THE CENTENNIAL ISSUE COLUMBIA IDEAS AT WORK | THE CENTENNIAL ISSUE Columbia Ideas at Work The Centennial Issue INTRODUCTION In celebration of Columbia Business School’s Centennial we sat down with twenty-five professors to discuss the single biggest question facing researchers in their field. From lingering questions left in the wake of the global financial crisis and the future of the global economy to the way we make choices and the very idea of what makes us human, these are just some of the questions that will define the next century at the very center of business. CONTENTS Who won’t be disrupted? ..........................1 Can we design hard measures Bernd Schmitt for soft skills? .........................................................37 Jonah Rockoff What good is a mind that wanders? ........................................................4 How do you set a price for Malia Mason a marketplace? .....................................................40 Garrett van Ryzin How can we help people get what they want? ................................................7 Where do startups start? ............................43 Elke Weber Evan Rawley Have we been thinking about What’s so bad about activists?.............46 diversity all wrong? .........................................10 Wei Jiang Katherine Phillips Is the future local? ............................................49 Can we think flat, but act Bruce Greenwald hierarchically?......................................................13 Adam Galinsky Will you have enough during retirement? ..........................................52 Where have all the leaders gone? ......16 Stephen Zeldes Sheena Iyengar Can the private sector help What’s wrong with rebuild America? ...............................................55 consumer research? ........................................19 Lynne Sagalyn Columbia Ideas at Work Michel Pham Centennial Issue Why don’t banks hold What will we learn from the more equity? ...........................................................58 Published January 2016 developing world?.............................................22 M. Suresh Sundaresan Gita Johar Columbia Ideas at Work, Columbia Business School’s Is fair value accounting thought-leadership publication, is published twice a year What’s behind the really fair? ..................................................................61 by Columbia Business School, Columbia University. productivity decline? ....................................25 Doron Nissim Dean: Glenn Hubbard Ann Bartel Associate Dean for Marketing and Communications: Iris Henries Can we better account for value? .....64 Senior Director of Communications: Tori Fullard Can Big Data give us big ideas? ..........28 Stephen Penman Editor: Peter Wiegand Olivier Toubia Design: Taylor Design What’s our climate worth? ......................67 Illustration: James Steinberg Can Big Data make business Geoffrey Heal Articles by: Agatha Bordonaro, Jen Kitses, Tracy O’Neill, .......................................................... Kenneth Partridge, Benjamin Reeves, and Peter Wiegand more ethical? 31 Bruce Kogut Can government learn to save? ..........70 © 2016 by The Trustees of Columbia University in the Pierre Yared City of New York. All rights reserved. Can we deliver better healthcare at a lower cost? .....................................................34 Why does growth stop? ...............................73 Carri Chan Glenn Hubbard THE CENTENNIAL ISSUE I Who won’t be disrupted? Disruption has become the driving concept of the technology revolution. Before it’s over, it’s likely to touch virtually every corner of our lives. he core technologies that made up Web 2.0—Facebook, Wikipedia, the iPhone for instance—are all now nearly a decade or more old. At the same time, the rate of increase in labor productivity—a critical compo- Tnent of economic growth—has faltered, leading thinkers from PayPal founder Peter Thiel to Federal Reserve economists to wonder if perhaps the tech revolution has already passed us by. But to hear Bernd Schmitt tell it, the revo- lution hasn’t even begun. “When I use the word revolution,” Schmitt says, “I mean something every bit as transformative as past revolutions—as the agricultural revolution, or the industrial revolution.” Up to this point, the technological revolution has been driven by digitiza- tion—or, in the words of Nicholas Negroponte, the conversion of atoms to bits. That trend will continue, but the true revolution, as Schmitt sees it, comes when those bits start to return to the world of atoms. Schmitt sees five key drivers of this transformation: advances in 3D printing, the Internet of Things, robotics and Artificial Intelligence (AI), virtual reality, and human enhancement. Innovations in each of these areas hold the potential to upend not only large swathes of the economy but also our very understanding of ourselves. Companies—and workers—in manufacturing industries may be the first to experience major changes. 3D printing could completely transform manu- facturing as acquiring new objects becomes as simple as queuing up the next episode on Netflix. Already, companies have begun offering simple services to upload product designs and have them printed and delivered. One day in the not too distant future we may be able to simply print out many commonly used objects at home. That change could have a devastating impact on many of today’s corporate THE CENTENNIAL ISSUE 1 behemoths, as comparative advantage shifts from supply chains and physical capital to code and information. It may further place manufacturers of smart objects—objects capable of communicating and being controlled over the internet, like Google’s Nest thermostat—at a distinct advantage. The informa- tion previously trapped in our products may become companies’ most important source of value, replacing the components and craftsmanship themselves. Likewise, where 3D printing and smart objects will undermine tradi- tional manufacturing, AI could have a similar effect on white collar industries. “Today’s knowledge workers,” Schmitt says, “basically just sit and make deci- sions. But supercomputers can process far more information far more quickly than a human can, and they aren’t subject to the many biases that can plague human decision-makers either.” Advances in robotics are further making the efficient, untiring workers of science fiction a reality. Safer, smarter, and increasingly adept at processing sensory information, robots are already being tested around the world as assis- tants in elder care. “When you begin to react to a machine as if it were a person,” Schmitt says, “you have to begin to question the difference.” As robots become more like us, we’re set to become more like them. New devices like the Oculus Rift headset barely scratch the surface of what virtual reality technology could accomplish. At its further extent, VR could allow our “When we are all theoretically modifiable, enhanceable, improvable, who will get access to these enhancements?” appearances and experiences to become as transferable as a text message. Advances in healthcare and bionics may further allow us to transform, amplify and even replace our bodies with machines. Present applications in prosthetics are only a harbinger of much more dramatic, voluntary modifications to our bodies. At stake is our very definition of ourselves. As objects and our bodies themselves become more interconnected, privacy is likely to become a greater concern for many. Yet Schmitt sees an even bigger issue in the other hot-button topic of our time—inequality. “When we are all theoretically modifiable, enhanceable, improvable, who will get access to these enhancements? What will that mean for those who can’t?” Indeed, if only a portion of what Schmitt predicts comes true, it could still mean a total transfor- mation of the global economy and of humanity itself. “What kinds of companies will create value in the future? What kinds of value will they create? What kinds of people will be necessary to produce it? These,” Schmitt says, “are the real questions.” Bernd Schmitt is the Robert D. Calkins Professor of International Business in the Marketing Division and Faculty Director of the Center on Global 2 COLUMBIA IDEAS AT WORK GSB.COLUMBIA.EDU/IDEAS THE CENTENNIAL ISSUE 3 What good is a mind that wanders? For decades, researchers have demonstrated the shortcomings of our attention, but distraction may be essential to modern life. rim pronouncements from the popular press in the past decade have declared us to be living in a new “age of distraction.” At the same time, a range of academic studies have estimated that we spend anywhere G from 20 to 50 percent of our day focused on something other than the task immediately at hand, with some placing the economic cost of distraction at several hundred billion dollars per year. The issue has spawned a cottage industry of management gurus promising to help us stay focused and be more efficient, and a litany of research demon- strating our brains’ shortcomings. But according to Malia Mason, they may be missing the point. “There’s a tendency for both self-help professionals and researchers to focus on the ways in which people mismanage their attention. We begin tasks and then can’t remember why we started them. We get distracted. Our minds wander,” she explains. “But, at a certain point, simply documenting these shortcomings ceases to be productive. Instead, why not try to figure out what our brains are trying to do, and if there