Clayton Christensen on “The Discipline of Managing Disruption”

To Harvard professor Clayton Christensen, coauthor of How Will You Measure Your Life?, a primary task of leadership is asking questions that anticipate great challenges. Here is a brief excerpt from an interview conducted by Art Kleiner for strategy+business magazine, published by Bain & Company. To read the complete interview, check out other resources, learn more about the firm, obtain subscription information, and register for email alerts, please click here.

Photograph by Evgenia Eliseeva

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This is the second interview we’ve published with Harvard Business School professor and author Clayton Christensen. The first appeared back in 2001. Four years before, Christensen had published The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997). When his keenly original theory of disruption first appeared, it seemed like an audacious and counterintuitive view of organizational change. But it soon evolved into conventional business wisdom. And now he is applying it to a deeper question: “What is life for?”

In The Innovator’s Dilemma, Christensen argued that as companies focus their attention on their best and most reliable customers, they can all too easily overlook the threat of disruption from young upstart competitors. Those competitors, exercising their creativity, develop innovative capabilities and reach customers that the incumbents ignore. Sooner or later, the upstarts steal the market with their better, less-expensive new ways of solving customers’ problems.

Christensen has always had an entrepreneurial bent, and this clearly colors his approach. Before arriving at Harvard Business School, he founded the CPS Technologies Corporation, a manufacturer of thermal management materials (originally called the Ceramics Process Systems Corporation), and he is a cofounder of a small Boston-based consulting firm called Innosight. His ideas are particularly valuable for established industries that seek to respond effectively to the disruption coming seemingly out of nowhere.

In recent years, he has applied this approach to healthcare (The Innovator’s Prescription: A Disruptive Solution for Health Care, with Jerome H. Grossman and Jason Hwang, McGraw-Hill, 2008), education (Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns, with Michael Horn and Curtis W. Johnson, McGraw-Hill, 2008), and, most recently, the personal side of leadership.

Written as a reflection on the fulfillment of life’s purpose after a series of severe medical problems (including cancer and a stroke), Christensen’s most recent book, How Will You Measure Your Life? (coauthored with James Allworth and Karen Dillon, HarperBusiness, 2012), has struck a chord with many business leaders. It links the discipline of managing disruption to the kind of long-term thinking that is necessary if one is to step past today’s pressures and build a strong personal and professional legacy. In late 2012, Christensen spoke with strategy+business by phone from his home outside Boston.

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S+B: How did you develop the concept of measuring your life?

Christensen: I had always aspired as a researcher to develop models that were robust enough to relate to any level in a hierarchy, from a national economy to an industry to a corporation to a business unit to a team. A good theory is really a fundamental statement of causality, and it ought to be as applicable to a business unit as it is to a nation, or vice versa.

In all my work, I’ve looked for universal principles—starting with my doctoral thesis in the early 1990s, which was the original study of disruption in the disk drive industry [which I wrote about in The Innovator’s Dilemma]. I was trying to explain why it was so hard for successful disk drive companies to sustain their success, generation after generation. I’d concluded that the success of their past practices made it difficult to react effectively to new disruptive competitors.

At first, when I finished, I thought I had a model that applied only to the disk drive industry. Then I remembered that during the Cuban missile crisis, which had happened when I was a boy in 1962, my neighbors hired a steam shovel to dig a bomb shelter in their basement. The steam shovel was manufactured by Northwest Engineering, a company that died in the early 1980s because its products were made obsolete by hydraulic excavators. So, later, when I knew someone who worked for an excavating company, I went over to see him one night and described what I’d found in the disk drive industry, and he said the same thing had happened with big digging machines. “There must be something to this,” I thought, “if it explains hydraulic excavators and disk drives.”

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To read the complete interview, please click here.

Todd Henry: An interview by Bob Morris

Todd Henry is the founder and CEO of Accidental Creative, a company that helps creative people and teams generate brilliant ideas.  He regularly speaks and consults with companies, both large and small, about how to develop practices and systems that lead to everyday brilliance. Todd’s work has been featured by Fast Company, Fortune, Forbes, HBR.org, US News & World Report, and many other major media outlets. His book, The Accidental Creative: How To Be Brilliant at a Moment’s Notice, offers strategies for how to thrive in the creative marketplace and has been called “one of the best books to date on how to structure your ideas, and manage the creative process and work that comes out of it” by Jack Covert, author of The 100 Best Business Books of All Time and founder of 800-CEO-READ.  You can connect with Todd here, or learn more about how to hire him to speak at your event or train your team.

Here is my interview of him. To read the complete interview, please click here.

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Morris: Before discussing The Accidental Creative, a few general questions. First, Who has had the greatest influence on your personal growth?

Henry:  I have a counter-intuitive answer to this. Probably the biggest influence on my personal growth was a 20th-century mystic and monk named Thomas Merton. It seems strange that a man who lived the biggest part of the late years of his life in isolation and contemplation would have much to say to a 21st-century, tech-immersed creative, but I found his writings to be deeply reflective on the nature of humanity, and also an illumination on the mechanics of doing important work.

If I were talking only about contemporary influences, I would have to say that I’ve been incredibly blessed to be around a group of mentors who, over a period of several years, really made it a project to develop me and help me understand both my capacity and my limitations. It was in this virtual incubator for leadership that I first discovered my voice and began reflecting deeply on the creative process.

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course that you continue to follow?

Henry: I was a leader in an organization trying to scale a team while helping them handle the pressures and demands we were facing, and in my effort to do so I reached out to several other creative directors who I knew would be dealing with the same issues. My biggest question for them was, “How do you serve your team, and help them do their best work without burning them out?” They stared at me like I was from another planet. “What you mean?” they almost unanimously asked. In other words, it had never occurred to them that it might be possible to exist in any create on-demand environment and be simultaneously healthy in the way you approach your work. This began a long journey for me of exploring whether or not it was possible to be prolific, brilliant, and healthy simultaneously in life and work. This research eventually led to my company, which now shares these insights with teams around the world, and then eventually to the book, The Accidental Creative.

Morris: To what extent has your formal education proven invaluable to what you have accomplished in your life thus far?

Henry: It may be cliché but I believe that the biggest contribution formal education made to my career accomplishments is that I learned how to structure my uncertainty and questions into a format that could be pursued and digested effectively. I learned to deal with ambiguity and suffer through process. When I was in school, information wasn’t so readily available, and there was more risk involved in pursuing a specific avenue of research. It was much more difficult (and costly!) to pivot mid-course, so it forced me to stay focused while going about my work. This allowed me to develop the capacity of deep, intermittent focus that has served me in my work as a professional creative.

Morris: In your opinion, what are the most significant differences between creativity and innovation?

Henry: The definition of innovation I use is “progressive and useful change” which typically involves (or at least begins with) a creative act. Creativity, at the heart of it, is problem solving. A designer might solve a problem visually, while a manager might do so by thinking up a new system. But that creative act is only innovation once it’s applied and creates useful change.

Morris: What do you say in response to someone who says, “I’m just not creative”?

Henry: I would say they are wrong. We are all creative, because we all have the ability to solve problems and create value with our mind. I think the biggest reason people say “I’m not creative” is because they confuse creativity with art. The very act of holding a conversation – which most of us can do – is a creative act, because it’s based on improvisation! Once we re-frame creativity as problem-solving, it helps people see their own creative capacity in new ways.

Morris: Isaac Asimov once observed, “The most exciting phrase to hear in science, the one that heralds new discoveries, is not Eureka! (I found it!) but rather, ‘hmm… that’s funny…’” Do you agree with him?

Henry: Yes! Steven Johnson has called this the “slow hunch” and I agree. Brilliant work is most frequently the result of focused, laborious effort punctuated by moments of insight, all of which is driven by curiosity sourced in the slow hunch. It’s only when we stay with the problem long enough to recognize those anomalies that we are positioned for breakthroughs. To do this we must develop the ability to ask incisive questions. The questions are – in my opinion – far more important than the answers. Every answer must lead to a new question.

Morris: Here is another quotation, this time from Oliver Wendell Holmes: “I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.” By what process can one get to “the other side of complexity”?

Henry: The trouble is that we get to the other side of complexity for a moment, only to find that there’s far more complexity to be conquered. The creative process is the perpetual assault on the beachhead of apathy, which means that we must fight a daily battle against our natural desire to stay in our comfort zone. Steven Pressfield calls this battling “Resistance” and I’m in 100% agreement. To get to those flashes of clarity – simplicity – requires persistent daily, and sometimes seemingly fruitless effort. At the same time, I don’t know that the illusion of simplicity lasts for long. Most creatives I know experience a brief, shining moment of satisfaction before they begin to see holes in their work. That’s what propels us to keep striving – the promise of greater clarity and simplicity.

Morris: Many major breakthroughs in creativity and innovation are the result of counter-intuitive thinking. For example, combining a wine press with separable type (Gutenberg and the printing press), removal of burrs from a pet’s hair with an attachment (George de Mestral and VELCRO), and leather softener with skin care (Mark Kay Cosmetics).

Here is my two-part question: What are the major differences between intuition and counter-intuition? What (if anything) do intuition and counter-intuition share in common?

Henry: I think intuition and counter-intuition are all about framing. A problem framed in a certain way leads to an intuitive solution. When framed in a different way, the same solution appears counter-intuitive. I believe that so much of this is determined by the focus of the individual solving the problem, and the stimuli that prompt their search for a solution. That’s why I believe it’s critical to maintain a proper level of focus on the true problems you’re trying to solve. If you don’t regularly define your work, you’re likely to drift and you’re less likely to notice those moments of intuitive or counter-intuitive serendipity.

Morris: Of all the books you have read, from which one have you learned the most about creativity and innovation? Please explain.

Henry: From an innovation standpoint, it’s really hard to top The Innovator’s Dilemma by Clayton Christensen. He thoroughly nailed the dynamics of living and working in a marketplace that requires perpetual reinvention, and I believe also unintentionally defined the single biggest factors that cause creative professionals to feel frustrated, under-utilized, and disengaged in their daily work. Purely from a “mechanics of creativity” standpoint, I’d say that I learned the most from Lateral Thinking by Edward de Bono. I also greatly enjoyed Creativity by Mihaly Csikszentmihalyi, which is a synthesis of his research into creativity across multiple domains.

Morris: Within the last few years, there have been several excellent books published in which thought leaders such as Roger Martin, Chris Brown, and Roberto Verganti discuss the design of business. In your opinion, why has this subject attracted so much attention?

Henry: Over the past many years it’s become obvious that design can’t be an after-thought, because it’s actually good business as well. We are in an age where ideas flow freely and with less friction, and many of the traditional means of creating and distributing goods were based on creating friction rather than eliminating it. Great design is about eliminating friction so that consumers can identify, connect with, and consume what they want when they want it. Good design, from operations all the way through the final point-of-sale communication, is critical in eliminating that friction, especially now that consumers have so many choices.

Morris: What are the defining characteristics of a workplace environment within which creativity and innovation are most stimulated, nourished, and when necessary, protected?

Henry: There is no one-size-fits-all solution, though many still try to find it. In my experience, the most innovative and productive workplace environments have less to do with physical space than psychological space. Is there clarity of purpose? Are we rewarded for the things that move the needle, such as taking measured risks, asking good questions, and spending ourselves on behalf of the work? Do we foster an environment of conversation, or of secrecy? No one goes to work in the morning hoping to crank out a mediocre pile of misery, yet over time our work environments either reward continual growth, or encourage systemic mediocrity. You’re either growing or dying, there is no stagnancy. But growth is difficult and messy, and requires persistent effort. Many give up when it’s “good enough.” (One of the best examinations I’ve read of teams who accomplished great, innovative things is Organizing Genius by Warren Bennis and Patricia Ward Biederman.)

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To read the complete interview, please click here.

Todd cordially invites you to check out the resources at The Accidental Creative website by clicking here.

Why Management Ideas Matter

Here is a brief excerpt from a brilliant article by posted by Des Dearlove and Stuart Crainer. It is featured at the Thinkers50 website. To read the complete article and check out the wealth of resources, please click here.

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Who is the most influential living management thinker?

That is the question that the Thinkers50, the biennial global ranking of management thinkers, seeks to answer. But does the ranking or the ideas it celebrates really matter?

It’s a fair question.  In an age of awards overkill, it is tempting to see the ranking as just another example of hubris in the business world. All the more galling when many businesses are struggling.

But, celebrating the very best new thinking in management matters for three reasons.

First, ideas are important. They have the power to change the world.  Think of Copernicus, Socrates, Aristotle, Newton, Galileo, or Einstein. Think of Charles Darwin, the ultimate disruptive innovator.   Ideas define our humanity. They shape the way we think and see our place in the universe.

Equally, in the business world, too, ideas matter — from Steve Jobs to Tim Berners-Lee; and Google to Facebook — new thinkers and new ideas challenge and redefine how we work and live.  An idea can change an entire industry and ideas, from kaizen to the balanced scorecard, continually transform the way we work and lead our businesses.

Second, management matters. It has become fashionable in some places to mock management. Ask someone in the UK what is wrong with the National Health Service, for example, and you are likely to be told that there are too many managers and management consultants and not enough doctors and nurses.  Managers are the fall guys, the scapegoats for organizational excesses, failures and inefficiencies.

Yet, the reality is that management gets things done. The moment you move beyond one or two people working together then some form of management is required. There is nothing new in this. From Alexander the Great to the modern day, the elements of management – from organizational behavior to supply chain management — have made the difference between success and failure.

Just because management has always been with us, it is easy, too, to dismiss the progress that has been made in the last century. Management is often seen as a poor man’s science. (Not so long ago economics suffered a similar fate.) Critics lampoon the latest management buzzwords, labeling them as pretentious and shallow. In truth, though, management has made big strides.

A hundred years ago, we were in the thrall of scientific management. Had there been a Thinkers50 in the early twentieth century, it would have been dominated by one name — Frederick Winslow Taylor. We have moved on since then. One of the achievements of management in the last 20 years is the recognition that management is a fundamentally human activity. It is as much an art as a science.

It is easy to underestimate the influence of management ideas in that process. Notions such as empowerment, championed in the 1980s, and emotional intelligence in the 1990s seem self-evident now. But we have come a long way from Scientific Management and using a stopwatch to manage performance.  Ideas like Howard Gardner’s Multiple Intelligence Theory laid the foundations for that.

Or consider the influence of Clayton Christensen, who tops the Thinkers50 ranking. Christensen’s influence on the business world has been profound. In The Innovator’s Dilemma, he looked at why companies struggle to deal with radical innovation in their markets. The book introduced the idea of disruptive technologies and disruptive innovation to a generation of managers.

Some ideas make us reappraise what we thought we already knew. Until very recently, for example, most managers were (and many still are) convinced that fear and greed were the two primary levers for motivating people.  But Dan Pink’s recent book, Drive: The Surprising Truth About What Motivates Us tackles the perennial subject of motivation, and argues that we need to abandon the ineffectual carrot and stick approach, and the importance of doing something we love for a career.

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Des Dearlove and Stuart Crainer ( http://www.crainerdearlove.com/) are the founders and directors of the Thinkers50. They are adjunct professors at IE Business School. Stuart is editor of Business Strategy Review. Des is an associate fellow of Oxford University’s Saïd Business School.

The Little Black Book of Innovation: A book review by Bob Morris

The Little Black Book of Innovation: How It Works, How to Do It
Scott D. Anthony
Harvard Business Review Press (2012)

How to develop and then apply the skills needed to create “something different that has impact”

I have read and reviewed all of the other books that Scott Anthony has authored or co-authored and think this is the most valuable…thus far. In ways and to an extent even Clay Christensen hasn’t, Anthony has embraced his reader and said, in effect, “I am now going to share with you everything I have learned about what innovation is…and isn’t, what it does…and doesn’t do, and how you can master the skills of innovative thinking.” He immediately establishes a direct and collegial rapport with his reader and then sustains it throughout the lively and eloquent narrative.

Although his book is technically not a memoir, Anthony draws heavily on his own experience, sharing anecdotes from defining moments and memorable relationships throughout his “personal innovation journey” that “began in earnest” during an airline flight more than a decade ago. He was carrying with him and began to read a copy of Christensen’s The Innovator’s Dilemma. He was among the students enrolled in an experimental course (“Building a Sustainably Successful Enterprise”) at Harvard Business School taught by Christensen. Thus began a personal as well as professional relationship with him that continues to this day. Anthony’s aforementioned “journey” since that day (October 20, 2000) enabled him to learn “the truth” about innovation (especially from academic researchers who have “decoded” many of its mysteries”) that has prepared him well to help each of his readers to embark on a comparable journey. As he explains,

“Much of this learning is out of reach for the layperson. It is locked up in books that are too dense, or even worse, it is locked up in the heads of individuals. The Little Black Book of Innovation aims to address this issue by providing the tools and giving you [his reader] the confidence to more reliably turn your dreams into reality.”

After establishing his book’s “foundation” in Part I, he introduces a 28-day innovation program in Part II. Here are the primary goals for each of the four weeks:

Week 1: Discovering the Opportunities (“Wrap Up” on Page 126)
Week 2: Blueprinting Ideas (“Wrap Up” on 165)
Week 3: Addressing and Testing Ideas (“Wrap Up” on 206)
Week 4: Moving Forward (“Wrap Up” on 245)

Anthony introduces each of the four (“This week will help you to accomplish the following [objectives]”) and devotes a separate chapter to each of the 28 days, posing a “Central Question” followed by a “One-Sentence Answer” as well as a set of “How-To Tips.” Within this framework, he provides an abundance of information, insights, and recommendations based on real-world situations that illustrate what innovation is…and isn’t, what it does…and doesn’t do, and how almost anyone can master the skills of innovative thinking.

This four-week/28-day program will be of substantial benefit both to individuals and to teams. If a senior-level executive reads this book and decides to create and lead a project team whose objective is to develop a game plan to increase and support innovation throughout the given enterprise, I presume to suggest that Anthony’s previously published book, The Silver Lining: An Innovation Playbook for Uncertain Times, also be read. In it, he also offers a wealth of advice. For example:

o Identifying the “different approach to take when prudently ‘pruning’” by obtaining the answers to five questions (Pages 30-31)
o What the four business unit portfolio “traps” are and how to avoid or escape from them (Pages 34-35)
o Four specific analyses that can help to determine the degree to which an existing business has unexploited or under-developed potential (Pages 38-39)
o Three important lessons for cost cutting to be learned from the basic pattern of disruptive innovation (Page 52)
o The three-step process to drive “intelligent cost cutting” (Pages 52-63)
o The three-step process that innovators have used to drive disruption to create “spectacular success” (Pages 75-82)
o Four common strategic traps that may appear (Pages 96-98)

Mind you, all this is provided during the first hundred pages.

With all due respect to the other books that have been written about these and other issues, if you will read only one, I think it must be The Little Black of Innovation. If you read only two, The Silver Lining is my recommendation.

 

The Innovator’s Solution: A book review by Bob Morris

The Innovator’s Solution: Creating and Sustaining Successful Growth
Clayton M. Christensen and Michael E. Raynor
Harvard Business Press (2003)

Note: I read and then reviewed this “business classic” when it was first published and recently re-read it. I am even more impressed now than I was then.

In a previous work, The Innovator’s Dilemma, Christensen examines why so many companies fail to remain competitive “when they confront certain types of market and technological change….the good companies — the kinds that many managers have admired for years and tried to emulate, the companies known for their abilities to innovate and execute….It is about well-managed companies that have their competitive antennae up, listen astutely to their customers….invest aggressively in new technologies, and yet they still lose market dominance.” According to Christensen, the innovator’s dilemma occurs when the logical, competent decisions of management which are critical to the success of their companies are also the reasons why they lose their positions of leadership. I wholly agree with Christensen that a given problem must first be fully understood before efforts to solve it are initiated. The challenge is even greater when the given problem poses a dilemma which (in essence) involves a paradox: Whatever has been essential to success can also cause failure. What to do?

In The Innovator’s Solution, Christensen and Raynor offer a wealth of strategies and tactics to solve such a dilemma, revealed by their rigorous research on hundreds of different companies. In their book, they summarize “a set of theories that can guide managers who need to grow new businesses with predictable success — to become disruptors rather than disruptees — and ultimately kill the well-run, established competitors.” More specifically, Christensen and Raynor suggest appropriate responses to situations such as these:

• When a disruptive foothold is needed which competitors “will be happy to ignore or be relieved to walk away from”

• When there are opportunities to help customers “get done more conveniently and inexpensively what they are already trying to get done”

• When a low-end disruption is feasible and a business model is therefore necessary “that can make attractive profits at the discount prices required to capture customers at the low end of the market”

• When determining the criteria for selecting members of a management team for a new venture

NOTE: Christensen and Raynor correctly suggest that among the most important criteria is sufficient prior experience with solving problems comparable with those the new venture seems certain to encounter.

• When disruption (and competing against non-consumption in particular) “requires a longer runway before a steep ascent is possible.”

Christensen and Raynor have no illusions whatsoever about the difficulties of creating and then sustaining successful growth, however “growth” may be defined and measured. Moreover, they observe “To our knowledge, no company has been able to build an engine of disruptive growth and keep it running and running.”

For many decision-makers who read The Innovator’s Solution, I think it will prove be the most valuable business book they ever read. Why? Because it will guide and inform their efforts with associates to design, activate, and then maintain “a well-functioning disruptive growth engine.” Even then, they must keep it mind that no such mechanism will keep “running and running” forever. Improvisation and adaptability are imperative. Eventually, a new “engine” will be required but at least they will possess the knowledge and experience needed to produce another one.

 

The Best Business Books Ever: A book review by Bob Morris

The Best Business Books Ever: The Most Influential Management Books You’ll Never Have Time to Read
Basic Books (2011)

Note: This review is of a book published earlier this year. It is a sequel to one published in 2003.

What we have here is a series of brief discussions of “the most influential management books you’ll never have time to read,” a total of 130, one per author or co-authors. They were selected by persons not identified and the book was published by (appropriately) Basic Books. No doubt those who examine the list will disagree with the selections (I do and more about that later) because any such list is bound to generate controversy. Some readers will question the selection of an author’s work (e.g. preferring Jim Collins’ Good to Great to Built to Last written with Jerry Porras) and other readers will object to an author’s inclusion (e.g. Gerry McGovern, R. Meredith Belbin) and/or exclusion (e.g. Adrian Slywotsky, Jason Jennings). That said, the 130 really would provide an excellent “basic library” of resources that include non-business books such as Sun Tzu’s The Art of War, Niccolò Machiavelli’s The Prince, and Carl von Clauswitz’s On War that have indeed had significant impact on thinking about leadership and management.

The two-page format is eminently sensible:

WHY READ IT? A capsule introduction describing the book’s key contribution to management
GETTING STARTED: An introduction to the main themes that each author sets out to address
CONTRIBUTION: A detailed summary of the book’s most important points
CONTEXT: An overview of both the immediate reaction to the book and its long-term significance
FOR MORE INFORMATION: Essential bibliographic information on the given title

Granted, it is impossible to do full justice to any of the 130. What surprised me is how much useful material the anonymous co-authors of the digests manage to provide. Although the format is standardized, the approach to essential points varies to accommodate the unique significance of the given work. Here are two brief excerpts:

On the contribution of Igor Ansoff’s Corporate Strategy (1965): “The book presented several new theoretical concepts, such as partial ignorance, business strategy, capability and competence profiles, and synergy. One particular concept, the product-mission matrix, became very popular because it was simple and – for the first time – codified the differences between strategic expansion and diversification.”

On the contribution of Clayton M. Christensen’s The Innovator’s Dilemma (2003): “The author cites five reasons successful companies fail to capitalize on disruptive technologies:

• Customers control the pattern of resource allocation.
• Small markets do not solve the growth needs of large companies.
• It can be difficult to identify successful applications in advance.
• Larger organizations rely on their core competencies and values.
• Technology supply may not equal demand.”

Having read most of the 130, reviewed a majority, and interviewed the authors of several, I disagree with only a few of the selections and would have replaced them with others I consider more worthy such as Eric Drexler’s Engines of Creation: The Coming Era of Nanotechnology (1987), Patrick Lencioni’s The Five Dysfunctions of a Team: A Leadership Fable (2002), Guy Kawasaki’s Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition (2008), Thomas S. Kuhn’s The Structure of Scientific Revolutions (1996), and the U.S. Army’s Official Army Leadership Manual: Leadership the Army Way (available to the general public in Be*Know*Do, an adaptation of the manual published in 2004).

The “Innovator’s Dilemma” Applies To Management, As Well As Technology – Insight From Alan Murray (WSJ)

Here is some terrific, and challenging, insight from Alan Murray from the Wall Street Journal:  The End of Management: Corporate bureaucracy is becoming obsolete. Why managers should act like venture capitalists. The entire article is definitely worth reading.  Here are key excerpts:

“Modern” management is nearing its existential moment.

When I asked members of The Wall Street Journal’s CEO Council, a group of chief executives who meet each year to deliberate on issues of public interest, to name the most influential business book they had read, many cited Clayton Christensen’s “The Innovator’s Dilemma.” That book documents how market-leading companies have missed game-changing transformations in industry after industry—computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)—not because of “bad” management, but because they followed the dictates of “good” management. They listened closely to their customers. They carefully studied market trends. They allocated capital to the innovations that promised the largest returns. And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster products.

“The single biggest reason companies fail,” says Mr. Hamel, “is that they overinvest in what is, as opposed to what might be.”

The new model will have to instill in workers the kind of drive and creativity and innovative spirit more commonly found among entrepreneurs. It will have to push power and decision-making down the organization as much as possible, rather than leave it concentrated at the top. Traditional bureaucratic structures will have to be replaced with something more like ad-hoc teams of peers, who come together to tackle individual projects, and then disband.

Can the 20th-century corporation evolve into this new, 21st-century organization? It won’t be easy. The “innovator’s dilemma” applies to management, as well as technology. But the time has come to find out. The old methods won’t last much longer.

Clayton Christensen asks, “How will you measure your life?”

Clayton Christensen

Here is an excerpt from an article written by Clayton Christensen for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

Editor’s Note: When the members of the class of 2010 entered business school, the economy was strong and their post-graduation ambitions could be limitless. Just a few weeks later, the economy went into a tailspin. They’ve spent the past two years recalibrating their worldview and their definition of success. The students seem highly aware of how the world has changed (as the sampling of views in this article shows). In the spring, Harvard Business School’s graduating class asked HBS professor Clay Christensen to address them—but not on how to apply his principles and thinking to their post-HBS careers.

The students wanted to know how to apply them to their personal lives. He shared with them a set of guidelines that have helped him find meaning in his own life. Though Christensen’s thinking comes from his deep religious faith, we believe that these are strategies anyone can use. And so we asked him to share them with the readers of HBR. To learn more about Christensen’s work, visit his HBR Author Page [click here].

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Before I published The Innovator’s Dilemma, I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldn’t—that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, I’ve got your model. Just tell us what it means for Intel.”

I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel mini-mills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills.

When I finished the mini-mill story, Grove said, “OK, I get it. What it means for Intel is…,” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the Celeron processor.

I’ve thought about that a million times since. If I had been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I taught him how to think—and then he reached what I felt was the correct decision on his own.
That experience had a profound influence on me. When people ask what I think they should do, I rarely answer their question directly. Instead, I run the question aloud through one of my models. I’ll describe how the process in the model worked its way through an industry quite different from their own. And then, more often than not, they’ll say, “OK, I get it.” And they’ll answer their own question more insightfully than I could have.

My class at HBS is structured to help my students understand what good management theory is and how it is built. To that backbone I attach different models or theories that help students think about the various dimensions of a general manager’s job in stimulating innovation and growth. In each session we look at one company through the lenses of those theories—using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results.

On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys—but something in their lives sent them off in the wrong direction.
As the students discuss the answers to these questions, I open my own life to them as a case study of sorts, to illustrate how they can use the theories from our course to guide their life decisions.

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Clayton M. Christensen (cchristensen@hbs.edu) is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School as well as the author or co-author of several books that include The Innovator’s Dilemma, The Innovator’s Solution, Seeing What’s Next, The Innovator’s Prescription: A Disruptive Solution for Health Care co-authored with Jerome H. Grossman M.D. and Jason Hwang M.D.. and most recently, Disrupting Class, Expanded Edition: How Disruptive Innovation Will Change the Way the World Learns co-authored with Curtis W. Johnson and Michael B. Horn (to be published later in 2010).

Book Review: Innovator’s Guide to Growth

The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work
Scott D. Anthony, Mark W. Johnson, Joseph V. Sinfield, and Elizabeth J. Altman
Harvard Business School Press (2008)

The co-authors offer a great deal of valuable information and counsel and much of the credit must be given to Scott Anthony who is a long-time and close associate of Clayton Christensen’s and co-author with him of Seeing What’s Next: Using Theories of Innovation to Predict Industry Change. The author of The Innovator’s Dilemma and The Innovator’s Solution (with Michael E. Raynor), Christensen wrote the Foreword to this volume in which Anthony and his co-authors (Mark Johnson, Joseph Sinfield, and Elizabeth Altman) explain why and how taking “the right steps and putting in place the right structures can allow managers and entrepreneurs to improve significantly their odds of creating profitable growth businesses. This view contrasts with a prevailing stream of thinking that innovation is random and requires creative genius.”

This last sentence caught my eye because I had just read a book by Geoff Colvin, Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else. In Chapter Nine, Colvin suggests that two views characterize what most of us know “that just ain’t so” about innovation and creativity. “One is that creative ideas come to us in the way a famous one came to Archimedes, in a eureka moment when everything suddenly becomes clear…The other thing we all think we know about creativity is that it can be inhibited by too much knowledge. We often say that someone is `too close to the problem’ to see the solution. The broader principle is that if you know too much about a situation, a business, a field of study, then you can’t have the flash of insight that is available only to someone unburdened by a lifetime of immersion in the domain.” Colvin’s repudiation of both views is best revealed within the narrative, in context. His point is, that great innovators (e.g. those who devise disruptive technologies) aren’t burdened by knowledge, they’re nourished by it. For them (with very rare exception), innovation doesn’t strike, it grows. Therefore, innovation requires a culture within which to thrive.

After providing a “Disruptive Innovation Model” with a brief explanation (Figure 1-2 on Pages 17-18), the authors carefully organize their material as follows: Part One: Identify Opportunities (e.g. nonconsumers, overshot customers, and jobs to be done); Part Two: Formulate and Shape Ideas (e.g. development of disruptive ideas and assessment of a strategy’s fit with a pattern); Part Three: Build the Business (i.e. mastering emergent strategies as well as assembling and managing project teams); and Part Four: Build Capabilities (e.g. “organize to innovate” and formulate innovation metrics). Then in the final chapter, “Conclusion,” the authors review several key points and then briefly discuss ten “key innovation traps” (six that are project-related, such as “Pursuing unattainable perfection,” and four that are company-related, such as “Too many lingering projects”) and then review a series of lessons to be learned from innovation initiatives at Procter & Gamble. The authors conclude the chapter with their “Final Words of Wisdom,” eight guiding axioms suggested by the extensive research and intensive field work that led to their writing of this book. I especially like #8, “Devil’s advocates are abundant, problem solvers are scarce.”

I presume to add one other perspective. Think of an innovative organization as a “nursery” where trees thrive and flowers blossom because they are planted in nutrient rich soil and receive constant nurturing. Seedlings are not pulled up “to see how well they’re doing.” And when necessary, there is pruning to protect growth. Extending the metaphor, the information and counsel the authors of this book provide can help each reader to develop a “green thumb.” Producing a harvest is up to you.

Book Review: Seeing What’s Next

Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change
Clayton M. Christensen, Scott D. Anthony, and Erik A. Roth
Harvard Business School Press (2004)

Together with Erik A. Roth and Scott D. Anthony, Clayton M. Christensen offers in this volume further development of core concepts previously discussed in The Innovator’s Dilemma and The Innovator’s Solution. However, there is a substantial amount of new thinking and an abundance of new material. Although I strongly recommend that the two earlier works be read first, that is not a requirement to derive full benefit from Seeing What’s Next.

According to Christensen, “While the two previous books were aimed at managers inside firms who wanted to defend again or attack with a disruption, Seeing What’s Next is written for those who watch industries from the [in italics] outside, and who must make important decisions based on what they see. It will help executives, analysts, investors, and others who have a stake in a specific industry to evaluate the impact of innovations, the outcomes of competitive battles, and the moves made by individual firms — and to make smarter business decisions, forecasts, and stock recommendations based on those evaluations. The goal here [in Seeing What's Next] is to dramatically increase the odds of getting things right in the arena where wrong decisions could be devastating.”

In a single volume, the authors guide and inform decision-makers in all manner of organizations as they embark on the three-part process by which to (1) identify signals of change, (2) evaluate competitive, head-to-head battles between companies loosely classified as “attackers” and “incumbents” (please see the Glossary), (3) formulate appropriate strategic choices that can influence the outcome of competitive battles, and (4) meanwhile establish and then sustain an effective relationship between innovation and non-market forces such as government regulation. Christensen, Anthony, and Roth are to be congratulated for what I consider to be a brilliant achievement. Since it was published five years ago, Seeing What’s Next has become a business book “classic.”