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.
So the day came and they chose another person and, I wondered why did I have the feeling that an important thing was going to happen to me, did the people kind of lose guts? Or I don’t know. But I wrestled with — how will they measure Clay Christensen’s life? You know if they’re going to not make me the leader of a large institution, how do I know whether my life has been worth living? And again, how will I measure my life? And I realized that I studied this for a long time and I reached the strangest conclusion that, God doesn’t employ accountants or statisticians. And what I mean by that is, because you and I have finite minds, when we try to understand what’s going on in the world, we have to aggregate things. So in your company you can’t keep track of every individual invoice, and so you have to aggregate all those up, so that you have receivables and payables and revenues. And you can’t keep track of every element of cost, and so you have to aggregate all that up into total cost categories, and then you subtract that from this and there’s a number and that’s the way we try to understand the world is, because we have limited minds, we have to aggregate things up.