John Van Reenen
Appearances
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
It was very much driven by, you know, the prime minister, Tony Blair. The other, quite praiseworthy.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
I spent a year of my life working in the Department of Health when there was a big expansion in the UK National Health Service of resources and various attempts at reforms.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
One of the key things that was thought could really be a game changer was to have electronic patient records. So you can see the history of patients, their conditions, what they've been treated with. And having that information, instead of having all this pieces of paper written illegibly by different physicians, you could actually have this in a single record.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
would not only make it much easier to find what was going on with patients, but could also be used as a data source to try and help think about how patients could have more joined up care and could even maybe predict what kind of conditions they might have in the future.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
It was very much driven by the Prime Minister, Tony Blair. This was a centralised, top-down approach in order to have a single IT system where you could access information. Instead of having all these different IT systems, these different siloed pieces of paper, to have it in one consistent national system. The NHS is a big operation, one of the biggest employers in the world.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
But then if you drill down into it, it is pretty fragmented. Each local general practitioner unit is self-employed. Each trust has a lot of autonomy. And that's part of the issue, is that this was a centralized, top-down program in a system where there's a lot of different fiefdoms, a lot of different pockets of power who are quite capable of resisting this.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
and disliked very strongly being told this is what you're going to have, this is what you're going to do without really being engaged and consulted properly.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
And the delivery of those was, it was a guy called Richard Granger who was brought in, I think he was the highest paid public servant in the country. He was at Deloitte's before he came and then after he left he went to work for Accenture. He was brought in to do this and he designed these contracts
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
Very tough contracts, which loaded the risk of things going wrong very strongly onto the private sector providers. I think just about every single quote-unquote winner eventually either went bankrupt or walked away from the contract. The estimates vary of the cost of this, but estimates are up to $20 billion lost on this project. It was the biggest civilian IT project in the Western world.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
I mean, there's lots of examples of huge public sector failures and private sector failures as well, but this was one of the biggest.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
I think it's a failure of many, many different causes on many different levels. That top-downness, not really understanding what was going on at a grassroots level, and the haste, it was attempted on very quickly.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
Correct. I mean, it seemed at the time when these contracts were formed, the government was getting a good deal. They were doing it quickly. They were loading the risks onto the suppliers. So it wasn't obvious from the get-go that this was going to be as bad as it turned out to be.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
Looking back, trying to do things quickly in such a complicated system, there was so much complexity that a lot of these contracts effectively had to be rewritten afterwards. And I think another general lesson is that when you're doing a long-term, important big contract, you can't get everything written down quickly. There has to be a lot of give and take.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
It's a kind of relationship that you have to adjust as things go. Contracts are very fuzzy. They're very incomplete. You just have to accept that, that you're going to have to not get things right, but not try to do everything really, really, really quickly. An IT project's never just about IT. It's also about the way you change a whole organization.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
And to do it, it's not just about spending money. You also have to get players in that system on board because it's very difficult to just get them to do things, especially, you know, in a public system where you can't just fire people if you want to fire them. You really have to have a culture of kind of bringing people on board if you want to make these type of changes.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
And that just didn't happen. So I don't think it's just one thing you could think of. There's the haste, there's the design which worked out badly, and there's the cultural aspects that we've talked about. When you're trying to innovate, you want to have a way of allowing people to take risks and do things wrong, but then you also have to have feedback mechanisms to figure out, well, you know,
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
what has gone wrong. So creating an attitude of saying, well, we actually don't know what the right thing to do is. So we're prepared to do experimentations and learn from that.
Freakonomics Radio
How to Succeed at Failing, Part 2: Life and Death (Update)
There's lots of examples of huge public sector failures, but this was one of the biggest.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
I think that when you do what we do in research, you recognize the fact that most ideas you have are not going to work. There's a risk of being paralyzed by that. But the way to approach that is to say, well, let's just, you know, try them out. In a way, the whole market economy is like an experimentation machine.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
Loads of companies fail, but the ones who do come up with things which people want to buy or come up with new ideas are the ones who can be successful. So I think that notion of embracing failure is very important.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
If you look over the last 20, 25 years, the fraction of jobs in new firms has actually declined in the US. The degree of entrepreneurship has been going down van reenen thinks this may have to do with a decreased appetite for risk one of the reasons for people being risk averse is the worry about failure because if you fail it makes it look like maybe you were incompetent or doing the wrong thing
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
Well, I think yes. America is a bit like this compared to Europe. It's like, you know, it's better to try and fail than never to have tried at all. So the rewards for actually trying something, even if it doesn't work out, that is part of a kind of cultural change, which I think is, you know, very beneficial.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
And in success. I think that's probably true in failure and in success. Compared to, say, Europe, I think there's a much stronger emphasis on entrepreneurship. If you think of the bankruptcy laws, for example, a more generous approach in Chapter 11 to saying, if things went wrong, it's not necessarily your fault.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
In many parts of Europe, historically, it's like, if you're bankrupt, you're not allowed to run another business for another 15 years. That reflects this feeling that it's always your fault if things went wrong.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
I think it is. I think that's part of the... Historically, greater levels of entrepreneurship in the United States and in Europe is related to that greater tolerance of if things go wrong, it's not such a great shame as it would be in Europe. And that creates more success. I mean, you think about the superstar firms in the digital sector, the Googles, the Facebooks, and everything else.
Freakonomics Radio
How to Succeed at Failing, Part 1: The Chain of Events (Update)
You don't see many of those in Europe or any parts of the world, maybe apart from China. So there is something about... The culture of America, I've seen this having lived both in America and in Europe. There is a greater openness to trying new things out, even if, you know, at the end of the day, they don't work out.