Speaker 1: Pushkin. I once worked at a company that was trying
Speaker 1: to disrupt the news industry. It did not end well
Speaker 1: for the industry or for the company. But if you
Speaker 1: entered the workforce circa twenty thirteen, as I did, disruption
Speaker 1: was the word on everybody's lips around that time. Jill
Speaker 1: Lapourt got an assignment at The New Yorker to dig
Speaker 1: a bit deeper into this earth shaking theory, and what
Speaker 1: she found let her to write one of her most
Speaker 1: controversial essays, The Disruption Machine.
Speaker 2: Like the place where I worked was being changed, My
Speaker 2: favorite newspaper was being changed. I'm sure you know anything
Speaker 2: else I read was being affected. Publish industry, public education
Speaker 2: was being affected, hospitals like it was everywhere. Like disrupt
Speaker 2: or Die. And so then I said to a matador, Okay,
Speaker 2: I am willing to write the piece.
Speaker 1: Stick around afterwards for a conversation between me and Jill
Speaker 1: about how the essays age and the difference between being
Speaker 1: an old fogie and telling the truth from the disruptor
Speaker 1: Die twenty tens. Here's the disruption Machine.
Speaker 2: The disruption Machine. In the last years of the nineteen eighties,
Speaker 2: I worked not at startups, but at what might be
Speaker 2: called finished downs. Tech companies that were dying would higher temps,
Speaker 2: college students and new graduates to do what little was
Speaker 2: left to the work of the employees they'd laid off.
Speaker 2: This was in Cambridge near mit I type users' manuals,
Speaker 2: save them on to a five point twenty five inch
Speaker 2: floppy disk and send them to a line printer that
Speaker 2: yammered like a set of prank shop chatter teeth. But
Speaker 2: by the time the last perforated page coiled out of it,
Speaker 2: the equipment whose functions those manuals explained had been discontinued.
Speaker 2: We'd work a month here, a week there. There wasn't
Speaker 2: much to do. Mainly we sat at our desks and
Speaker 2: wrote wishy, washy poems on keyboards manufactured by Digital Equipment Corporation,
Speaker 2: left one another's sly messages on pink while You're out,
Speaker 2: sticky notes, swapped paperback novels Kurt Vonnegut, Margaret Atwood, Gabriel
Speaker 2: Garcia Marquez, that kind of thing, and during lunch hour
Speaker 2: had assignations and empty unlocked offices at Polaroid. I once
Speaker 2: found a Bantam Books edition of Steppenwolf in a clogged
Speaker 2: sink in an employee's bathroom, floating like a raft in
Speaker 2: his heart. He was not a man, but a wolf
Speaker 2: of the steps, it said on the bloated cover. The
Speaker 2: rest was unreadable. Not long after that I got a
Speaker 2: better assignment, answering the phone for Michael Porter, a professor
Speaker 2: at Harvard Business School. I was an assistant to his assistant.
Speaker 2: In nineteen eighty five, Porter had published a book called
Speaker 2: Competitive Advantage, in which he elaborated on three strategies cost, leadership, differentiation,
Speaker 2: and focus that he described in his nineteen eighty book
Speaker 2: Competitive Strategy. I almost never saw Porter, and when I did,
Speaker 2: he was dashing affably out the door, suitcase in hand.
Speaker 2: My job was to field inquiries from companies that wanted
Speaker 2: to book him for speaking engagements. The Competitive Advantage of
Speaker 2: Nations appeared in nineteen ninety. Porter's ideas about business strategy
Speaker 2: reached executives all over the world. Porter was interested in
Speaker 2: how companies succeed. The scholar who in some respects became
Speaker 2: his successor, Clayton M. Christensen, entered a doctoral program at
Speaker 2: Harvard Business School in nineteen eighty nine and joined the
Speaker 2: faculty in nineteen ninety two. Christiansen was interested in why
Speaker 2: companies fail. In his nineteen ninety seven book The Innovator's Dilemma,
Speaker 2: he argued that very often it isn't because their executives
Speaker 2: made bad decisions, but because they made good decisions, the
Speaker 2: same kind of good decisions that had made those companies
Speaker 2: successful for decades. The Innovator's dilemma is that doing the
Speaker 2: right thing is the wrong thing. As Christiansen saw it,
Speaker 2: the problem was the velocity of history, and it wasn't
Speaker 2: so much a problem as a missed opportunity, like a
Speaker 2: plane that takes off without you, except that you didn't
Speaker 2: even know there was a plane, and had wandered onto
Speaker 2: the airfield which you thought was a meadow, and the
Speaker 2: plane ran you over during takeoff. Manufacturers of mainframe computers
Speaker 2: made good decisions about making and selling mainframe computers and
Speaker 2: devising important refinements to them in their R and D departments,
Speaker 2: Sustaining innovations, Christensen called them, but busy pleasing their mainframe
Speaker 2: customers one tinker at a time, they missed when an
Speaker 2: entirely untapped customer wanted personal computers, the market for which
Speaker 2: was created by what Christiansen called disruptive innovation. The selling
Speaker 2: of a cheaper, poorer quality product that initially reaches less
Speaker 2: profitable customers but eventually takes over and devours an entire industry.
Speaker 2: Ever since the Innovator's Dilemma, everyone one is either disrupting
Speaker 2: or being disrupted. There are disruption consultants, disruption conferences, and
Speaker 2: disruption seminars. In twenty fourteen, the University of Southern California
Speaker 2: is opening a new program. The degree is in Disruption.
Speaker 2: The university announced disrupt or Be Disrupted. The venture capitalist
Speaker 2: Josh Linkner warrens in a new book, The Road to Reinvention,
Speaker 2: in which he argues that fickle consumer trends, friction free markets,
Speaker 2: and political unrest, along with dizzying speed, exponential complexity, and
Speaker 2: mind numbing technology advances, mean that the time has come
Speaker 2: to panic as you've never panicked before. Larry Downs and
Speaker 2: Paul Nuns, who blog for Forbes, insists that we have
Speaker 2: entered a new and even scarier age, big Bang disruption.
Speaker 2: This isn't disruptive innovation, they warn, it's devastating innovation. Things
Speaker 2: you own or use that are now considered to be
Speaker 2: the product of disruptive innovation include your smartphone, many of
Speaker 2: its apps, which have disrupted businesses from travel agencies and
Speaker 2: record stores to map making and taxi dispatch. Much more
Speaker 2: disruption we are told lies ahead. Christiansen has co written
Speaker 2: books urging disruptive innovation and higher education, The Innovative University,
Speaker 2: Public Schools, Disrupting class and Healthcare, The Innovator's Prescription. His
Speaker 2: accolytes and imitators, including no small number of hucksters, have
Speaker 2: called for the disruption of more or less everything else.
Speaker 2: If the company you work for has a chief innovation officer,
Speaker 2: it's because of the long arm of the innovator's dilemma.
Speaker 2: If your city's public school district has adopted an innovation
Speaker 2: agenda which has disrupted the education of every kid in
Speaker 2: the city, you live in the shadow of the innovator's dilemma.
Speaker 2: If you saw an episode of the HBO sitcom Silicon
Speaker 2: Valley in which the characters attend a conference called tech
Speaker 2: Crunch Disrupt twenty fourteen, which is a real thing, and
Speaker 2: a guy from the stage of Paul rud Lookalie shouts
Speaker 2: let me hear it, disrupt, you have heard the voice
Speaker 2: of Clay Christensen echoing across the valley. In twenty fourteen,
Speaker 2: days after The Times publisher Arthur Sulzberger Junior fired Jill Abramson,
Speaker 2: the paper's executive editor. The Times Innovation Report was leaked
Speaker 2: and included grafts inspired by Christensen's Innovator's Dilemma, along with
Speaker 2: a lengthy, glowing summary of the book's key arguments. The
Speaker 2: report explains disruption is a predictable pattern across many industries
Speaker 2: in which fledgling companies use new technology to offer cheaper
Speaker 2: and inferior alternatives to products sold by established players. Think
Speaker 2: Toyota taking on Detroit decades ago. Today, a pack of
Speaker 2: new startups are hoping to disrupt our industry by attacking
Speaker 2: the strongest incumbent. The New York Times, A pack of
Speaker 2: attacking startups sounds something like a pack of ravenous hyena.
Speaker 2: But generally, the rhetoric of disruption, a language of panic, fear, asymmetry,
Speaker 2: and disorder, calls on the rhetoric of another kind of conflict,
Speaker 2: in which an upstart refuses to play by the established
Speaker 2: rules of engagement and blows things up. Don't think of
Speaker 2: Toyota taking on Detroit. Startups are ruthless and leaderless and unrestrained,
Speaker 2: and they seem so tiny and powerless until you realize,
Speaker 2: but only after it's too late that they're devastatingly dangerous. Bangkaboom.
Speaker 2: Think of it this way. The times is a nation state,
Speaker 2: BuzzFeed is stateless. Disruptive innovation is competitive strategy for an
Speaker 2: age seized by terror. Every age is a theory of
Speaker 2: rising and falling, of growth and decay, of bloom and wilt,
Speaker 2: a theory of nature. Every age also has a theory
Speaker 2: about the past and the present, of what was and
Speaker 2: what is. A notion of time, a theory of history.
Speaker 2: Theories of history used to be supernatural. The divine ruled time,
Speaker 2: the hand of God, a special providence lay behind the
Speaker 2: fall each sparrow. If the present differed from the past,
Speaker 2: it was usually worse. Supernatural theories of history tend to
Speaker 2: involve decline and fall from grace, the loss of God's
Speaker 2: favor corruption. Beginning in the eighteenth century, as the intellectual
Speaker 2: historian Dorothy Ross once pointed out, theories of history became secular.
Speaker 2: Then they started something new, historicism, the idea that all
Speaker 2: events in historical time can be explained by prior events
Speaker 2: in historical time. Things began looking up. First there was that,
Speaker 2: then there was this, and this is better than that.
Speaker 2: The eighteenth century embraced the idea of progress. The nineteenth
Speaker 2: century had evolution, The twentieth century had growth and then innovation.
Speaker 2: Our era has disruption, which, despite its futurism, is atavistic.
Speaker 2: It's a theory of history founded on a profound anxiety
Speaker 2: about financial collapse and apocalyptic fear of global devastation and
Speaker 2: shaky evidence. Most big ideas have loud critics, not disruption.
Speaker 2: Disruptive innovation as the explanation for how change happens, has
Speaker 2: been subject to little serious criticism, partly because its headlong,
Speaker 2: while critical inquiry is unhurried, partly because disruptors ridicule doubters
Speaker 2: by charging them with fogism, as if to criticize the
Speaker 2: theory of change were identical to decrying change, And partly
Speaker 2: because in its modern usage, innovation is the idea of
Speaker 2: progress jammed into a criticism proof jack in the box.
Speaker 2: The idea of progress, the notion that human history is
Speaker 2: the history of human betterment, dominated the worldview of the
Speaker 2: West between the Enlightenment and the First World War. It
Speaker 2: add critics from the start, and in the last century,
Speaker 2: even people who cherished the idea of progress and point
Speaker 2: to improvements like the eradication of contagious diseases and the
Speaker 2: education of girls. Have been hard pressed to hold onto
Speaker 2: it while reckoning with two world wars, the Holocaust and
Speaker 2: Hiroshima genocide, and global warming. Replacing progress with innovation skirts
Speaker 2: the question of whether a novelty is an improvement. The
Speaker 2: world may not be getting better and better, but our
Speaker 2: devices are getting newer and newer. The word innovate, to
Speaker 2: make new, used to have chiefly negative connotations. It signified
Speaker 2: excessive novelty without purpose or end Edmund Burke called the
Speaker 2: French Revolution a revolt of innovation. Federalists declared themselves to
Speaker 2: be enemies to innovation. George Washington, on his deathbed, was
Speaker 2: said to have uttered these words Beware of innovation in politics.
Speaker 2: Noah Webster warned in his Dictionary in eighteen twenty eight,
Speaker 2: it is often dangerous to innovate on the customs of
Speaker 2: a nation. The redemption of innovation began in nineteen thirty nine,
Speaker 2: when the economist Joseph Schumter, in his landmark study of
Speaker 2: business cycles, used the word to mean bringing new products
Speaker 2: to market, a usage that spread slowly and only in
Speaker 2: the specialized literatures of economics and business. In nineteen forty two,
Speaker 2: Shumpter theorized about creative destruction. Christiansen retrofitting believes that Shumter
Speaker 2: was really describing the disruptive innovation. Innovation began to seep
Speaker 2: beyond specialized literatures in the nineteen nineties and gained ubiquity
Speaker 2: only after nine to eleven one measure. Between twenty eleven
Speaker 2: and twenty fourteen, Time, the Times Magazine, The New Yorker, Forbes,
Speaker 2: and even Better Homes and Gardens published a special innovation issue.
Speaker 2: The modern equivalents of what a century ago were known
Speaker 2: as sketches of men of progress. The idea of innovation
Speaker 2: is the idea of progress stripped of the aspirations of
Speaker 2: the Enlightenment, scrubbed clean of the horrors of the twentieth century,
Speaker 2: and relieved of its critics. Disruptive innovation goes further, holding
Speaker 2: out the hope of salvation against the very damnation it describes.
Speaker 2: Disrupt and you will be saved. Disruptive innovation, as a
Speaker 2: theory of change is meant to serve both as a
Speaker 2: chrome of the past this has happened, and as a
Speaker 2: model for the future it will keep happening. The strength
Speaker 2: of a prediction made from a model depends on the
Speaker 2: quality of the historical evidence and on the reliability of
Speaker 2: the methods used to gather and interpret it. Historical analysis
Speaker 2: proceeds from certain conditions regarding proof. None of these conditions
Speaker 2: have been met. The innovator's dilemma consists of a set
Speaker 2: of hand picked case studies, beginning with a disk drive industry,
Speaker 2: which is the subject of Christensen's doctoral thesis in nineteen
Speaker 2: ninety two. Nowhere in the history of business has there
Speaker 2: been an industry like disk drives, Christiansen rights, which makes
Speaker 2: it a very odd choice for an investigation designed to
Speaker 2: create a model for understanding other industries. The first hard
Speaker 2: disk drive which weighed more than a ton was invented
Speaker 2: at IBM in nineteen fifty five by a team that
Speaker 2: included Alan Shugart. Christensen is chiefly concerned with an error
Speaker 2: beginning in the late nineteen seventies, when disk drives decreased
Speaker 2: in size from fourteen inches to eight eight, then from
Speaker 2: eight to five and a quarter, from five and a
Speaker 2: quarter to three and a half, from three and a
Speaker 2: half to two and a half, and to one point eight.
Speaker 2: He counts one hundred and sixteen new technologies and classes
Speaker 2: one hundred and eleven of them as sustaining innovations and
Speaker 2: five as disruptive innovations. Each of these five, he says,
Speaker 2: introduced smaller disk drives that were slower and had lower
Speaker 2: capacity than those used in the mainstream market, and each
Speaker 2: company that adopted them was an entrance firm that toppled
Speaker 2: an established firm. In nineteen seventy three, Alan Shugart founded
Speaker 2: Shugart Associates, which introduced to five and a quarter inch
Speaker 2: floppy disk drive. In nineteen seventy six, The company was
Speaker 2: bought by Xerox the next year. In nineteen seventy eight,
Speaker 2: Shuegart Associates developed an eight inch hard disk drive. Christensen,
Speaker 2: who is uninterested in the floppy disk industry, classes the
Speaker 2: company as an entrant firm and credits it with disrupting
Speaker 2: established firms that manufactured fourteen inch hard drives. In nineteen
Speaker 2: seventy nine, Allen Shugart founded Shoegart Technology, which changed its
Speaker 2: name to Seagate Technology after Xerox threatened to sue. In
Speaker 2: nineteen eighty, Seagate Technology introduced the first five and a
Speaker 2: quarter inch hard to drive. Christiansen at this point classes
Speaker 2: Seagate as an entrant firm and Shueguart Associates as a
Speaker 2: failed incumbent, even though Shueguard Associates was shifting its focus
Speaker 2: to what was then its very profitable floppy drive business
Speaker 2: in the mid eighties. Seagate, here considered by Christiansen to
Speaker 2: be an established firm, delayed manufacturing three and a half
Speaker 2: inch drives, which were valued by producers of portable computers
Speaker 2: and laptops because its biggest customer, IBM, didn't want them.
Speaker 2: IBM wanted a better and faster version of the five
Speaker 2: and a quarter inch drive for its full size desktop computers.
Speaker 2: Seagate didn't start shipping three and a half inch drives
Speaker 2: until nineteen eighty eight, and by then Christiansen argues it
Speaker 2: was too late the original research. Christiansen established the cutoff
Speaker 2: for measuring a company's success or failure as nineteen eighty nine,
Speaker 2: and explained that successful firms were arbitrarily defined as those
Speaker 2: which achieved more than fifty million dollars in revenues in
Speaker 2: constant nineteen eighty seven dollars in any single year between
Speaker 2: nineteen seventy seven and nineteen eighty nine, even if they
Speaker 2: subsequently withdrew from the market. Much of the theory of
Speaker 2: disruptive innovation rests on this arbitrary definition of success. In fact,
Speaker 2: Seagate Technology was not felled by disruption. Between nineteen eighty
Speaker 2: nine and nineteen ninety its sales doubled, reaching two point
Speaker 2: four billion, more than all of its US competitors combined,
Speaker 2: according to an industry report. In nineteen ninety seven, the
Speaker 2: year Christiensen published The Innovator's Dilemma, Seagate was the largest
Speaker 2: company in the disk drive industry, reporting revenues of nine
Speaker 2: billion dollars. In twenty thirteen, Seagate shipped its two billionth
Speaker 2: disk drive. Most of the n firms celebrated by Christiansen
Speaker 2: as triumphant disruptors, on the other hand, no longer exist,
Speaker 2: their success having been in some cases brief and an
Speaker 2: other's illusory. The fleeting nature of their successes, of course,
Speaker 2: perfectly consistent with his model. Between nineteen eighty two and
Speaker 2: nineteen eighty four, Micropolis made the disruptive leap from eight
Speaker 2: inch to five and a quarter inch disk drives through
Speaker 2: what christian Sen credits as the herculean managerial effort of
Speaker 2: its CEO, Stuart Mahan. Mahan remembers the experience as the
Speaker 2: most exhausting of his life, Christiansen writes, but shortly thereafter Micropolis,
Speaker 2: unable to compete with companies like Seagate, failed. Minnie Scribe,
Speaker 2: founded in nineteen eighty started out selling five and a
Speaker 2: quarter inch drives and saw a quick success. That was
Speaker 2: Minnyscribe's hour of glory. The company's founder later said, we
Speaker 2: had one hour of infamy shorter after that. In nineteen
Speaker 2: eighty nine, Mini Scribe was investigated for fraud and soon collapsed.
Speaker 2: A report charged that the company's practices included fabricated financial
Speaker 2: reports and shipping bricks and scrap parts disguised as disk drives.
Speaker 2: As striking as the disruption in the disk drive industry
Speaker 2: seemed in the nineteen eighties, more striking from the vantage
Speaker 2: of history are the continuities. Christensen argues that incumbents in
Speaker 2: the disk drive industry were regularly destroyed by newcomers, but today,
Speaker 2: after much consolidation, the divisions that dominate the industry are
Speaker 2: divisions that led the market in the nineteen eighties. In
Speaker 2: some instances, what has shifted was their ownership. IBM sold
Speaker 2: its hard risk division to Hitachi, which later sold its
Speaker 2: division to Western Digital. In the longer term, victory in
Speaker 2: the disk drive industry appears to have gone to the
Speaker 2: manufacturers that were good at incremental improvements, whether or not
Speaker 2: they were the first to market the disruptive new format.
Speaker 2: Companies that were quick to release a new product but
Speaker 2: not skilled at tinkering have tended to flame out. Other
Speaker 2: cases in the innovators m are equally murky. In his
Speaker 2: account of the mechanical excavator industry, Christiansen argues that established
Speaker 2: companies that built cable operated excavators were slow to recognize
Speaker 2: the importance of the hydraulic excavator, which was developed in
Speaker 2: the late nineteen forties. Almost the entire population of mechanical
Speaker 2: shovel manufacturers was wiped out by a disruptive technology hydraulics
Speaker 2: that the leader's customers and their economic structure had caused
Speaker 2: them initially to ignore. He argues. Christiansen counts thirty established
Speaker 2: companies in the nineteen fifties and says that by the
Speaker 2: nineteen seventies only four had survived the entrance into the
Speaker 2: industry of thirteen disruptive newcomers, including Caterpillar, Owen, k De
Speaker 2: Mag and Tatachi, but in fact, many of Christiansen's new
Speaker 2: entrants had been making cable operated shovels for years. Owen k,
Speaker 2: founded in eighteen seventy six, had been making them since
Speaker 2: nineteen o eight. De mag had been building excavators since
Speaker 2: nineteen twenty five, when it bought a company that built
Speaker 2: steam shovels. Hatachi, founded in nineteen ten, sold cable operated
Speaker 2: shovels before the Second World War. Manufacturers that were genuinely
Speaker 2: new to excavation equipment tended to sell a lot of
Speaker 2: hydraulic excavators if they had a strong distribution network, and
Speaker 2: then not do so well, and some established companies disrupted
Speaker 2: by hydraulics didn't do half as badly as Christensen suggests.
Speaker 2: Buceris the old line shovel maker he writes about the
Speaker 2: most got its start in Ohio in eighteen eighty, built
Speaker 2: most of the excavators that dug the Panama Canal, and
Speaker 2: became Buceros Eerie in nineteen twenty seven when it bought
Speaker 2: the Eerie steam shovel Company. It acquired a hydraulics equipment
Speaker 2: firm in nineteen forty eight, But christians and Rights faced
Speaker 2: precisely the same problems and marketing its hydraulic backhoe as
Speaker 2: Seagate had faced with its three and a half inch drives.
Speaker 2: Unable to persuade its established customers to buy a hydraulic excavator,
Speaker 2: Busus introduced a hybrid product called the Hydroho in nineteen
Speaker 2: fifty one, a merely sustaining innovation. Christensen says that Busceris
Speaker 2: logged record profits until nineteen sixty six, the point at
Speaker 2: which the disruptive hydraulics technology had squarely intersected with customer's
Speaker 2: needs and then began to decline. This is typical of
Speaker 2: industries facing a disruptive technology, he explains, the leading firm
Speaker 2: in the established technology remains financially strong until the disruptive
Speaker 2: technology is in fact in the midst of their mainstream market.
Speaker 2: But actually, between nineteen sixty two and nineteen seventy nine,
Speaker 2: Busius's sales grew sevenfold and its profits grew twenty fivefold.
Speaker 2: Was that so bad? In the nineteen eighties Busserus suffered
Speaker 2: the whole construction industry did. It was devastated by recession, inflation,
Speaker 2: the oil crisis, a drop in home building, and the
Speaker 2: slowing of highway construction. Caterpillar sustained heavy losses too. In
Speaker 2: the early nineteen nineties after a disastrous leveraged biote handled
Speaker 2: by Goldman sachs Uisuerus entered Chapter eleven protection, but it
Speaker 2: made some sizeable acquisitions when it emerged as Boosters International
Speaker 2: and was a leading maker of mining equipment, just as
Speaker 2: it had been a century earlier. Was it a failure?
Speaker 2: Caterpillar didn't think so, when in twenty eleven it bought
Speaker 2: the firm for nearly nine billion dollars. Christensen sources are
Speaker 2: often dubious and his logic questionable. His single citation for
Speaker 2: his investigation of the disruptive transition from mechanical to electronic
Speaker 2: motor controls, in which he identifies the Alan Bradley Company
Speaker 2: as triumphing over four rivals, is a book called The
Speaker 2: Bradley Legacy, an account published by a foundation established by
Speaker 2: the company's founders. This is akin to calling an actor
Speaker 2: the greatest talent and a generation. After interviewing his publicist
Speaker 2: use theory to help guide data collection, Christiansen advises he
Speaker 2: finds further evidence of his theory in the disruption of
Speaker 2: the department store by the Discount Store just as in
Speaker 2: disk drives and Excavators. He writes a few of the
Speaker 2: leading traditional retailers, notably S. S. Kresge, F W. Woolworth,
Speaker 2: and Dayton Hudson, saw the disruptive approach coming and invested early.
Speaker 2: In nineteen sixty two. Kresgi, which traces its origins to
Speaker 2: eighteen ninety seven, opened Kmart, Dayton Hudson nineteen o two
Speaker 2: open Target, and Woolworth eighteen seventy nine opened Woolco. Kresky
Speaker 2: and Dayton Hudson ran their discount stores as independent organizations.
Speaker 2: Woolworth ran its discount store in house, Kmart and Target succeeded,
Speaker 2: Woolco failed. Christiansen presents the story as yet more evidence
Speaker 2: of an axiom derived from the disk drive industry. Two
Speaker 2: models for how to make money cannot peacefully coexist within
Speaker 2: a single organization. In the mid nineteen nineties, Kmart closed
Speaker 2: more than two hundred stores, a fact that Christiansen does
Speaker 2: not include in his account of the industry's history. Kmart
Speaker 2: filed for bankruptcy and two two thousand and two. Only
Speaker 2: in a footnote does he make a vague allusion to
Speaker 2: Kmart's troubles. When this book was being written Camart was
Speaker 2: a crippled company, and then he dismisses this piece of
Speaker 2: counter evidence by Fia. Camart's present competitive struggles are unrelated
Speaker 2: to Krezky's strategy in meeting the original disruptive threat of discounting.
Speaker 2: In his discussion of the steel industry, in which he
Speaker 2: argues that established companies were disrupted by the technology of
Speaker 2: mini milling, melting down scrap metal to make cheaper, lower
Speaker 2: quality sheep metal, Christiansen writes that US Steel, founded in
Speaker 2: nineteen oh one, lowered the cost of steel production from
Speaker 2: nine labor hours per ton of steel produced in nineteen
Speaker 2: eighty to just under three hours per ton in nineteen
Speaker 2: ninety one, which he attributes to the companies ferociously attacking
Speaker 2: the size of its workforce, pairing it from more than
Speaker 2: ninety three thousand and nineteen eighty to fewer than twenty
Speaker 2: three thousand in nineteen ninety one. In order to point
Speaker 2: out that even this accomplishment could not stop the coming disruption,
Speaker 2: Christensen tends to ignore factors that don't support his theory.
Speaker 2: Factors having effects on both production and profitability that Christiansen
Speaker 2: does not mention are that between nineteen eighty six and
Speaker 2: nineteen eighty seven, twenty two thousand workers at US Steel
Speaker 2: did not go to work as part of a labor action,
Speaker 2: and that US Steel's workers are unionized and have been
Speaker 2: for generations, while many mill manufacturers with their newer work
Speaker 2: forces are generally non union. Christiansen's logic here seems to
Speaker 2: be that the industry's labor arrangements can have played no
Speaker 2: role in US steel struggles and are not even worth mentioning,
Speaker 2: because US Steel's struggles must be a function of its
Speaker 2: having failed to build many mills. US steel struggles have
Speaker 2: been and remain grave, but its failure is by no
Speaker 2: means a matter of historical record. Today, the largest US
Speaker 2: producer of steel is US Steel. The theory of disruption
Speaker 2: is meant to be predictive. On March tenth, two thousand,
Speaker 2: Christensen launched a three point eight million dollar disruptive Growth fund,
Speaker 2: which he managed with Neil Eisner, a broker in Saint Louis.
Speaker 2: Christensen drew on his theory to select stocks. Less than
Speaker 2: a year later, the fund was quietly liquidated. During a
Speaker 2: stretch of time when the NASDAK lost fifty percent of
Speaker 2: its value, The Disruptive Growth Fund lost sixty five percent.
Speaker 2: In two thousand and seven, Christensen told Business Week that
Speaker 2: the prediction of the theory would be that Apple won't
Speaker 2: succeed with the iPhone, adding history speaks pretty loudly on
Speaker 2: that in its first five years, the iPhone generated one
Speaker 2: hundred and fifty billion dollars of revenue. In the preface
Speaker 2: to the twenty eleven edition of The Innovator's Dilemma, Christensen
Speaker 2: reports that since the book's publication in nineteen ninety seven,
Speaker 2: the theory of disruptive innovation continues to yield predictions that
Speaker 2: are quite accurate. This is less because people have used
Speaker 2: his model to make accurate predictions about things that haven't
Speaker 2: happened yet than because disruption has been sold as a
Speaker 2: and because much that has happened between nineteen ninety seven
Speaker 2: and twenty eleven looks in retrospect. Disruptive Disruptive innovation can
Speaker 2: reliably be seen only after the fact. History speaks loudly,
Speaker 2: apparently only when you can make it say what you
Speaker 2: want it to say. The popular incarnation of the theory
Speaker 2: tends to disavow history altogether. Predicting the future based on
Speaker 2: the past is like betting on a football team simply
Speaker 2: because it won the Super Bowl a decade ago. Jos
Speaker 2: Langler writes in the Road to Reinvention his first principle,
Speaker 2: let go of the past. It has nothing to tell you.
Speaker 2: But unless you already believe in disruption, many of the
Speaker 2: successes that have been labeled disruptive innovation look like something else,
Speaker 2: and many of the failures that are often seen to
Speaker 2: have resulted from failing to embrace disruptive innovation look like
Speaker 2: bad management. Christiansen has compared the theory of disruptive innovation
Speaker 2: to a theory of nature the theory of evolution. On
Speaker 2: the many differences between disruption and evolution is that the
Speaker 2: advocates of disruption have an affinity for circular arguments. If
Speaker 2: an established company doesn't disrupt, it will fail, and if
Speaker 2: it fails, it must be because it didn't disrupt. When
Speaker 2: a startup fails, that's a success. Since epidemic failure is
Speaker 2: a hallmark of disruptive innovation, stop being afraid of failure
Speaker 2: and start embracing it. The organizers of fail Cohn an
Speaker 2: annual conference, implore suggesting that in an era of disruption,
Speaker 2: innovators face unprecedented challenges. For instance, maybe you've made the
Speaker 2: wrong hires. When an established company succeeds, that's only because
Speaker 2: it hasn't yet failed. And when any of these things happen,
Speaker 2: all of them are only further evidence of disruption. The
Speaker 2: hand picked case study, which is Christensen's method, is a
Speaker 2: notoriously weak foundation on which to build a theory. But
Speaker 2: if the hand picked case study is the approved approach,
Speaker 2: it would seem that efforts at embracing disruptive innovation are
Speaker 2: often fatal. Morrison Nudsen, an engineering and construction firm, got
Speaker 2: its start in nineteen oh five and helped build more
Speaker 2: than one hundred and fifty dams all over the world,
Speaker 2: including the Hoover. Beginning in nineteen eighty eight, a new CEO,
Speaker 2: William Agee, looked to new products on new markets, and,
Speaker 2: after Bill Clinton's election in nineteen ninety two, bet on
Speaker 2: mass transit, turning to the construction of both commuter and
Speaker 2: long distance train cars through two subsidiaries, MK Transit and
Speaker 2: MK Rail. These disruptive businesses proved to be a disaster.
Speaker 2: Morrison Nudson announced in nineteen ninety five that it had
Speaker 2: lost three hundred and fifty million dollars, by which point
Speaker 2: the company had essentially collapsed, not because it didn't disruptively innovate,
Speaker 2: but because it did. Time Inc. Founded in nineteen twenty
Speaker 2: two Autodisrupted two. In nineteen ninety four, the company launched Pathfinder,
Speaker 2: an early new media venture, an umbrella website for its
Speaker 2: magazines at a cost estimated to have exceeded one hundred million.
Speaker 2: Time the site was abandoned in nineteen ninety nine. Had
Speaker 2: Pathfinder been successful, it would have been greeted retrospectively as
Speaker 2: evidence of disruptive innovation. Instead, as one of its producers
Speaker 2: put it, it's like it never existed. In the late
Speaker 2: nineteen nineties and early two thousands, the financial services industry
Speaker 2: innovated by selling products like subprime mortgages, collateralized debt obligations,
Speaker 2: and mortgage backed securities, some to a previously untapped customer base.
Speaker 2: At the time, Ed Clark was the CEO of Canada's
Speaker 2: TD Bank, which traces its roots to eighteen fifty five. Clark,
Speaker 2: who earned her PhD in economics at Harvard with a
Speaker 2: dissertation on public investment in Tanzania, forswore Canada's version of
Speaker 2: this disruptive innovation. Acid backed commercial paper. The decision made
Speaker 2: TD Bank one of the strongest banks in the world.
Speaker 2: Between two thousand and two and twenty twelve, TD Bank's
Speaker 2: assets increased from two hundred and seventy eight billion to
Speaker 2: eight hundred and six billion. Since two thousand and five,
Speaker 2: t D Bank has opened thirteen hundred branches in the
Speaker 2: United States, bought Commerce Bank for eight point five billion
Speaker 2: in two thousand and eight, and adopted the motto America's
Speaker 2: most convenient Bank. With the money it earned by expanding
Speaker 2: its traditional banking services almost four billion dollars a year
Speaker 2: during the height of the financial crisis, according to the
Speaker 2: Canadian business reporter Howard Green, it set about marketing itself
Speaker 2: as the bank with the longest hours, the best teller services,
Speaker 2: and free dog biscuits. When the financial services industry disruptively innovated,
Speaker 2: it led to a global financial crisis. Like the bursting
Speaker 2: of the dot com bubble, the meltdown didn't dim the
Speaker 2: fervor for disruption. Instead, it fueled it because these products
Speaker 2: of disruptive innovation contributed to the panic on which the
Speaker 2: theory of disruption thrives. Disruptive innovation as an explanation for
Speaker 2: how change happens is everywhere. Ideas that come from business
Speaker 2: goals are at exceptionally well marketed. Faith and disruption is
Speaker 2: the best illustration and the worst case of a larger
Speaker 2: historical transformation having to do with secularization and what happens
Speaker 2: when the invisible hand replaces the hand of God. As
Speaker 2: explanation and justification. Innovation and disruption are ideas that originated
Speaker 2: in the arena of business, but which have since been
Speaker 2: applied to arenas whose values and goals are remote from
Speaker 2: the values and goals of business. People aren't disk drives,
Speaker 2: public schools, colleges and universities, churches, museums, many hospitals, all
Speaker 2: of which have been subjected to disruptive innovation, have revenues
Speaker 2: and expenses and infrastructures, but they aren't industries in the
Speaker 2: same way that manufacturers of hard disk drives or truck
Speaker 2: engines or dry goods are industries. Journalism isn't an industry
Speaker 2: in that sense either. Doctors have obligation to their patients,
Speaker 2: teachers to their students, pastors to their congregations, curators to
Speaker 2: the public, and journalists to their obligations that lie outside
Speaker 2: the realm of earnings and are fundamentally different from the
Speaker 2: obligations that a business executive has to employees, partners, and investors. Historically,
Speaker 2: institutions like museums, hospitals, schools, and universities have been supported
Speaker 2: by patronage, donations made by individuals or funding from church
Speaker 2: or state. The press has generally supported itself by charging
Speaker 2: subscribers and selling advertising. Underwriting by corporations and foundations is
Speaker 2: a funding source of more recent vintage. Charging for admission,
Speaker 2: membership subscriptions, and for some earning profits are similarities these
Speaker 2: institutions have with businesses. Still, that doesn't make them industries
Speaker 2: which turn things into commodities and sell them for gain.
Speaker 2: In The Innovative University, written with Henry J. Iring, who
Speaker 2: used to work at the Monitor Group, a consulting firm
Speaker 2: co founded by Michael Porter, Christensen subjected to Harvard, a
Speaker 2: college founded by seventeenth century theocrats, to his case study
Speaker 2: analysis studying the university's history, Christensen and Airing wrote, will
Speaker 2: allow us to move beyond the forlorn language of crisis
Speaker 2: to hopeful and practical strategies for success. On the basis
Speaker 2: of this research, Christiensen and Airing's recommendations for the disruption
Speaker 2: of the modern university include a mix of face to
Speaker 2: face and online learning. The publication of The Innovative University
Speaker 2: in twenty eleven contributed to a frenzy for massive open
Speaker 2: online courses or mooks at colleges and universities across the country,
Speaker 2: including a collaboration between Harvard and MIT, which was announced
Speaker 2: in May of twenty twelve. Shortly afterward, the University of
Speaker 2: Virginia's panicked board of trustees attempted to fire the president,
Speaker 2: charging her with jeopardizing the institution's future by failing to
Speaker 2: disruptively innovate with sufficient speed. The vice chair of the
Speaker 2: board forwarded to the chair a Times column written by
Speaker 2: David Brooks, The Campus Tsunami, in which he cited Christensen,
Speaker 2: Christensen and Erings recommendations of a mix of face to
Speaker 2: face and online learning was drawn from an investigation that
Speaker 2: involves a wildly misguided attempt to apply standards of instruction
Speaker 2: in the twenty first century to standards of instruction in
Speaker 2: the seventeenth. In twenty fourteen, there were twenty one thousand
Speaker 2: students at Harvard. In sixteen forty, there were thirteen. The
Speaker 2: first year classes were held Harvard students and their non
Speaker 2: specialized faculty. One young schoolmaster, Nathaniel Eaton, enjoying small face
Speaker 2: to face classes. Eaton's wife, who fed the students, was
Speaker 2: accused of putting goats dung in their hasty pudding. With
Speaker 2: high faculty empathy for learners, Eaton conducted thrashings with a
Speaker 2: stick of walnut, said to have been big enough to
Speaker 2: have killed a horse could have paddled together in a
Speaker 2: single canoe. That doesn't mean good arguments can't be made
Speaker 2: for online education, but there's nothing factually persuasive in this
Speaker 2: account of its historical urgency and even inevitable, which relies
Speaker 2: on a method well outside anything resembling plausible historical analysis.
Speaker 2: Christiansen and Airing also urge universities to establish heavyweight innovation teams.
Speaker 2: Christiansen thinks that R and D departments housed within a
Speaker 2: business and accountable to its executives are structurally unable to
Speaker 2: innovate disruptively. They are preoccupied with pleasing existing customers through
Speaker 2: incremental improvement. Christiansen argues, for instance, that if Digital Equipment Corporation,
Speaker 2: which was doing very well making mini computers in the
Speaker 2: nineteen sixties and seventies had founded in the eighties a
Speaker 2: separate company and another location to develop the personal computer,
Speaker 2: it might have triumphed. The logic of disruptive innovation is
Speaker 2: the logic of the startup. Established a team of innovators,
Speaker 2: set a whiteboard under a blue sky, and never ask
Speaker 2: them to make a profit, because there needs to be
Speaker 2: a wall of separation between the people whose job is
Speaker 2: to come up with the best, smartest and most creative
Speaker 2: and important ideas and the people whose job is to
Speaker 2: make money by selling stuff. Interestingly, a similar principle has
Speaker 2: existed for more than a century in the press, the
Speaker 2: heavyweight innovation team. That's what journalists used to call the newsroom.
Speaker 2: It's readily apparent that in a democracy, the important business
Speaker 2: interests of institutions like the press might at times conflict
Speaker 2: with what became known as the public interest. That's why,
Speaker 2: a very long time ago, newspapers like The Times and
Speaker 2: magazines like The New Yorker established a wall of separation
Speaker 2: between the editorial side of affairs and the business side.
Speaker 2: The metaphor is to the Jeffersonian wall between church and state.
Speaker 2: The wall dividing the newsroom and business side has served
Speaker 2: the Times well for decades, according to the Times twenty
Speaker 2: fourteen Innovation Report, allowing one side to focus on readers
Speaker 2: and the other to focus on advertisers, as if this
Speaker 2: had been all along simply a matter of office efficiency.
Speaker 2: But the notion of a wall should be abandoned, according
Speaker 2: to the report, because it has hidden costs that thwart innovation.
Speaker 2: Shortly before the release of the report, the Times tried
Speaker 2: to recruit as its new head of audience Development Michael Worthheim,
Speaker 2: the former head of promotion as the disruptive media outfit Upworthy.
Speaker 2: Worthhime turned the Times job down, citing its wall as
Speaker 2: too big an obstacle to disruptive innovation. The recommendation of
Speaker 2: the Innovation Report is to understand that both sides editorial
Speaker 2: and business share as their top priority reader experience, which
Speaker 2: can be measured following up Worthy in attention minutes. Fox Media,
Speaker 2: a digital media disruptor that is mentioned ten times in
Speaker 2: the Times report and is included along with BuzzFeed in
Speaker 2: a list of The Times's strongest competitors, few of which
Speaker 2: are profitable, called the report brilliant, shockingly good and an
Speaker 2: insanely clear explanation of disruption, but express the view that
Speaker 2: there's no way The Times will implement its recommendations, because
Speaker 2: what the report doesn't mention is the sobering conclusion of
Speaker 2: Christensen's research, companies faced with disruptive threats almost never managed
Speaker 2: to handle them gracefully. Disruptive innovation is a theory about
Speaker 2: why businesses fail. It's not more than that. It doesn't
Speaker 2: explain change. It's not a law of nature. It's an
Speaker 2: artifact of history, an idea forged in time. It's the
Speaker 2: manufacture of a moment of upsetting, an edgy uncertainty transfixed
Speaker 2: by change. It's blind to continuity. It makes a very
Speaker 2: poor profit. The upstarts who work at startups don't often
Speaker 2: stay at any one place for very long. Three out
Speaker 2: of four startups fail, more than nine out of ten
Speaker 2: never earn a return. They work a year here, a
Speaker 2: few months there, say any hours everywhere. There were Janes
Speaker 2: and sneakers and ride scooters and share offices and sprawl
Speaker 2: on couches like great Danes. Their coffee machines look like
Speaker 2: doll house sized factories. They are told that they should
Speaker 2: be reckless and ruthless. They're investors if they're like Josh Lindner.
Speaker 2: Tell them that the world is a terrifying place, moving
Speaker 2: at a devastating pace. To day, I run a venture
Speaker 2: capital firm and back the next generation of innovators who
Speaker 2: are as I was throughout my early career, dead, focused
Speaker 2: on eating your lunch. Linkner writes his job appears to
Speaker 2: be to convince a generation of people who want to
Speaker 2: do good and do well to learn instead remorselessness. Forget rules, obligations,
Speaker 2: your conscience, loyalty, a sense of the common wheel. If
Speaker 2: you start a business and it succeeds, Linkner advises, sell
Speaker 2: it and take the cash. Don't look back, never pause,
Speaker 2: disrupt or be disrupted. But they do pause, and they
Speaker 2: do look back, and they wonder. Meanwhile, they tweet, they post,
Speaker 2: They tumble in and out of love. They ponder. They
Speaker 2: send one another's sly messages, touching the screens of sleek,
Speaker 2: soundless machines with a worshipful tenderness. They swap novels. David Foster,
Speaker 2: Wallace Zadie Smith Steppenwolf is still available in print, five
Speaker 2: dollars cheaper as an ebook. He's a Wolf, He's a man.
Speaker 2: The rest is unreadable. So as ever is the future
Speaker 2: twenty fourteen, So.
Speaker 1: The disruption machine something that I really loved this essay
Speaker 1: and I remember reading it when I was working at
Speaker 1: a startup.
Speaker 2: That was disruptively innovating.
Speaker 1: That was disruptively innovating the goose industry, and I felt
Speaker 1: so crazy the whole time that I was there, and
Speaker 1: it was the kind of what's real, what's not is
Speaker 1: the whole world sort of just trying to disrupt everything
Speaker 1: that I believe in. And this essay really takes down
Speaker 1: that idea of disruption, that it's a creative act, that
Speaker 1: it's a generative act or a good thing. But you
Speaker 1: write about being accused of fogyism, risking coming across as
Speaker 1: an old fogy, which is it's so easy to paint
Speaker 1: people that way when they criticize modern movements. And I'm
Speaker 1: wondering how you avoid falling into an old fogy trap
Speaker 1: while still maintaining a healthy skepticism I did.
Speaker 2: I mean, I wasn't an old fogey then, but I'm
Speaker 2: more of an old fogy now. This is an old essay,
Speaker 2: maybe it's the oldest one in the collection. There is
Speaker 2: actually way more now, sort of self proclaimed luddism, Like
Speaker 2: you see people your age all the time talking about like,
Speaker 2: let's take back the banner of Luddism. There's like a
Speaker 2: new book about it. We're in a very different moment now,
Speaker 2: but at that time, one of the things that was
Speaker 2: so concerning about disruptive innovation as an ideology, it really
Speaker 2: was just an ideology, it's not even really His theory
Speaker 2: was that it had been designed to be in a
Speaker 2: very self just way immune to criticism, because like your
Speaker 2: criticism could just be folded into it. So yeah, I
Speaker 2: I will say I was really reluctant to write this
Speaker 2: essay because it involved writing about the work of, in
Speaker 2: a notional sense, a colleague of mine, I mean Clayton
Speaker 2: Christian's in the Coiner of Disruptive Innovation, the real proponent
Speaker 2: of its ideas. It's most celebrated guru. It was at
Speaker 2: the Harvard Business schoo all the time. He's since died,
Speaker 2: and I, you know, was it was going to require
Speaker 2: taking down a whole person's life work. So I was
Speaker 2: very reluctant to do it. And when I was first
Speaker 2: asked if I would write about it, I went and
Speaker 2: read the first of Christiansen's book, which I think was
Speaker 2: published in nineteen ninety eight. The Innovator's Dilemma, which had
Speaker 2: been his dissertation. He had been Harvard Business School student
Speaker 2: when you were with the dissertation about the discribe industry,
Speaker 2: and I remember writing to my editor and saying, like,
Speaker 2: why would I write about this? This is like nobody
Speaker 2: can believe this, Like this is just like so patently wrong,
Speaker 2: Like it's this is nothing, like I've never even heard
Speaker 2: of it, Like I just kind of had not descended
Speaker 2: on me, like you were working at a disruptive startup,
Speaker 2: but I don't know. I was teaching history, Like well,
Speaker 2: I was completely not I was fairly immune to the
Speaker 2: world of people being very excited about disruption. And then
Speaker 2: after I had read the book, the Times Innovation Report,
Speaker 2: which was a sort of self appointed kind of committee
Speaker 2: report about how The Times should and whether it should
Speaker 2: disruptively innovate, came out. It was leaked, and then Jill Abramson,
Speaker 2: who had been executive editor, was fired and kind of
Speaker 2: became clear that she had objected to the changes that
Speaker 2: were proposed in the Innovation Report. And then I love
Speaker 2: the New York Times, I really care about it, and
Speaker 2: the Innovation Report was whoever put it together just swallowed
Speaker 2: whole the ideas from the innovator's dilemma, and had included
Speaker 2: these you know charts that you know, show the like
Speaker 2: growth of like BuzzFeed as against the sort of the
Speaker 2: duel between sustaining innovation and its inevitable failure and obsolescence
Speaker 2: and in the excitement of disruptive innovation. And I thought
Speaker 2: the report was alarmingly idiotic, and it proposed to remake
Speaker 2: The New York Times in the mode of BuzzFeed. I
Speaker 2: would be the first to say I know nothing about
Speaker 2: how the news industry needed to deal with the acceleration
Speaker 2: of technological change and the obsolescence of the business model
Speaker 2: of you know, classifieds and a big, big advertising and
Speaker 2: subscription that the newspaper industry was built on. Like I'm not.
Speaker 2: I don't mean to suggest I know what newspapers should
Speaker 2: have done, And certainly there's huge changes necessary, but it
Speaker 2: would not seem like a wise thing to model your
Speaker 2: change after an ideology that's based on really really shaky
Speaker 2: empirical work. And it really really bugged me. And then
Speaker 2: it was at that same semester Harvard announced that it
Speaker 2: had made a deal with MIT in this organization company
Speaker 2: called ed X to do massive online camp classes or
Speaker 2: whatever or moos, and that this was going to be
Speaker 2: the disruptive innovation thing for higher education. Christian Center in
Speaker 2: a book about this, and my kids public school district,
Speaker 2: the superintendent had read Christiansen's book about Disrupting schools and
Speaker 2: decided that the entire school district needed to be restructured
Speaker 2: around the disruptive innovation that was called for by Christians
Speaker 2: in the book about education. And so suddenly this thing
Speaker 2: that I was like, no one could possibly do this,
Speaker 2: I seriously was like everywhere in my life, like the
Speaker 2: place where I worked was being changed. My favorite newspaper
Speaker 2: was being changed. I'm sure you know anything else I
Speaker 2: read was being affected, published industry, public education was being affected,
Speaker 2: hospitals like it. It was everywhere like disrupt or die.
Speaker 2: And so then I said to Manad, Okay, I'm willing
Speaker 2: to write the piece.
Speaker 1: How long did you sit on the idea before writing it?
Speaker 2: It was several months. I really was pretty reluctant, honestly,
Speaker 2: to do it. I don't think I've ever written a
Speaker 2: takedown before or since, and I was right to be
Speaker 2: nervous about it. It elicited this really crazy, crazy reaction.
Speaker 2: But you know, I remember biking over to the historical
Speaker 2: collections at the Baker Business Library the Harvard Business School
Speaker 2: and reading his dissertation, going back through the archival records
Speaker 2: of the companies that he described as disruptively innovating or
Speaker 2: failing to disruptively innovate, and picking these, you know, looking
Speaker 2: at these various case studies. I put a lot of
Speaker 2: time into basically, you know, redoing. And also because the
Speaker 2: original book had been published in nineteen ninety eight and
Speaker 2: I was writing in I don't know, twenty thirteen or something,
Speaker 2: you could see did the predictions that he made for
Speaker 2: these industries carry out? And you know, like the predictions
Speaker 2: that most political commentators make, like no, they didn't most
Speaker 2: of them, or at least more than half of them,
Speaker 2: Like there was no He had also started an investment
Speaker 2: company that had failed to make any money. Like it
Speaker 2: turned out not to be predictive at all. And the
Speaker 2: whole idea behind the model was that it was a
Speaker 2: predictive model, so it didn't even really describe the past well.
Speaker 2: But you would have to have a lot of historical
Speaker 2: evidence in order to make a model to build on
Speaker 2: the data that you have. The historical data to make
Speaker 2: a model that could be predictive, and the historical evidence
Speaker 2: just didn't even support any consistent interpretation is certainly not
Speaker 2: the one that he offered. So yeah, so I don't
Speaker 2: think I've ever written the piece of the Innovation Report
Speaker 2: of the New York Times didn't come out, and it
Speaker 2: really was really shocking to me. That's people who were
Speaker 2: that smart and cared so much about what they were
Speaker 2: doing and understood its importance to the public. However, you know,
Speaker 2: urgently they had to understand there needed to be tremendous
Speaker 2: amount of change and how they did what they did
Speaker 2: would just import wholesale like this, just wildly flawed set
Speaker 2: of ideas about how change happens.
Speaker 1: Yeah, I have one last question about this, which is
Speaker 1: you you framed the piece with a personal story. You
Speaker 1: talk about the temp Agency in the first paragraph in
Speaker 1: your work as a assistant for an executive assistant for
Speaker 1: Michael Porter. Why did you settle on a personal frame
Speaker 1: for this story that was so current and was so
Speaker 1: much about diagnosing a particular moment in a particular pathology
Speaker 1: that came from a person who, while it was Porter's
Speaker 1: successor in some ways, you know, was not the character
Speaker 1: you began.
Speaker 2: With, yeah, it's funny. It had a kind of weird consequence,
Speaker 2: which was that I don't think I've ever said this
Speaker 2: on the record anywhere. But when the piece came out,
Speaker 2: Christians and called me in and he came to my
Speaker 2: office multiple times and left me notes, and he called
Speaker 2: me and he wanted to meet, and he wanted to meet,
Speaker 2: and he wanted to make a pledge with me. Well,
Speaker 2: he wanted me to retract the piece, but then he wanted
Speaker 2: to make a pledge with me. He wanted me to
Speaker 2: promise that we would neither of us speak to the
Speaker 2: press about the piece. He didn't want to like wage
Speaker 2: some proxy battle on the press. And I was like,
Speaker 2: that's fine, I'm not going to speak to the press about peace.
Speaker 2: I never do that. And then he immediately spoke to
Speaker 2: the press and described me as a criminal liar to
Speaker 2: the press, and like multiple interviews and these legions of
Speaker 2: his followers came after me, and it was really kind
Speaker 2: of terrifying. I think I was on a family vacation
Speaker 2: and there was all this like just really extraordinary sort
Speaker 2: of like disruptive minions, and a lot of it was
Speaker 2: really like how dare you who do you think you are?
Speaker 2: You couldn't possibly understand this great man and his great ideas.
Speaker 2: There was a lot of like tweeting from like tech
Speaker 2: venture capitalists, and it was really really weird. But one
Speaker 2: of the things that Christensen became convinced of was that
Speaker 2: Michael Porter was behind the piece. I had worked for
Speaker 2: Michael Porter before I even went to graduate school, like
Speaker 2: decades before. I'm sure that Michael Porter would not remember
Speaker 2: my name. I was like a tempt for his secretary.
Speaker 2: I wouldn't even work directly for him. I worked for
Speaker 2: his secretary, but he had like so much business and
Speaker 2: cash flow to manage that she needed help just dealing
Speaker 2: with I basically wrote the checks to pay his visibles
Speaker 2: for his second wife. I'd never spoken to him since then.
Speaker 2: I don't think I ever spoke to him more than
Speaker 2: once when I worked for him, like put nothing to
Speaker 2: do with mease, So it was a weird. I would
Speaker 2: never have anticipated that, But I was just trying to
Speaker 2: historicize that we were in a different moment, that there
Speaker 2: is such a thing as a downturn, that innovative technology
Speaker 2: companies are not always growing up. And when I right
Speaker 2: before I worked at the business school and are really
Speaker 2: around it. That same time, I went from temp job
Speaker 2: to temp job working for these companies in Cambridge. They
Speaker 2: were all going under that they had fired basically all
Speaker 2: their staff and just to keep the lights on, have someone.
Speaker 2: I really just sat in these various companies, a lot
Speaker 2: of them are software companies and answered the phone while
Speaker 2: the company went through bankruptcy proceedings. So my sense of like,
Speaker 2: because it's a huge tech industry, the biotech that like
Speaker 2: software companies in Cambridge and in the eighties and nineties,
Speaker 2: and they just didn't you know, most of them did
Speaker 2: not make it and they so like my coming of
Speaker 2: age around tech was don't put your money in that, like,
Speaker 2: you know, be able to be very careful about these
Speaker 2: there's a lot of fly by nights here and they're
Speaker 2: not Some of them were these kind of legacy companies
Speaker 2: and some of them were newer companies. And then when
Speaker 2: I went to work at the business school, because I
Speaker 2: was working for Michael Porter, I read all of his
Speaker 2: books like whatever, you would just do like you're working
Speaker 2: for some guy like he really was never in the
Speaker 2: office because he was traveling all the time giving these lectures.
Speaker 2: He had like an unbelievably high lecture fee. And I
Speaker 2: read all the books and we're really it's really interesting,
Speaker 2: But like, how is this guy a guru? Like how
Speaker 2: does the world of ideas work over here such that
Speaker 2: people will pay this guy like two hundred thousand dollars
Speaker 2: to enter room and speak for fifteen minutes? Like I
Speaker 2: was truly baffled by that. So I could see why
Speaker 2: it would be exciting as a person trying to run
Speaker 2: a business and trying to figure out how to think
Speaker 2: about your business, you would like to have some guy idents.
Speaker 2: And the impromater of this person is a Harvard Business
Speaker 2: School professor. And this is I think some of those
Speaker 2: early books were Harvard Business Press books, and you know,
Speaker 2: I excerpted in the Harvard Business Review and it had
Speaker 2: this cachet that or you could go to. You know,
Speaker 2: they run all these executive management summer classes and people
Speaker 2: these guys wanted and like they have the answers, And
Speaker 2: I am very sympathetic. Like, you're trying to run a company.
Speaker 2: You're trying to not have to lay people off, you
Speaker 2: need to show a profit, you want to secure investors.
Speaker 2: You don't know what the rules are, how do you
Speaker 2: do this? How can you do it right? How can
Speaker 2: you stay in business? Like these are really good questions.
Speaker 2: I would want answers too, and I could see where
Speaker 2: Porter had some really empirically interesting answers, but I couldn't
Speaker 2: say that with Christians, and so I think I just
Speaker 2: was more like just reflecting on that. And I also like, yeah,
Speaker 2: it was hard to think of how to welcome a
Speaker 2: reader who's not an adherent of the ideology of disruptive
Speaker 2: innovation into a long piece about a business theory. So
Speaker 2: I remember writing about the chattering the printer's dot matrix
Speaker 2: printers being like chatter teeth, just trying to make vivid
Speaker 2: the obsolescence of machinery, that change is a part of
Speaker 2: technological development, and obsolescence is part of it, and uncertainty
Speaker 2: is inevitable.
Speaker 1: There's also something sort of beautiful about so many of
Speaker 1: the disruptive companies are run by young people who, though
Speaker 1: they could not possibly have all the answers, have to
Speaker 1: pretend as if they do. And the temp agency staffed
Speaker 1: by these young people who are unsure what to do
Speaker 1: with their lives, asking questions, falling in and out of love.
Speaker 1: It's sort of a beautiful evocation of a time of
Speaker 1: your life, a time of a company's life, where you
Speaker 1: aren't really supposed to be world eating necessarily.
Speaker 2: Yeah yeah, maybe it's a time for more humility.