Where does growth come from?

I received a YouTube video link via an email forwarded across multiple mailing lists praising its insight. It was Clay Christensen’s talk at Google titled “Where does growth come from?” I’ve read and seen many of Clay’s talks now and feel a certain familiarity with the material. However, I am a fan. In fact, I think it is a normal week on ALearningaDay when at least one post is directly or indirectly inspired by one of Stephen Covey, Clay Christensen, or Seth Godin. :-)

I thought I’d boil it down to the usual 3 things I took away. But, before doing that, let’s lay the groundwork. First, we must understand that companies invest in 4 kinds of innovations to drive growth –
1. Potential products: We don’t yet know what they are.
2. Sustaining innovations: These make the potential products better.
3. Disruptive innovations: These grow markets.
4. Efficiency innovations: These enable us to do existing things faster or better.

Getting terminology right is helpful in learning how to use them. I found this helpful as I found myself grasping this better despite having seen this a few times.

1. Disruptive innovations originate at the low end and are often business model innovations. For example, Uber disrupted the taxi industry with a business model built on variable costs. The iPhone disrupted the personal computer. And, so on. An interesting point he made was that disruptors often win with customers who were non consumers. Uber converted car owners into Uber users. And, his belief is that Android and Huawei are disrupting the iPhone on the low end. They are, in turn, bringing in non computer and non iPhone users into the smartphone market. Japan’s growth in the 1970s came from a series of disruptive innovations. They enabled non consumers to own cars, listen to music and consume electronics. However, they followed it up by focusing on increasing profits and efficiency/sustaining innovations. And, these only help with growth in the short run.

I thought of Amazon and Jeff Bezos as he insisted on the importance of the low end. Amazon Web Services or AWS struck me as a great example of this – a combination of low end and a fundamentally different business model of charging by usage has resulted in their stunning growth. So, the question that crossed my mind was – how do you ever disrupt an Amazon? Thanks to Jeff Bezos, they are so relentlessly focused on the low end that it is highly unlikely a competitor will ever catch them unawares.

2. The customer is the wrong unit of measurement. Forget the customer. Instead, focus on the job the customer hires you to do. This is such a simple and transformative idea. Yet, I haven’t completely internalized this and, thus, can’t say I have learned this yet. I need to keep working on applying this regularly and make it second nature.

3. Be careful what you measure. A Clay talk wouldn’t be complete without this message. The metrics we use can have many an unintended consequence – both at work and our lives. The metrics that are commonplace – stock prices, valuations, promotions and salaries – all tend to be short term. The most valuable things are the hardest to measure. So, take the time to understand how you will measure your business and your life.

A close friend watched this talk and pointed to Clay’s humility as one of the things that impacted him. Whenever someone asked a question, Clay always said – “Thank you for your question.” And, his presentation reeked of humility and thoughtfulness.

It doesn’t at all surprise me that Clay gets that right. After all, the small things are the big things. And, there are few who “get” that idea the way he does.

[embedyt] http://www.youtube.com/watch?v=rHdS_4GsKmg%5B/embedyt%5D

A conversation with Clay Christensen

In what will go down as among the most thoughtful gifts I will ever receive, a close friend got me 20 minutes on Clay Christensen’s calendar. We are the average of those we spend time with. And, aside from close friends and family, Clay Christensen is one of those folks I’ve spent a lot of time with – thanks to his generosity in sharing his wisdom via his book. Just recently, I had written about how their personal cultures had gone such a long way in helping me define my own. In that post, I’d mentioned that Clay didn’t know I exist.


I have reached out to most of my favorite authors and interviewed them in the past few years. But, somehow, I stayed away from reaching out to Clay. Maybe it was because I knew he had a stroke and didn’t want to impose. Maybe it was because I felt I might be a bit disappointed if I never heard back. Either way, I didn’t do it. So, it was a real surprise when this friend forwarded his response to a note she’d left on his website about how I’d been inspired by his work to create “The Good Life sessions” at school. This was a true honor – it is always special meeting someone who has influenced you much more than they realize.

Our conversation revolved around purpose and the themes of “How Will You Measure Your Life?”

On his process of figuring out what mattered to him. Clay is a devout follower of the Mormon faith and his curiosity revolved around whether what he’d read about his faith was true. His experiences led him to experience what he considered a central teaching – if you do your duty, you will have opportunities to amplify your good work. And, that believe has been a constant through his life.

However, he didn’t want his book to be shut off as a religious book. So, he left this portion out (I always wondered why – it took me a long while to figure out how to build a process). In the process of attempting to convey some of his ideas, he had to dig deep to uncover principles that would apply to people of all faiths and belief systems.

On whether “don’t let life happen to you – instead, be intentional and thoughtful as you make your choices” is what he intended readers to take away. Absolutely. The principle here is to understand the resource allocation process. In his class, he teaches a case about resource allocation at Intel. Even though they were attempting to make a shift in the business to a lower profit per unit chip, they were still allocating resources based on “Gross margin per wafer.” This antiquated metric made it hard to make the shift they wanted. So, if managers want to drive change in organizations, you have to be fully aware of the resource allocation process.

Applying that to our personal life, this means understanding how we allocate resources. There are many forces that put pressure on our limited time and energy. For example, most of us habitually prioritize careers over families – even if careers are not that important to us. We can’t let life happen to us.

On parenting and the idea of quality time vs. quantity time. Clay talks a lot about parenting in his book. His reaction to this question was that quality vs. quantity time is the wrong categorization. Instead, first, we must ask ourselves if we are allocating time and energy to our children consistent with how we will measure our lives. And, as parents, our guiding question should be – “Are we working together toward building something or am I simply doing all the work for my children?” A natural following question is – “At the end of our time together, do my children have more confidence to tackle the hard things?”

Looking back, he shared that one of his children’s favorite memories was building kayaks. They didn’t seem to remember what they did with these kayaks. But, building them and tackling the associated challenges was a hugely memorable experience.

I found the idea that Clay had to dig deep to find principles that worked everywhere so as to make sure his wisdom reached people of all faiths and beliefs fascinating. It is, in my opinion, what made that book incredibly compelling – if you are ready for it. His pursuit of principles has inspired my own principle to find integrative principles that cut across all parts of our life. My leadership one pager was a result of a such a pursuit.

Thank you, Clay, for taking the time. And, thank you, for all your generosity. It all means more than I can express.