Here is the full transcript of American scholar Clay Christensen’s TEDx Talk presentation: How Will You Measure Your Life? at TEDxBoston conference. For more details about the speaker, read the bio here.
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Clay Christensen – American scholar
Thank you very much. The world is, in many ways, organized in a nested system. And so we have nations. Within those we have industries; within industries we have corporations; within those we have business units; within those we have teams; within the teams we have people; and within people we have brains. And we are nested.
It turns out that, as I have and my colleagues have tried to understand how business works, we’ve developed a set of theories. And when I say a theory, what I mean is a statement of causality, an understanding of what causes what and why. And some of you know some of the theories. Disruption is a theory. And what it asserts is that the mechanism that causes successful companies to fall, is not that they’re not at their work, but rather somebody comes in at the bottom of the market and moves up. And that’s the mechanism, the pursuit of profit from at the bottom of the market that makes success so hard to sustain.
There’s another theory, called the theory of preservation of modularity — the theory of preservation of modularity explains among the other things why the Euro doesn’t work and why SAP implementation systems are so difficult and complicated. And there’s another theory called ‘jobs to be done’ and what it asserts is that, you know, here’s Clay, I have characteristics. I unfortunately am 60 years old now, I live in the suburbs, 5 children, unfortunately have all left and are living independently and life has become boring. But the fact that I have those characteristics, doesn’t cause me to go out and buy the New York Times. There might be a correlation between my characteristics and the propensity to buy the New York Times, but the characteristics don’t cause me to do anything.
What causes us to do something is there’s a job that arises in our life and we have to get the job done. And what causes us to buy a product or services is, we have to reach out and find something that can do the job and pull it into our lives, and that’s the causal mechanism behind a purchase, is understanding what’s the job and the insight there is that their customer is the wrong unit of analysis, it’s the job that we need to understand.
So these are all theories and some of you know those, and a number of others from our research. What we have learned and inadvertently in many ways, is that these statements of causality apply at every stage in this nested system. And so the theories help us understand why nations lose their competitiveness, why Japan was so successful and then died, for example, and why America finds it so hard to regain our momentum, and that goes all the way down to the point of teams.
Well, a number of years ago in my course at the Harvard Business School, in this course we study these theories, try to understand them, then put these theories on like a set of lenses and examine companies, or economies or industries and try to understand, can we understand why things are happening the way they are happening, and what actions would lead what results. At the end of the course on the last day rather than asking them to just put on these lenses and examine yet another company, I ask them to look in the mirror and ask them, can you explain why your life is the way it is today, because of these theories? And can you predict what will happen in your life, if you continue to do what you are now doing? And it’s been a remarkable experience to see the students come back on the last day of class. And with causal theories, is the explanation what they need to change in their lives so that, their life will be the life that they had hoped to live.
And I thought, I’d just offer a couple of these in the hopes that as entrepreneurs and ambitious people you end up living the life that you hope you will live. So one of the things we observed as I mentioned is that, what kills successful companies is somebody comes in at the bottom of the market. So if you go back a few years ago in telecommunications, the darlings of the industry were Lucent and Nortel, made circuit switching technology and this rusty little or small company not very consequential called Cisco emerged. And their technology, the router wasn’t good enough to be used in voice, but they deployed it at the bottom of the market with data and then went up market and ultimately killed Lucent and Nortel. And the reason why is that when they look down at a router, the router on every dimension wasn’t as good, and so they kept making better and better circuit switch devices.
And we ask ourselves, I wonder who decided at Lucent, that they should go out and get killed, and when was the date on which they decided they would get killed? And the answer of course is that nobody made the decision. In fact, what happened is all the individual people in a very successful organization did everything right, but because they did all of these things independently and what made sense in those circumstances, when it summed up, it summed up to disaster.
Well, the reason why it sums up to disaster is they’re trying to maximize their profitability and typically the way you calculate profitability, tomorrow’s investments that pay off tomorrow go to the bottom line and are much more tangible than investments that pay off 10 years from now.
Well when I go back to my graduating classes, I graduated from the MBA program at Harvard in 1979, we have a reunion every five years. When we came back for a 5th reunion, man, everybody was happy, most of our classmates had married people who were much better looking than my classmates, they’re doing well in their career. But as we hit the 10th and 15th and 20th and the 25th anniversaries, oh my gosh, my friends were coming back not happy with their lives. And very many of them have gotten divorced, and their spouses had remarried and they were raising their — my classmates’ children on the other side of the country alienated from them. And I guarantee that none of my classmates ever planned when they graduated from the business school to go out and get divorced and have children who hate their guts and are being raised by other children and yet, a very large portion of my classmates actually implemented a strategy that they never plan to do.
And it turns out that the reason why they do that is the very same mechanism and that is that pursuit of achievement. So we all — everybody here is driven to achieve, and when you have an extra ounce of energy or 30 minutes of time instinctively and unconsciously, you’ll allocate it to whatever activities in your life give you the most immediate evidence of achievement. And our careers provide that immediate evidence of achievement: we close a sale, we ship a product, we finish a mid-presentation, we close a deal, we get promoted, we get paid. And our careers provide the most very tangible immediate achievement.
In contrast, investments in our families don’t pay off for a very long time. In fact, on a day-to-day basis our children misbehave over and over again, and it really isn’t until 20 years down the road that you can look at your children, and be able to put your hands on your hips and say, we raised great children, but on a day-to-day basis achievement doesn’t at hand when we invest in relationships with our family, children and our spouses.
And as a consequence, people like you and I who plan to have a happy life, because our families truly are the deepest source of happiness in our lives, find that — although that’s what we want, the way we invest our time and energy and talents, causes us to implement a strategy that we wouldn’t at all plan to pursue.
And so I wanted to just offer that one, is something to think about. The reason why successful companies fail, is they invest in things that provide the most immediate and tangible evidence of achievement. And the reason why they have such a short time horizon is that they are run by people like you and I. And we then apply that very same thinking process in our personal lives with sad results.
Let me just offer another thought that might be useful. I was driving to work a number of years ago early, and when I was on Huron Avenue in Cambridge, I just had a feeling that something important was going to happen to Clay Christensen, and I was going to be given a much more consequential business opportunity than I had just as a plain old professor. And a couple of weeks later, somebody who was in that position announced that he was leaving, and I put two and two together and decided, gosh, sounds like for whatever reason I just had this feeling that I’m going to be his replacement.