and penning my thoughts as an active blogger, I have never been a fan of
producing anything verbatim. But Clay Christensen s
article from Harvard Business Review, below, is a lethal combination of
philosophy, Corporate Conduct, Prioritisation, life lessons and above all refreshingly
different from the humdrum of infinitely large supply of gyaan
available on the net. I wanted this to be a permanent part of my timeline – Do read,
leave a comment and share if You please.
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 minimills 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
When I finished the minimill 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.
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
One of the theories that gives great
insight on the first question—how to be sure we find happiness in our
careers—is from Frederick Herzberg, who asserts that the powerful motivator in
our lives isn’t money; it’s the opportunity to learn, grow in responsibilities,
contribute to others, and be recognized for achievements. I tell the students
about a vision of sorts I had while I was running the company I founded before
becoming an academic. In my mind’s eye I saw one of my managers leave for work
one morning with a relatively strong level of self-esteem. Then I pictured her
driving home to her family 10 hours later, feeling unappreciated, frustrated,
underutilized, and demeaned. I imagined how profoundly her lowered self-esteem
affected the way she interacted with her children. The vision in my mind then
fast-forwarded to another day, when she drove home with greater
self-esteem—feeling that she had learned a lot, been recognized for achieving
valuable things, and played a significant role in the success of some important
initiatives. I then imagined how positively that affected her as a spouse and a
parent. My conclusion: Management is the most noble of professions if it’s
practiced well. No other occupation offers as many ways to help others learn
and grow, take responsibility and be recognized for achievement, and contribute
to the success of a team. More and more MBA students come to school thinking
that a career in business means buying, selling, and investing in companies.
That’s unfortunate. Doing deals doesn’t yield the deep rewards that come from
building up people.
I want students to leave my classroom
Create a Strategy for Your Life
the second question—How can I ensure that my relationship with my family proves
to be an enduring source of happiness?—concerns how strategy is defined and
implemented. Its primary insight is that a company’s strategy is determined by
the types of initiatives that management invests in. If a company’s resource
allocation process is not managed masterfully, what emerges from it can be very
different from what management intended. Because companies’ decision-making
systems are designed to steer investments to initiatives that offer the most
tangible and immediate returns, companies shortchange investments in
initiatives that are crucial to their long-term strategies.
Over the years I’ve watched the fates
of my HBS classmates from 1979 unfold; I’ve seen more and more of them come to
reunions unhappy, divorced, and alienated from their children. I can guarantee
you that not a single one of them graduated with the deliberate strategy of
getting divorced and raising children who would become estranged from them. And
yet a shocking number of them implemented that strategy. The reason? They
didn’t keep the purpose of their lives front and center as they decided how to
spend their time, talents, and energy.
It’s quite startling that a
significant fraction of the 900 students that HBS draws each year from the
world’s best have given little thought to the purpose of their lives. I tell
the students that HBS might be one of their last chances to reflect deeply on
that question. If they think that they’ll have more time and energy to reflect
later, they’re nuts, because life only gets more demanding: You take on a
mortgage; you’re working 70 hours a week; you have a spouse and children.
For me, having a clear purpose in my
life has been essential. But it was something I had to think long and hard
about before I understood it. When I was a Rhodes scholar, I was in a very
demanding academic program, trying to cram an extra year’s worth of work into
my time at Oxford. I decided to spend an hour every night reading, thinking,
and praying about why God put me on this earth. That was a very challenging
commitment to keep, because every hour I spent doing that, I wasn’t studying
applied econometrics. I was conflicted about whether I could really afford to
take that time away from my studies, but I stuck with it—and ultimately figured
out the purpose of my life.
Doing deals doesn’t yield
the deep rewards that come from building up people.
Had I instead spent that hour each
day learning the latest techniques for mastering the problems of
autocorrelation in regression analysis, I would have badly misspent my life. I
apply the tools of econometrics a few times a year, but I apply my knowledge of
the purpose of my life every day. It’s the single most useful thing I’ve ever
learned. I promise my students that if they take the time to figure out their
life purpose, they’ll look back on it as the most important thing they
discovered at HBS. If they don’t figure it out, they will just sail off without
a rudder and get buffeted in the very rough seas of life. Clarity about their
purpose will trump knowledge of activity-based costing, balanced scorecards,
core competence, disruptive innovation, the four Ps, and the five forces.
My purpose grew out of my religious
faith, but faith isn’t the only thing that gives people direction. For example,
one of my former students decided that his purpose was to bring honesty and
economic prosperity to his country and to raise children who were as capably
committed to this cause, and to each other, as he was. His purpose is focused
on family and others—as mine is.
The choice and successful pursuit of
a profession is but one tool for achieving your purpose. But without a purpose,
life can become hollow.
Allocate Your Resources
Your decisions about allocating your
personal time, energy, and talent ultimately shape your life’s strategy.
I have a bunch of “businesses” that
compete for these resources: I’m trying to have a rewarding relationship with
my wife, raise great kids, contribute to my community, succeed in my career,
contribute to my church, and so on. And I have exactly the same problem that a
corporation does. I have a limited amount of time and energy and talent. How
much do I devote to each of these pursuits?
Allocation choices can make your life
turn out to be very different from what you intended. Sometimes that’s good:
Opportunities that you never planned for emerge. But if you misinvest your
resources, the outcome can be bad. As I think about my former classmates who
inadvertently invested for lives of hollow unhappiness, I can’t help believing
that their troubles relate right back to a short-term perspective.
people who have a high need for achievement—and that includes all Harvard
Business School graduates—have an extra half hour of time or an extra ounce of
energy, they’ll unconsciously allocate it to activities that yield the most
tangible accomplishments. And our careers provide the most concrete evidence
that we’re moving forward. You ship a product, finish a design, complete a
presentation, close a sale, teach a class, publish a paper, get paid, get
promoted. In contrast, investing time and energy in your relationship with your
spouse and children typically doesn’t offer that same immediate sense of
achievement. Kids misbehave every day. It’s really not until 20 years down the
road that you can put your hands on your hips and say, “I raised a good son or
a good daughter.” You can neglect your relationship with your spouse, and on a
day-to-day basis, it doesn’t seem as if things are deteriorating. People who
are driven to excel have this unconscious propensity to underinvest in their families
and overinvest in their careers—even though intimate and loving relationships
with their families are the most powerful and enduring source of happiness.
If you study the root causes of business disasters, over and over
you’ll find this predisposition toward endeavors that offer immediate
gratification. If you look at personal lives through that lens, you’ll see the
same stunning and sobering pattern: people allocating fewer and fewer resources
to the things they would have once said mattered most.
Create a Culture
There’s an important model in our
class called the Tools of Cooperation, which basically says that being a
visionary manager isn’t all it’s cracked up to be. It’s one thing to see into
the foggy future with acuity and chart the course corrections that the company
must make. But it’s quite another to persuade employees who might not see the
changes ahead to line up and work cooperatively to take the company in that new
direction. Knowing what tools to wield to elicit the needed cooperation is a
critical managerial skill.
two dimensions—the extent to which members of the organization agree on what
they want from their participation in the enterprise, and the extent to which
they agree on what actions will produce the desired results. When there is
little agreement on both axes, you have to use “power tools”—coercion, threats,
punishment, and so on—to secure cooperation. Many companies start in this
quadrant, which is why the founding executive team must play such an assertive
role in defining what must be done and how. If employees’ ways of working
together to address those tasks succeed over and over, consensus begins to
form. MIT’s Edgar Schein has described this process as the mechanism by which a
culture is built. Ultimately, people don’t even think about whether their way
of doing things yields success. They embrace priorities and follow procedures
by instinct and assumption rather than by explicit decision—which means that
they’ve created a culture. Culture, in compelling but unspoken ways, dictates
the proven, acceptable methods by which members of the group address recurrent
problems. And culture defines the priority given to different types of
problems. It can be a powerful management tool.
In using this model to address the
question, How can I be sure that my family becomes an enduring source of
happiness?, my students quickly see that the simplest tools that parents can
wield to elicit cooperation from children are power tools. But there comes a
point during the teen years when power tools no longer work. At that point
parents start wishing that they had begun working with their children at a very
young age to build a culture at home in which children instinctively behave
respectfully toward one another, obey their parents, and choose the right thing
to do. Families have cultures, just as companies do. Those cultures can be
built consciously or evolve inadvertently.
If you want your kids to have strong
self-esteem and confidence that they can solve hard problems, those qualities
won’t magically materialize in high school. You have to design them into your
family’s culture—and you have to think about this very early on. Like
employees, children build self-esteem by doing things that are hard and
learning what works.
Avoid the “Marginal Costs” Mistake
We’re taught in finance and economics
that in evaluating alternative investments, we should ignore sunk and fixed
costs, and instead base decisions on the marginal costs and marginal revenues
that each alternative entails. We learn in our course that this doctrine biases
companies to leverage what they have put in place to succeed in the past,
instead of guiding them to create the capabilities they’ll need in the future.
If we knew the future would be exactly the same as the past, that approach
would be fine. But if the future’s different—and it almost always is—then it’s
the wrong thing to do.
This theory addresses the third
question I discuss with my students—how to live a life of integrity (stay out
of jail). Unconsciously, we often employ the marginal cost doctrine in our
personal lives when we choose between right and wrong. A voice in our head
says, “Look, I know that as a general rule, most people shouldn’t do this. But
in this particular extenuating circumstance, just this once, it’s OK.” The
marginal cost of doing something wrong “just this once” always seems alluringly
low. It suckers you in, and you don’t ever look at where that path ultimately
is headed and at the full costs that the choice entails. Justification for
infidelity and dishonesty in all their manifestations lies in the marginal cost
economics of “just this once.”
I’d like to share a story about how I
came to understand the potential damage of “just this once” in my own life. I
played on the Oxford University varsity basketball team. We worked our tails
off and finished the season undefeated. The guys on the team were the best
friends I’ve ever had in my life. We got to the British equivalent of the NCAA
tournament—and made it to the final four. It turned out the championship game
was scheduled to be played on a Sunday. I had made a personal commitment to God
at age 16 that I would never play ball on Sunday. So I went to the coach and
explained my problem. He was incredulous. My teammates were, too, because I was
the starting center. Every one of the guys on the team came to me and said,
“You’ve got to play. Can’t you break the rule just this one time?
I’m a deeply religious man, so I went
away and prayed about what I should do. I got a very clear feeling that I
shouldn’t break my commitment—so I didn’t play in the championship game.
In many ways that was a small
decision—involving one of several thousand Sundays in my life. In theory,
surely I could have crossed over the line just that one time and then not done
it again. But looking back on it, resisting the temptation whose logic was “In
this extenuating circumstance, just this once, it’s OK” has proven to be one of
the most important decisions of my life. Why? My life has been one unending
stream of extenuating circumstances. Had I crossed the line that one time, I
would have done it over and over in the years that followed.
The lesson I learned from this is
that it’s easier to hold to your principles 100% of the time than it is to hold
to them 98% of the time. If you give in to “just this once,” based on a
marginal cost analysis, as some of my former classmates have done, you’ll
regret where you end up. You’ve got to define for yourself what you stand for
and draw the line in a safe place.
Remember the Importance of Humility
I got this insight when I was asked
to teach a class on humility at Harvard College. I asked all the students to
describe the most humble person they knew. One characteristic of these humble
people stood out: They had a high level of self-esteem. They knew who they
were, and they felt good about who they were. We also decided that humility was
defined not by self-deprecating behavior or attitudes but by the esteem with
which you regard others. Good behavior flows naturally from that kind of
humility. For example, you would never steal from someone, because you respect
that person too much. You’d never lie to someone, either.
humility into the world. By the time you make it to a top graduate school,
almost all your learning has come from people who are smarter and more
experienced than you: parents, teachers, bosses. But once you’ve finished at Harvard
Business School or any other top academic institution, the vast majority of
people you’ll interact with on a day-to-day basis may not be smarter than you.
And if your attitude is that only smarter people have something to teach you,
your learning opportunities will be very limited. But if you have a humble
eagerness to learn something from everybody, your learning opportunities will
be unlimited. Generally, you can be humble only if you feel really good about
yourself—and you want to help those around you feel really good about
themselves, too. When we see people acting in an abusive, arrogant, or
demeaning manner toward others, their behavior almost always is a symptom of
their lack of self-esteem. They need to put someone else down to feel good about
Choose the Right Yardstick
This past year I was diagnosed with
cancer and faced the possibility that my life would end sooner than I’d
planned. Thankfully, it now looks as if I’ll be spared. But the experience has
given me important insight into my life.
I have a pretty clear idea of how my
ideas have generated enormous revenue for companies that have used my research;
I know I’ve had a substantial impact. But as I’ve confronted this disease, it’s
been interesting to see how unimportant that impact is to me now. I’ve
concluded that the metric by which God will assess my life isn’t dollars but
the individual people whose lives I’ve touched.
I think that’s the way it will work
for us all. Don’t worry about the level of individual prominence you have
achieved; worry about the individuals you have helped become better people.
This is my final recommendation: Think about the metric by which your life will
be judged, and make a resolution to live every day so that in the end, your
life will be judged a success.