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How Silicon Valley Created Trump

Donald Trump’s successful campaign for president can trace its roots the culture of disruption in Silicon Valley, says Jeremy Ghez, HEC Paris economics professor

Disruption, in tech, is a good thing. Without it, we wouldn’t have smartphones. For example.

Disruption in politics — well, the jury is still out on that one. Certainly the process seems, and feels, kind of messy. Examples abound of late.

But according to an economics professor at HEC Paris, one contributed in a very real way to the other, with disruption in Silicon Valley leading to the disruption in politics that produced both Brexit and President Donald Trump. And that, the professor says, is a good thing.

IMPORTING THE DISRUPTION BUSINESS MODEL INTO POLITICS

Jeremy Ghez

Jeremy Ghez, professor of decision science at HEC Paris and academic director of the school’s Centre for Geopolitics, tells Poets&Quants that the rapid digital development of Silicon Valley created a culture of disruption in its wake. Silicon Valley has been instrumental in “creating the expectation for disruption” beyond the business world, leading to political and economic uncertainty. One major result was Trump’s wild, chaotic — and successful — campaign for president.

To borrow a phrase from a certain Machiavellian cable television character: “Chaos is a ladder.”

“The growing influence of Trump’s presidential campaign is a clear example,” Ghez says. “He was able to import levels of chaos into his political campaign to upset the status quo, and use this to great effect. 

“Silicon Valley created an expectation of disruption — they created an expectation that we were on the eve of a very significant revolution,” Ghez says. “I have in mind an exponential curve and they created the expectation that we were really at the bottom of that curve, and every change from now on would have to seismic, it would have to be huge.

“Once upon a time there was a real estate mogul in New York who thought to himself, ‘These guys keep on disrupting, and they’re so popular.’ His ego helping, he told himself, ‘Hey, no one has imported that business model into politics. Why is that?’ We are surprised — and by ‘we’ I mean Western people who didn’t expect this to happen a few years back — we’re surprised not only that he tried, but that he succeeded. But come to think of it, there was nothing unexpected about this.”

LOVE-HATE RELATIONSHIP BETWEEN PUBLIC, BIG TECH

Ghez was in San Francisco in August to lead a group of HEC’s Executive Education students in an exploration of the recent upheaval in both tech and politics, focusing at length on the public’s “obsession” — not, he noted pointedly, its love and respect — for the tech giants of Silicon Valley: Apple, Google, Facebook, IBM, Intel, and dozens of others. But the companies themselves are in danger of failing to expand, or even keep from shrinking, the appeal of their products, and that can lead to stagnation and destruction.

“We’re obsessed with the tech giants, and I’m the first culprit. I came home and rushed to my computer to see what the next iPhone will look like, because I really feel like buying the next iPhone,” says Ghez, who is also a research fellow at RAND Europe. “I’m by no means criticizing the love for tech. I also think that we’re obsessed with them and they’re our darlings because to a large extent they’re redefining some concepts in the world in ways that are very convenient. The whole question of distance is being challenged, in different ways, by Amazon and Facebook. The concept of community is being challenged by Facebook, and to some extent by Apple. They’re redesigning a world in which it’s far easier for you and me to have a far larger impact. But there’s something that might actually blow back in all of this.

“The people who voted for Donald Trump don’t own a Tesla, they don’t have an iPhone. When they need money, they have to rely on bad credit. As (French interpreter) Carlos Rodrigues said, ‘It’s about time that we find algorithms that bring us together and that don’t divide us.’ And I was very much struck by this reading of the Trump election, which is to say, ‘Look guys, if we don’t worry about the American middle class, the Western middle class, or the global middle class for that matter, at some point in time there won’t be anyone else to sell our products to.’ You can be a very pro-market, pro-capitalist person but still worry about these things for very pragmatic reasons.

“I don’t know if all big tech giants have figured that out — and I think this love-hate relationship is basically at the heart of the creative destruction movement of the 21st century. They’re dominating the market because people love them, they love what they’re doing, they love the convenience, they love the products, they love the innovation, they love the change — but if the amount of people that can actually benefit from these products and services grows significantly smaller over time, then what happens? In this case you might get whacked in the head by a political system that rejects everything you stand for because you weren’t inclusive enough.”

A SIZABLE CHUNK LEFT BEHIND — LESSONS FOR B-SCHOOL STUDENTS

This all cuts both ways, says Ghez. Because business and politics go hand in hand, management practices and decisions are increasingly shaped by the actions of governments and political leaders — which can be problematic in times of uncertainty, the likes of which are inevitable under the governance of someone who relied on chaos and disruption to come to power.

As business managers grow concerned over how unstable, risky, and dangerous the world has become, Ghez says, many are failing to recognize opportunities for growth and innovation. Uncertainty and chaos do not have to be hurdles; business leaders looking to grow their organizations should take a page from Trump’s book and see these as strategic assets. Rather than merely accepting and weathering disruption, he says, they should generate it.

“I would argue Donald Trump is symptomatic of the fact that a sizable chunk of the U.S. population might feel that they are left out of the current technological revolution,” Ghez says.

The lesson he teaches to his HEC students is that 2016 showed leaders that “impossible” and “improbable” are not interchangeable — and that while business leaders have previously been trained to be predictable, predictability and rationality at all times may be limiting their range of options and clouding their vision for key opportunities.

“The cue we need to take is, ‘What is the next model of business?’ I would say it’s a more inclusive one,” Ghez says. “I’m not arguing on moral or ethical grounds, though I could easily make that case. This is on pragmatic grounds. If businesses do not become more inclusive, if they do not find a way to basically get a bigger chunk of the population, then mathematically at some point in time the size of their market will shrink. This isn’t a matter of love your equal, it’s a matter of love yourself — self-interest — and it’s a question of building a strategy that will guarantee the ability to survive.”

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