Europe as well as British academics who fear that Brexit and the xenophobic policies associated with it, such as the plans to dramatically slash the number of international students the UK admits each year, will endanger the finances of their employers.  The need to capitalize on the narrow window of opportunity associated with Brexit by poaching top researchers from the UK has been discussed by the Presidents of the Universities of Toronto and Waterloo, two important hubs for innovation (see here). Then there is the Trump effect—US academics seeking to leave the country due to the election of a President who is xenophobic and, more importantly, is likely to cut budgets for science and technology. Canada’s current Prime Minister, Justin Trudeau, is known throughout the world (unlike his immediate predecessors who had close to zero name recognition outside of Canada) and has helped to make Canada’s  place brand even better. (Shortly before the final round of the French presidential election, I heard some French people joke that if Le Pen wins, they would move to Quebec and live in Justin Trudeau’s house).  I’m currently at a conference at EDHEC Business School in France and can attest that Canada is today regarded as a very attractive employment destination by many European management academics. The Atlantic, a US magazine, just published an article on whether the Toronto-Waterloo corridor can ever become Silicon Valley North. As the article notes, there is tremendous interest in the potential of this innovation hub.

In an uncharacteristically swift move,  the Canadian government announced in early April that it was going to create 150 new endowed research chairs to bring the world’s best researchers to Canada.  The government selected the number 150 to refer to the 150th anniversary of the creation of Canadian state in 1867. The real reason for this sudden investment, I suspect is all of the factors discussed in the previous paragraph.

Let me quote from the press release:

The Honourable Kirsty Duncan, Minister of Science, announced today at the University of Waterloo that the Government of Canada will invest $117.6 million over eight years for the new Canada 150 Research Chairs program. The program provides one-time funding in celebration of Canada’s 150th anniversary. It is designed to attract approximately 25 internationally esteemed researchers and Canadian expatriates who wish to relocate to Canada so they can further knowledge in the sciences, technology, health, engineering and the social sciences and humanities.

The Canada 150 Research Chairs program will be open to top-tier international scholars and researchers from across all disciplines, including Canadian expatriates.

The Government anticipates that the drive to recruit new chairs will take months, not years

The press release suggests that the Canadian government is going to act swiftly and boldly to take advantage of the situation. Indeed, reading the press release would cause one to think that it had been prepared by the government of Singapore, a nation characterised by a thoroughly modern and professional approach to policy implementation.

Now just a few weeks later, the Canadian government announced that the entire Canada Research Chair program may be scrapped unless universities agree to fulfil some sort of equity mandate by filling more of the positions thereby created with women and members of certain domestically-defined ethnic minority populations.  By calling this entire program into question, the Canadian government reduced the incentive to academics to invest time in applying for jobs under this scheme. This lack of policy coherence is astonishing to me. The ability of the Canadian government to disappoint through the shoddy implementation of policies never ceases to disappoint me.

Now if the Canadian government was truly serious about recruiting the best and the brightest to its universities, it would change the immigration laws so that Canadian academic job ads no longer contain the alienating and vaguely xenophobic words:

All qualified candidates are encouraged to apply, however, Canadian Citizens and Permanent Residents will be given priority. 

The policy represented by these words is ignored by most of the U15 universities anyway and all it does is to suggest that potential applicants that Canada is a place where factors other than professional competence are considered when hiring for academic jobs.

 





“Accounts with Interest:” An Interdisciplinary Research Project at Barclays Group Archives

11 05 2017

bank-ext1-smallest-cropped

My co-author Margaret Procter will be presenting our paper at a conference at the Federal Reserve of Saint Louis (see picture above).  The theme of the conference is Innovative Solutions for Banks and Financial Archives. The title of our paper is “Accounts with Interest:” An Interdisciplinary Research Project at Barclays Group Archives.  The paper falls into the broad category of “the uses of the past” and considers how banks can make use of the historical information in their archives so as to better achieve their objectives. The project is designed to speak to the interest of scholars in strategy and archive science as well as practitioners.  Our co-authors are Maria Sienkiewicz of Barclays and Ian Jones, my excellent PhD student.

 

The conference in St Louis looks very interesting, as the other speakers include the renowned historian Harold James, leading economic historians such as Michael Bordo, Larry Neal, and Eugene N. White as well professional archivists from such organizations as the World Bank, the Bank of International Settlements.

The full programme is here.

Unfortunately, I can’t be at this event, as I’m at the 2017 Family Business Conference, which is running at EDHEC business school in Lille today and then in Paris tomorrow.