How We're Duped by Data
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WINTER 2019-20 2 6 How We’re Duped by Data Haas faculty lead movement to restore faith in science Plus: REAL ESTATE PROPHET CONNIE MOORE P. 14 FAIR TRADE USA FOUNDER PAUL RICE P. 20 3 1 Key questions to ask A way to build trust when presented with data- among your based findings employees PAGE 26 PAGE 14 TEN 4 TAKEAWAYS Why being politically 2 incorrect 5 How female VCs isn't always a make their mark on bad thing Silicon Valley PAGE 10 PAGE 47 Is conscious 6 capitalism really a viable business model? PAGE 20 7 10 How to find What’s a fellow Haasies ANYWHERE great way to in the world drive virality Who’s really benefitting from PAGE 54 to boost your the rising stock market brand? 9 PAGE 48 PAGE 8 When anger 8 How your family could can be get you addicted motivational to opioids PAGE 5 PAGE 6 MASTHEAD Ute Frey Contributing Writers Address changes: WINTER Executive Editor Michael Blanding; Krysten [email protected] 2019-20 Crawford; Jeneé Darden, Contact: Amy Marcott Nancy Davis Kho; Andrew [email protected] Managing Editor Faught; Carol Ghiglieri; Kate Berkeley Haas Magazine, Constance Moore, MBA 80, Madden Yee; Sam Zuckerman UC Berkeley was presented with Berkeley EmDash 2001 Addison St., Ste. 240 Cover: Berkeley Haas is published Haas’ Lifetime Achievement Berkeley, CA 94704 Faculty Ellen Art Director three times a year by the Haas Award this fall in honor of Evers & Leif Nelson. School of Business, University her career as a real estate Illustration: John B Staff Writers of California, Berkeley. 1 investment pioneer. Laura Counts, Kim Girard Ritter. Source PHOTO: ERIC MILLETTE; ILLUSTRATIONS: DRUE WAGNER DRUE ILLUSTRATIONS: MILLETTE; ERIC PHOTO: photos:Jim Block Berkeley HAAS WINTER 2019-20 NEW TECHNOLOGIES Open Innovation Results New book shows how to profit “In order to advance from innovation prosperity, we must BY LAURA COUNTS not only create new When Adj. Prof. Henry Chesbrough was researching open innovation in the pharmaceuti- technologies, but we cal industry, he found one pharma that had 7,000 scientists working on tens of thousands of com- must also disseminate pounds. But the company only licensed out less than one a year, shelving the others. them broadly and absorb “Although some of those shelved compounds may have succeeded in the marketplace, companies them, which means may fear they’ll look bad if a product they passed on thrives externally—a phenomenon he calls “Fear of having the knowledge Looking Foolish” or FOLF. “Our interview subjects admitted to us that FOLF was a major constraint and skills to put them to CONTINUED ON NEXT PAGE> work in our business.” ILLUSTRATION: BENEDETTO CRISTOFANI CRISTOFANI BENEDETTO ILLUSTRATION: CONNECTIONS The Berkeley Innovation Forum is a The Takeaway membership organization created Chesbrough’s new book links open 2 by Chesbrough to help corporate innovation not only to enterprise 3 managers involved in innovation. performance but to national and global More at: haas.org/bif. economic growth as well. Berkeley HAAS WINTER 2019-20 < CONTINUED FROM PREVIOUS PAGE Open innovation centers on the idea that #HAASOME to overcoming this,” Chesbrough, PhD 97, writes. companies stand more to gain from making use It’s been 16 years since the publication of Ches- of external ideas and sharing their own innova- brough’s Open Innovation launched a new paradigm tions through licensing, sales, partnerships, and for bringing new technologies to market, spurring spinoffs than from trying to do it all themselves. companies to embrace the power of collaborative A famous example: IBM’s development of the PC. business models. Chesbrough is back to close the “We wanted to do something small and fast... loop with his most ambitious work to date. Open so it was critical to IBM’s success that we part- Innovation Results: Going Beyond the Hype and Getting nered with Intel and Microsoft and created the PC Down to Business (Oxford University Press, 2019), industry together,” said Jim Spohrer, Director of offers a clear-eyed view of the challenges that limit Cognitive OpenTech at IBM and a member of the the ability of organizations to create and profit Berkeley Innovation Forum, a group created by 2 from innovation and practical tools for overcoming Chesbrough to help corporate managers involved SAIF PLACE those obstacles. in innovation. Haas recently The book also provides a roadmap to restore Chesbrough opens the book with an “expo- expanded its Sus- productivity and economic growth for society as nential paradox” that’s at the heart of our current tainable and Impact a whole—in the U.S. and globally. global economic situation: While new technol- OPEN Finance program David Teece, the Thomas W. Tusher Professor ogies are emerging faster and faster—some say INNOVATIONG O I N G BE YO N D RESULTS T H E H YPE & G E T T I N G with new courses, DOWN TO BUSINESS in Global Business, says Open Innovation Results exponentially—economic productivity is slowing. research projects, breaks new ground. “It links open innovation not Has the promise of innovation been overhyped? internships, and only to enterprise performance but to national The real problem, Chesbrough argues, is that more. Housed within economic growth as well,” he says. “There are promoters of innovation too often chase after the Institute for important insights into the difference between “bright and shiny objects,” focusing on the initial Business & Social ‘open’ and ‘free’ innovation, along with insightful stage of development and neglecting the rest of Impact, SAIF focuses H E N R Y characterizations of China’s use of open innova- the process. Innovation results depend on what LEADING TEAMS CHESBROUGH on three sectors: tion practices and policies.” you finish, not on what you start, he says. sustainable invest- “In order to advance prosperity, we must not Has the promise of ment, impact invest- only create new technologies, but we must also innovation been overhyped? ment, and impact disseminate them broadly and absorb them, which ADJ. PROF. HENRY entrepreneurship, CHESBROUGH, PHD 97, means having the knowledge and skills to put them ANGER MANAGEMENT with an eye to better explores this in a new to work in our business,” Chesbrough says. “Only Negative emotion can be underrated as a motivational tool positioning book that continues his then do we really see the social benefit of these new groundbreaking work on students to work as technologies, and only then will these measures of BY MICHAEL BLANDING Open Innovation. public fund manag- economic productivity catch up again.” ers, private equity Chesbrough shapes these three facets of inno- It’s a common sports movie trope: A great, keep it up,’ it’s better to say, ‘I investors, or in the vation—generation, dissemination, and absorp- team down at the half comes roaring don’t care if you’re up by 10 points, you startup world. tion—into a new paradigm for managing R&D and back to victory after the coach’s inspi- can play better than this,’” Staw says. bringing new technologies to market. Rooted in rational locker room speech. But do pep However, really extreme levels of neg- two decades of extensive field research, the book talks work? ative expression—think former Indiana is packed with real examples of successes and fail- In research published in the Journal University coach Bobby Knight throwing ures from companies such as Procter & Gamble, of Applied Psychology, Berkeley Haas chairs—reversed the effect. IBM, Intel, General Electric, Bayer, and Huawei. Prof. Emeritus Barry Staw and colleagues In a business context, Staw cautions Carlos Moedas, European Union Commis- analyzed hundreds of halftime speeches against applying the findings too liber- sioner for Research, Science, and Innovation, says and final scores from high school and ally—prolonged negative feedback can the book’s complex concepts are made relatable. college basketball games and found that demoralize employees. “[It’s] a must-read for politicians, policy-makers, BLOCK JIM PHOTO: teams do better when coaches shelve the “Our results do not give leaders a and business leaders who want to make a differ- happy talk and bring down the hammer. license to be a jerk,” Staw says, “but when ence by designing the right policies that drive not In fact, the more negativity, the you have an important project that needs only the generation of new ideas but...their broad more the team outscored the opposi- to get done [quickly], negative emotions dissemination and adoption by society,” he says. ISTOCK ZUMA WIRE; VIA © THURMAN JAMES/CSM LEFT: FROM PHOTOS tion, even if already ahead at halftime. can be a very useful arrow to have in your “Rather than saying, ‘You’re doing quiver to drive greater performance.” The Takeaway < More Online The Takeaway Chesbrough shapes three facets of innovation: Learn about Chesbrough’s book: In short-term instances, when getting a 4 generation, dissemination, and absorption, into a openinnovationresults.com boost in performance is critical, expressing 5 new paradigm for managing R&D and bringing new anger and disappointment can lead a team to technologies to market. renewed effort and improved results. Berkeley HAAS WINTER 2019-20 #HAASOME Ways to address For families the social living in the same contagion household States that track prescription drug use and provide that infor- Likelihood of someone obtaining mation to doctors could also a prescription for opioids: 1 include data on family members’ access to medications. To avoid ONE BAD AXE TEAM 19% to 100+% privacy violations, the program could simply issue a risk score The Axe trophy is FACULTY RESEARCH that would signal to doctors that back! Cal defeated * HIGHER their patient has been indirectly Stanford 24–20 in within a year after a relative receives a script exposed to painkillers at home.