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Five Things To Learn From The Foremost Management Theorist Of Our Generation

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Clay Christensen, the gentle giant of innovation, whose theory of disruptive innovation has been called the most influential business idea of the early 21st century died on January 23rd 2020.
 
The idea of disruptive innovation was elaborated upon in Christensen’s book, The Innovator’s Dilemma, which was called by The Economist as one of the best six business books every written. The dilemma describes how outstanding companies can do everything seemingly correct, and still decline or fail. That’s because the things that made incumbent market leaders very successful can eventually lead to their downfall as disruptive innovation creates new “market value and network value”. More importantly, such disruptive innovations can be easier to nurture in newer companies versus incumbents.  

The world’s most successful business leaders in recent history owe at least a part of their success to this theory. It has influenced innovation for the past few decades and been fully leveraged by tech disruptors ranging from Amazon to AirBnB.

In other news, Facebook CEO Mark Zuckerberg warned this week that he will take strong, controversial positions on issues facing his company because he doesn’t need Facebook to be liked. He will prioritize encryption over the concerns that privacy mostly helps bad people. And he will forcefully defend Facebook’s advertising-based business model which relies on user data.

These two stories are linked.

Facebook, like most other successful companies of our times relies on Christensen’s teaching on how to succeed with disruptive innovations. I wish they, and more organizations and individuals, also paid attention to Christensen’s more recent work including “How will you measure your life?”, a stunning exhortation for purpose-based leadership. Christensen believed that management was the noblest of professions not because managers control money and power, but because they have the ability to impact the lives of their people, their families and by extension society for good. The effect of doing a good (or a bad) act can be profound.

In memory of this brilliant, multi-faceted human being I’d like to share the top five things I have learned from his work.
 
Five Important Concepts From Clay Christensen 

  1. The Innovator’s Dilemma (my version): That which currently makes you successful will eventually lead to your downfall, unless you disrupt yourself.
  2. Wall Street is optimized to support only one of three types of innovations: There are three types of innovations, market-creating, sustaining and efficiency. Market-creating innovations make new products accessible to the world, sustaining innovations make good products better, and efficiency innovations help us do more with less. Wall Street leans towards the last of these.
  3. God doesn’t hire accountants in heaven: We have to hire accountants because we have finite minds which cannot handle all of the detail. We therefore create hierarchies. So, people who manage bigger organizations and budgets are more important. And in the process, we lose track of doing good to individual people. God has an infinite mind and therefore assesses success at the level of helping individual people.
  4. It’s easier to do the right thing 100% of the time than 98% of the time: If we break our own rules just once, we can justify the small choices again. Using marginal cost thinking to justify all the small decisions lead up to a big one. Then, the big one does not seem enormous anymore; it is just another incremental step.
  5. How to measure your life: Make the world a better place. Your true impact as a manager is how you support your employees, customers, your family and community. 

 
 Go forth and transform.

Tony

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