The Business of Life
Scholarly economic theory applies to
more than just business. The same causal mechanisms that drive big corporations
to success can be just as effective in driving our personal lives, says
Professor Clayton M. Christensen. Key concepts include:
- In evaluating major life decisions, it's helpful to employ a tool called discovery-driven planning, which essentially boils down to a single question: What assumptions must prove true for this plan to work?
- Incentives are not the same things as motivators.
- Marginal thinking can be dangerous. It's safer to decide early on that you'll stay true to your commitments 100 percent the time, rather than assess the risk of every "just this once" possibility that comes along.
A few years ago, a colleague at
Harvard Business School visited Clayton Christensen's office to talk about
leading a values-driven life. "He told me that he had decided against
having religion in his life," Christensen recalls, explaining that his
colleague didn't see the long-term benefits of sticking to principles every
day, considering all the hard work involved. "He told me he thought it had
'a negative net present value.'"
“It’s a travesty that somehow our society has gotten to a
point where people have the view that science and academia are inconsistent
with a spiritual life.”
This unusual application of an
economic term delighted Christensen, a management professor known around HBS
and the globe as both a brilliant business thinker and a deeply religious man.
For more than a decade he has been a go-to consultant for several big
organizations—his theories on disruptive innovation have steered huge strategy
shifts at Intel Corp. and the Pentagon, for example. In 2011, Thinkers50 named
him the world's most influential business thinker. At the same time, he has
held major leadership positions in his church, and he's never taken a business
meeting on a Sunday because his faith encourages its members to keep the
Sabbath Day holy. He sees no dichotomy.
"You know, it's a travesty that
somehow our society has gotten to a point where people have the view that
science and academia are inconsistent with a spiritual life, and the belief
that there we've been put here for a purpose," he says. "The reality
is that the only reason you're interested in either of these things is that
you're interested in finding the truth. We spend most of our waking hours in
our professions, but if we can't allow success in our professions to benefit
from truth that we have learned in the other parts of our lives, we just
deprive ourselves of a very important input."
Christensen explores the synergies between economic logic
and personal conviction in his new book, How Will You Measure Your Life?
Coauthored with James Allworth (HBS MBA 2010) and Karen Dillon (former editor
of Harvard Business Review), the book shows the value of applying
scholarly business theories to major life decisions. The key idea is that the
same causal mechanisms that drive big businesses can be just as effective in driving
our personal lives.
Religion has been a driving force in
all of Christensen's own decisions, and he's up front about that in How Will
You Measure Your Life? But in explaining the value of applying academic
theories, the book avoids a religious bent, thanks in part to coauthor
Allworth's avowed atheism. "That was tough," Christensen says of
collaborating on such a personal work with someone who had such disparate
beliefs. "But in the end I'm glad, because I think that the principles we
discuss in this book are broadly applicable to people's lives. I hope that
we've been able to frame them in a way that is accessible to people who are
religious as well as people who aren't."
DELIBERATE
VERSUS EMERGENT STRATEGY
For example, Christensen cites
business scholars Henry Mintzberg and James Waters, who in 1985 published a
paper defining two forms of strategies: deliberate and emergent. A deliberate
strategy, they explained, is a roadmap that a company or an individual puts in
place and sets out to follow. An emergent strategy involves the decision to
follow a new path when opportunity knocks unexpectedly, or when an unexpected
roadblock arises. In work and in life, the question is always which path to
take.
To help answer that question,
Christensen recommends a tool called "discovery-driven planning,"
created by Ian MacMillan, a professor at the Wharton School, and Rita McGrath,
a professor at Columbia. In the interest of simplicity, How Will You Measure
Your Life? distills the tool to a single question: "What assumptions
must prove true for this plan to work?"
“That’s your job, if you’re building a happy family: to
realize that they need to be motivated and that there’s a clear way to motivate
them.”
Listing your assumptions about a
prospective plan and assessing their plausibility can help determine the
likelihood of a successful outcome, Christensen says, whether you are
evaluating an executive decision or a family matter. "Whenever you
implement something, if it fails, then almost invariably it did so because
there was an assumption in there that, looking back on it, clearly was not
plausible," he explains.
How Will You Measure Your Life? also stresses the importance of allocating resources in
such a way that they match the strategy, starting with tales of woe from giants
like Unilever and Apple and segueing into stories of friends whose marriages
fell apart due to neglect. "Watch where your resources flow," the
authors write. "If they're not supporting the strategy you've decided
upon, then you run the risk of a serious problem."
A graduate of HBS and a Rhodes
Scholar, Christensen notes that several of his former classmates, while
brilliant and driven, ended up unhappy. "Never have I known a student
whose deliberate strategy was to go out and get divorced, or to have children
who are being raised by an ex-wife's new spouse on the opposite coast," he
says. "But the strategy that they implemented took them in that
direction."
INCENTIVES
ARE NOT THE SAME AS MOTIVATORS
Christensen maintains that
motivation is as much a driving factor in building a successful family as it is
in building a successful business. He disagrees strongly with the widely-cited
concept known as agency theory, which essentially posits that people work in
accordance to how you pay them, and that external incentives are the chief
motivator. It's just as ineffective inside a family, he says, because it
depends on "bribing" them every time you want them to do
something—whether it's making their beds or just being nice to each other.
Rather, he advocates psychologist
Frederick Herzberg's Two-factor theory, which focuses on the idea that the
factors that determine job dissatisfaction ("hygiene factors") are
completely separate from those that determine true satisfaction
("motivators"). Insufficient financial compensation, for example,
falls into the former camp. But having sufficient compensation will not lead to
passion for a job; it just takes away the dissatisfaction. Motivation,
according to the theory, is determined not by material incentives, but rather
by interesting work, recognition, and personal growth.
“Life is an unending series of extenuating circumstances.”
Christensen shares the story of
building a backyard playhouse with the two youngest of his five kids. They
spent weeks choosing lumber and shingles, and he taught them how to hammer and
saw, even though it would have been faster just to build the whole thing
himself. The children were thrilled to show their friends the structure in
progress, but when the playhouse was finished, they rarely used it. Building
the house was the motivating factor—not having the house.
"You have to be sure that your
family are engaging in work that is really causing them to feel like they are
achieving important things," Christensen says. "And it's important to
recognize these achievements. It's not different in any way from running a
private enterprise. That's your job, if you're building a happy family: to
realize that they need to be motivated and that there's a clear way to motivate
them."
THE
PERILS OF ASSESSING COSTS MARGINALLY
Christensen also disagrees with the
popular idea that in evaluating new opportunities, we should base our decisions
on marginal costs and revenues. The book cites the fall of movie rental giant
Blockbuster. Ten years ago, the company decided not to explore the market of
then-upstart Netflix, because Netflix sported profit margins much lower than
Blockbuster's historical margins. History reveals Blockbuster's tactical error,
of course: the company is bankrupt, while Netflix now has more than 25 million customers.
Marginal thinking can be dangerous
on a personal level, too. Christensen maintains that the road to jail is paved
with the idea that it's OK to break the rules "just this once" when
an extenuating circumstance presents itself. "Life is an unending series
of extenuating circumstances," he says. For that, he argues it's easier to
decide early on that you'll stay true to your commitments 100 percent the time,
rather than assess the risk of every "just this once" possibility
that comes along.
"If you decide that you'll make
every decision on a day-to-day basis, you'll never get there from here,"
he says. "I'm so grateful that I made this decision to commit to my
principles 100 percent, because without that, you're just awash in
opportunities to take your life in directions that you hadn't intended."
For those that think it is easy for
a Harvard Professor to make such pronouncements from an ivy tower, the book
explains that Christensen became a professor after a prior career that included
being fired from a company he helped to found. He's also faced a series of
powerful setbacks. So far in his life, Christensen has lived with Type I diabetes,
survived a massive heart attack, endured lymphoma (the same type of cancer that
killed his father), and, 18 months ago, suffered a stroke that wiped out his
speech. He taught himself to speak again with the help of Rosetta Stone English
and his six-year-old granddaughter, but he still gets words mixed up once in a
while, and apologizes often for speaking slowly. Three years after his cancer
diagnosis, he's still undergoing chemotherapy that sometimes causes his feet to
go numb due to neuropathy—a harrowing prospect for a man who stands at
six-foot-eight. Suffice it to say he has seen plenty of life's curveballs. And
he maintains that his strict principles have kept him steady.
"The person I decide to
be has to be robust enough that it doesn't matter what happens in my
life," he says. "Life will happen to me. But I don't want what
happens in life to determine who Clay Christensen becomes." 
Carmen Nobel is senior editor of HBS Working Knowledge.
http://hbswk.hbs.edu/item/6991.html?wknews=006062012
No comments:
Post a Comment