Saturday, November 22, 2014

How will you measure your life? By Clay Christensen et'al

How will you measure your life? Finding fulfillment using lessons from some of the world's greatest businesses By Clayton M Christensen, James Allworth & Karen Dillion

This book is an eclectic one– a dose of management, bit of philosophy and a theory driven prediction all thrown in for a good measure. Main author, Harvard Business School Prof Clayton M Christensen had a brush with mortality [1]and hence his life lessons are firsthand experience which makes it really compelling. Also, as a writer he is a very accomplished author. His books Innovator dilemma and Innovator’s solution are well known classics. His Harvard Business Review articles have won McKinsey award many times.

Prof Clay advocates to develop “theory” which in turn can predict, so much so, he distills that thought “I don’t have an opinion but my theory has”. In the chapter which is attractively titled as “Just because you have feathers”, he observes that, there is a strong correlation between able to fly and having feathers and wings – what the would-be believed that allowed the birds to soar. But, the would-be aviators didn't understand the causal mechanisms – what actually causes something to fly? They could have seen some warning signs: Ostriches have wings and feathers but they can’t fly: Bats have wings but no feathers but they are great fliers and flying squirrels have neither wings nor feather but they get by. The real breakthrough came later when the concept of lift was explained by the Dutch mathematician David Bernoulli. So author claims, from then on we moved from correlation to causation thereby making giant strides in aviation. Fair enough. But, I have a trouble in subscribing to it fully. We are in an era where correlation would often over power the causation. For very complex systems, the causation factors are so many it is nearly impossible to develop a theory or formula to make a robust prediction. Surprisingly, correlation proves good enough in most cases in this ephemeral world.

Saint Augustine articulated long back that, total abstinence is easier than perfect moderation. Clay echoes similar approach when it comes to adhering to one’s beliefs/values – don’t give an excuse “only for this time”. I would totally agree since every time could be unique and therefore demand an exception. He gives his own example. He does not play on Sundays which is Sabbath day as a matter of principle. When the finals basketball tournament came on Sunday he told his coach he will not play. Coach was incredulous. Thankfully his team won. He also strongly advocates that principle of sacrifice deepens the commitment – be it job, marriage or friendships.

I liked his distinction between bad capital and good capital. He refers to Prof Amid Bhide, whose research suggests that 93% of the companies had to abandon the original idea before they became successful. In other words, winners became so because after the original idea failed they had some cash left to try another one. When winning strategy is not clear, we should be patient for growth and impatient for profits. Once clear we should be impatient for growth and patient for profits. Capital which is in that order is good capital and the other way is bad capital.

Clay’s caution on outsourcing is poignant. He talks about the Greek tragedy of outsourcing by DELL computers. Initially, the business model was disruptive  as they pioneered made to order model rather than standardized builds.   It was also very modular. Each sub system can be picked by the buyer based on needs.This transition was nicely aided by Taiwanese company called AZUS. First they did a very small manufacturing services to DELL.Then,
slowly moved on to make mother boards and later everything for DELL except the branding part. It eventually robbed DELL of some critical capabilities that would be required in future. He suggests a framework (Resources-Process-Priorities) to avoid the danger of outsourcing ones way to mediocrity. It is like Theseus ship where every part of the ship got replaced over time leaving one to wonder can it still be considered as Theseus’s ship?

It is a small book but worth the read many times.
Thanks for reading this far.