Paradise regained: Clayton Christensen and the path to salvation

June 29, 2012

Is it possible in the year of our Lord 2012 that leadership still isn’t well understood? In 2012, despite business journalism’s fetishization of Steve Jobs, the most successful leader ever, whose apotheosis was Walter Isaacson’s doorstop, Steve Jobs, a biography of the half-Syrian, bearded man who built the world’s most valuable company, brick by brick, and found himself, like an earlier CEO of sorts, with legions of devoted apostles, some powerful enemies, and an inextinguishable legend? Is it possible, despite the endless streams of management self-help articles burbling out of Fast Company, Inc., Harvard Business Review, Businessweek, Fortune and the blogs of droves of self-appointed leadership gurus, we need more advice? And is it possible despite the emails – so many emails, Jesus wept – those emails that aggregate all this content using algorithms and intern labor, and slice it up so that the middle manager in Minnesota and the lawyer in Los Angeles and the new media marketer in New York are all .0058% more likely to click through to a relevant article? Is it possible, really possible, the answer to our prayers is another book on leadership?

It is, thinks Clay Christensen. Business folks – the unquenchable consumers of all that content – have been taking the paradoxes of leadership, because they are so familiar, for granted. When they do this, they ruin their companies and then they ruin their lives. Like that subway step everyone tripped over for years without noticing, they take for granted that the well-worn grooves on our society’s pathways are the right ones to be in. They don’t watch the road to see when a turn they are on is about to become rutted, or when they might hit mud and tip over. They feel, like the pioneers, safe in a wagon train, but then something goes wrong, and they are very alone, very fast. They need the wisdom of a pioneer who has crossed the valley, and studied the path.

  • Paradox one: Leading is usually about getting people to go someplace difficult and new, even if (or precisely because) they’re perfectly comfortable and prosperous where they are right now.
  • Paradox two: A leader can’t just motivate people to change, she has to persuade them to actually take the journey, and care about its success or failure.
  • Paradox three: Even if a leader succeeds, there’s no guarantee she will get any credit, or gratitude for the services rendered. Except for the millions of dollars in compensation some business leaders make, the magazine cover stories and books written about them, the hobnobbing with President Obama, being a leader can be the most thankless of tasks. Of course, if you do it wrong, you get shown the door.

Still. Celebrity, money, power – hard to shed a tear, it’s true. But pay attention, for a moment, before we get to the personal, to the failures of business leadership. The landscape is littered with the carrion of companies that blew it; high fliers that flamed out. If leadership can be occasionally rewarding, it is far more often the case that business leaders, even ones who have been coronated by adoring customers and media, end up, over the long haul, stumbling and failing. To put it in more fruitful terms: For every Apple, there is a Blackberry.

Yet to Christensen, Harvard Business School professor, consultant, investor, onetime failed CEO, the problems of leadership are not inscrutable. They are very scrutable. They just have to be worked through a sound theory. Christensen, 60, is most famously the author of business school bible The Innovator’s Dilemma, a 1997 tract that grew out of his HBS doctoral thesis, about the disk drive industry. His work has appeared in or been the subject of scores of articles in all the above-named publications, but there is something different about it. It’s a something that grants him the ear and attention of some of the world’s most powerful CEOs. Christensen excels at delivering to them a very special kind of bad news, which would be unwelcome but for his steady, deep tone, gentle nature, and unshakeable conviction that his findings offer a path to corporate salvation, no matter how fraught it is with trials and temptation. Christensen tells his chosen people that if they want to survive they must lead, and they have to have faith in the theory that shows the way. He tells them that the moment of greatest danger comes when they stand at the pinnacle of their industry. Upstarts are coming for their customers. Soon, they’ll be broke. His theories are familiar to business journalism junkies, startup founders, and those powerful CEOs. Venture capitalists and startup founders in Silicon Valley and beyond have found religion in the concept of disruptive innovation that he refined.

Using spare black and white charts, which are his favorite visualization tools, Christensen shows how well-managed, profitable companies can become abject failures in a breathtakingly short time by doing all the right things: They refine their existing products to be better and better. They cater to their best, biggest customers. And they try to grow their profit margins with every passing quarter. But it turns out the path they’re on is something like C.S. Lewis’s gently sloping road to Hell. Christensen sees Bethlehem Steel go bankrupt just a couple years after a glowing Wall Street Journal profile about its genius CEO. He sees the second largest computer company in the world, DEC in the 1970’s, reduced to irrelevance in less than a decade. He observes the tragi-comic rise and fall of Enron. And he studies those disk drive companies, which he calls the “fruit flies” of the technology industry, as they are born, evolve, succeed, and die by the dozen, in no time at all. What the loser companies and many others all missed was, he believes, the impact of disruptive technologies on their business.

Christensen may appear to be an all seeing and all knowing deity, but he decides nothing. He doesn’t have an opinion. Christensen has a theory. “The theory has an opinion,” he tells me. “Like gravity is a theory. And it has a very strong opinion.” The theory, then, that Christensen has spent years refining, believes that great companies fail “because the very management practices that have allowed them to become industry leaders also make it extremely difficult for them to develop the disruptive technologies that ultimately steal away their markets.” What made you strong in the past, says the theory, is precisely what will kill you now.

Companies that want to survive over the long run must figure out how to disrupt their businesses or they will instead find themselves disrupted by smaller competitors who, at least initially, make subpar, expensive products that do similar jobs. That sounds laughable until the day all the old company’s customers abandon it to buy from the new guy, because the startup was able to tap a new market, or innovate more rapidly on the product, or relentlessly steal low-margin market share while also developing a more efficient cost structure to later raid the older company’s high-margin business. In industry after industry that Christensen has studied — steel, steam shovels, disk drives, and lately, education — the failures repeat themselves.

Though hydraulic backhoes were underpowered compared to mighty cable rigged steam shovels, Christensen found they tapped a new market, among trench diggers, and as their manufacturers improved them they caught up with and surpassed steam shovel makers in price and, thanks to the lack of cables to snap, safety. Mainframe computer makers may not have had much use for 5.25” disk drives, but the PC makers who were about to pillage their market had a huge, unfulfilled need for more compact drives, even at the expense, initially, of some capacity and reliability. In both cases, the original companies had learned to do business a certain way, and the technology that disrupted them was something their organizations weren’t built to address or nurture.

Though the failures repeat, so do the successes. IBM has experienced no less than three total reinventions in its hundred years of existence. Apple made beige computer boxes once too, and still makes computers today, but its two biggest sources of revenue, and its future, are now the iPhone and iPad. Christensen’s follow-ups to The Innovator’s Dilemma have examined the “hard” and “soft” strategies that CEOs use to effect change, and the various business structures large companies deploy to foster disruptive technologies that may eventually replace their core business altogether, but the how of how these big, established firms thrived all comes down to leadership. At IBM, the PC division was established in Florida, far from corporate headquarters, and given no corporate baggage to handle, only a mandate to build a product. At Apple, Steve Jobs was his own product designer and customer, and could bend the company to his will—traits he leveraged heavily upon returning in 1997 to the directionless company he had founded. His imperiousness would have backfired horribly if he hadn’t perfectly understood, according to Christensen’s “job to be done” theory, exactly what types of products Apple needed to make in order to turn itself around.

Christensen calls himself “quite a religious” man, a devout Mormon who has been a leader in his church and does not shy away from talking about his faith. It’s hard not to see how the teachings of his church have impacted his thinking about management. His faith, in fact, was one of the first things he discussed with me when I sat down with him in his living room in Belmont, Massachusetts, at the crack of dawn one Monday morning, the only time he could spare, because he was due to board a private jet and spend the day counseling a Fortune 50 CEO. “God designed our world,” he said, introducing a paradox. “He oriented us to look at the future, but he only makes data available about the past.” Then Christensen politely but firmly renounced the entire model upon which business schools are built. The elites who hold the status quo sacred might almost take what this devout man said about them as profane. “People come through the funnels, like the Harvard Business School, or Wharton,” he said, and these students learn by using historical business cases to make analytical, data-driven decisions about the future. The problem, he told me, is that, “in teaching them to be data driven, we condemn them to take action when the game is over.” This is how he works. It’s easy to throw ideas like disruption around in education, thinking, surely he couldn’t be talking about Harvard, where they have it all. But he is very much talking about Harvard.

It’s interesting then, that Christensen’s God by definition knows the outcome of every action that takes place in our universe. If hindsight is useless, so is a CEO who needs leadership lessons. Theories on process may be crucial to execution, but if a leader doesn’t already have Jack Welch’s balls, Steve Jobs’s arrogance, or Jack Dorsey’s sense of purpose (a “hall of fame” two-time disruptive innovator, says Christensen), the war is over before it’s begun.

The next paradox: The theory is just that: a theory. A leader can’t really know where the path he chooses will lead. Even Christensen couldn’t know that of the elite classmates that joined him at Harvard Business School and in the Rhodes scholarship, two, including Enron’s CEO Jeffrey Skilling, would wind up in jail, and several more would find themselves in broken marriages and with frayed professional lives. Watching Skilling’s tragedy unfold may be why, for the first time, he is applying his theories beyond business, to the personal. To our lives.

Those damaged beings became different kind of case studies for Christensen’s new book, How Will You Measure Your Life?, co-authored with with James Allworth and Karen Dillon. “I don’t want to mislead you,” Christensen writes. “There are many of my classmates who have led exemplary personal lives.” But the tapered ends of a distribution curve in Christensen’s world are not to be thrown away. They are for study. “You’re always going to find, ‘What does your theory not explain?’ And then”, he says, “you have to use that to go back and keep always improving your theory.”

It must have been tough, even so, for Christensen’s theory to make sense of his old classmate Jeffrey Skilling’s sad case. How did someone like Skilling, who was known as “a family man” even in his business school days, go on to become a jailed, disgraced symbol of fraud? And how does the theory explain Skilling? “I never,” Christensen says, “want to tell people, ‘If you do this, you’re going to be a happier person,’ because, in fact, life is very complicated. But there are better and worse ways to think your way through the problem.”

Much the way a CEO can’t afford to ignore a tiny, disruptive startup that could become an existential threat to his business, Christensen believes it’s the small compromises in life that eventually lead to grave crimes. “You get there because you couldn’t think through the end result of these innocuous, sense-making things,” he says.

“It’s easier,” says Christensen’s theory, “to keep your standards 100 percent of the time than 98 percent of the time, if these paradoxes or hard decisions occur repeatedly in your life, which they do.” Christensen can hear in his head the phrase people use when they excuse their lapses: “‘I know that in general everybody should follow this rule, but in my particular extenuating circumstance, just this once it’s O.K.’ If that theme recurs in your life over and over again, it really is true that life is an unending stream of extenuating circumstances.” But he gives me a longer list of exemptions people grant themselves, including viewing pornography, outsourcing, and even hiring a guy to mow your lawn, that lead to the same sloping road to Hell, just on a personal rather than corporate level. And he tells me how they get on the road:

“When Satan is trying to convince us to follow him, he doesn’t have a full disclosure policy. But he says, ‘Hey, come in this box with me.’ And you look inside the box and it looks really quite enticing. So you come in and in fact you enjoy it. and then Satan says, ‘How about you come into this next box?’ And it looks pretty good compared to the last one, and then you end up at the end of the path.

“And you say, ‘Satan, you never told me that this is where the path ends.’ But that’s his whole point. And so, the first step is pornography for a lot of people. And compared to no pornography, this is actually quite a nice box. And then the next thing happens, and the next thing happens, and all of a sudden you’re divorced and your kids are alienated from you. And you would never choose to go there, but you just don’t know the end.”

It’s not, then, about the flaunting of wealth. After all, Christensen had a Subaru in his driveway and a housepainter coming by as he was leaving for the airport. It’s that, he says, “all of these things make consummate sense individually, but then, your children don’t have to do hard things.” If they— if any of us—never have to ask ourselves why we can’t take the easy route, we’ll never take our own measure, or be able to foresee how our little compromises spiral into life-destroying ones.

Over the past few years, Christensen has become his own edge case. He bounced back from a stroke that robbed him of his ability to speak and he continues have trouble with writing, hence the co-authors. He underwent successful chemotherapy for lymphoma, which he was initially told was the same kind that killed his father. And he survived a “widow-maker” heart attack, not that the pain kept him from grabbing his briefcase on the way to the hospital, in case he could squeeze in some work while hooked up to the EKG.

Somehow, Christensen’s extenuating circumstances haven’t prevented him from thinking about new applications for his theory of disruption. Nor is his new book likely to be a permanent transition from business writing into the self-help section of, well, any bookstore that hasn’t been disrupted out of existence. The consulting firm he co-founded, Innosight, has been studying how disruption could apply to healthcare, and Christensen himself has been thinking a lot about education. Harvard Business School, he’s noticed, has been experiencing disruption from online education models and corporate universities. “What that means is in the past,” he tells me, leaning forward, ”we made our money with the artistry of the professor. And the components of the course, the cases, that was insignificant. But now online learning and corporations are just booming.”

The solution for Harvard, Christensen’s theory believes, is what he advises leaders to do when they are at the top of the heap, when their leadership is unquestioned. Disrupt. Tear it all down. Lead the business to an uncomfortable yet inevitable place. “Make it so affordable and easy that an unwashed instructor in a third rate corporate training program can teach better strategy than Clay Christensen. And if we did that, then we become the Intel inside of all these corporate universities.”

Mormons believe everyone is saved thanks to Jesus’s sacrifice, but that they must continue to, as is written in The Holy Bible, “work out their salvation with fear and trembling.” If they do that, they may eclipse mere salvation and become exalted, which is to say, become god-like. The way Christensen’s theories seem to work, our futures already exist. The path forward is clear enough, and the results of our actions are entirely predictable. Work the data through them, and everything will be illuminated. The only question is, are you saved?

 

Photo: Harvard Business School Professor Clayton Christensen conducts an interview with a Reuters journalist at his home in Belmont, Mass. REUTERS/Jessica Rinaldi.

3 comments

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The obvious counterexample would appear to be Coca-Cola. They were masters of the universe, and the only threat they faced was from someone who might come along and substitute much cheaper corn syrup for sugar in their flavoured water.

So Coke disrupted and did it first, changing the recipe. And very nearly destroyed the entire company in the space of a single press conference….

Posted by Ian_Kemmish | Report as abusive

“Is it possible in the year of our Lord 2012 that leadership still isn’t well understood? In 2012, despite business journalism’s fetishization of Steve Jobs, the most successful leader ever, whose apotheosis was Walter Isaacson’s doorstop, Steve Jobs, a biography of the half-Syrian, bearded man who built the world’s most valuable company, brick by brick, and found himself, like an earlier CEO of sorts, with legions of devoted apostles, some powerful enemies, and an inextinguishable legend?”

Whoa! Yes, it’s entirely possible, and more so since that opening paragraph.

We are sure there’s some coherent thought in there waiting to bust out, but we’re going to give up at this point — after five reads — trying to liberate it ourselves.

Posted by WeWereWallSt | Report as abusive

Oh my, I use a lawn guy. Still, Christensen is the real deal. I saw him speak, three months after his stroke, and marvelled as his ability to communicate the fundamental things of business and life. We could do a lot worse in life than listen to him.

Posted by Curmudgeon | Report as abusive