The Jobs effect
Even if we don’t have a problem with his attitude, does it make sense to aspire to be the next Steve Jobs?
At a work Christmas party a number of years ago (in those heady days when such things existed) we were all generously given 100 euros of Monopoly money to bet on the Roulette tables at the Casino. The person who won the most amount of Monopoly money won a real prize — a brand new PlayStation 3. I quickly realized that the person who won the most money would most probably have gained his loot by putting all his chips on the one number that happened to come up, rather than sensibly hedging his bets. Although it wasn’t very likely that the little Roulette ball would land in the very slot that I had picked, I knew that it was my best chance to actually win the PlayStation. I didn’t. This is what I call “The Jobs effect”.
Reading Walter Isaacson’s masterful biography of Steve Jobs, it is easy to become convinced that the keys to Jobs’ extraordinary success were his vision, his persuasiveness and his absolute dogged stubborn refusal to recognize anything that did not corroborate his story (his so-called “Reality Distortion Field”). As the book progresses, we tend to become wrapped up in the growing conflict between his being so determined and the obvious human cost accompanying his inevitable ruthlessness. We wonder if we’ve “got what it takes” to be so single-minded, to be able to “go the distance” and, ultimately, to triumph over all the doubters and nay-sayers. We praise Jobs for his stamina even if he was or had to be a bit of an asshole.
But it is easy to do an ex-post analysis and say with the benefit of hindsight that he was right to persist against all the odds. What if he bet on the wrong number? It is hard to answer that while at the same time knowing the very positive outcome of his bets. The question is, for every successful Steve Jobs, how many are there out there that we never get to hear about because they simply put all their chips on the wrong number and thus faded into obscurity? This survivorship or success bias makes it difficult — if not impossible — to know how much of a good strategy it is to be so single-mindedly focused. All we can know is that the chances are that the most successful CEOs will have this characteristic by the bucket-load.
A business book called “Blue Ocean Strategy” got a lot of traction when it was published in 2005. It analyzed cases where innovation had arisen as a result of combining two unlikely suspects such as, in the much touted case of le Cirque du Soleil, aspects of both circus (clowns, acrobats) and opera (adult audience, premium seating). Their argument was that, if you were successful, you would find yourself in a “blue ocean” — in other words, in an uncontested wide open space with no competitors or restrictions on growth. This, to me, is another example of the success bias. Of course, if we were able to make a go of a business that combined, let’s say — banking and music — in some kind of a meaningful and profitable way, we would have the jump on the banks and be one up on the music industry. But that innocent little “if” is the key word in that sentence. The rewards might be higher, but what about the risks?
In real life, however, we are not playing with Monopoly money and there are more prizes than just the winner-takes-all Playstation 3. We can think of the “correction” that the Western economy is currently undergoing as a (painful) reallocation of capital bets towards projects which will hopefully bear more fruits than those which failed in the past. In terms of the Roulette table, we are simply moving the chips to other numbers. The Jobs effect, fueled by the media and our basic need to have idols to whom we can aspire, tempts us into taking irresponsibly risky bets at a time when we should be diversifying our risks or covering several numbers on the Roulette table. On the other hand, for all the flack that “speculators” have been getting recently, a society without risk takers would be a poorer one as a result and would ultimately loose out to a more pioneering one. The crucial point is that risks are necessary so long as we are aware that we are taking those risks and they are not a means to an end in themselves. After all, we all have a Reality Distortion Field of some sort or another, just as those who bought houses with 100% mortgages were wishfully or innocently ignoring the risks of falling house prices, not to mention those who sold them the mortgages in the first place.