Posted by: seanmalstrom | June 26, 2014

The New Yorker and Clayton Christensen

The New Yorker has decided to attack disruptive innovation. When I read this, I was quite amused. The author frames the article as taking down the idea talisman of disruption that ‘everything is disruptive’ but actually is attempting to attack Christensen’s academia credentials. I was hoping to see a mention to Intel’s celeron chip or the Nintendo Wii. Neither were mentioned. The New Yorker could have just called Christensen to ask about these points but intentionally chose not to. A less educated person on disruption would probably find the New Yorker piece convincing which is pretty sad.

Christensen seemed quite annoyed by it. Business Week must have intentionally chosen the worst picture of Christensen. I’ve never seen him look that bad. Anyway, it is always good to quote Christensen so let us see what he is saying:

Well, in the first two or three pages, it seems that her motivation is to try to rein in this almost random use of the word “disruption.” The word is used to justify whatever anybody—an entrepreneur or a college student—wants to do. And as I read that, I was delighted that somebody with her standing would join me in trying to bring discipline and understanding around a very useful theory. I’ve been trying to do it for 20 years.

This is quite true. People kept throwing disruption around in a non-business sense. Christensen noticed what I did that she frames her article, at the beginning and at the end, against using the random use of the word ‘disruption’. But the actual content of the article is an attempt to discredit Christensen academically.

And then in a stunning reversal, she starts instead to try to discredit Clay Christensen, in a really mean way. And mean is fine, but in order to discredit me, Jill had to break all of the rules of scholarship that she accused me of breaking—in just egregious ways, truly egregious ways. In fact, every one—every one—of those points that she attempted to make [about The Innovator’s Dilemma] has been addressed in a subsequent book or article. Every one! And if she was truly a scholar as she pretends, she would have read [those]. I hope you can understand why I am mad that a woman of her stature could perform such a criminal act of dishonesty—at Harvard, of all places.

A mad Christensen is an interesting Christensen. I was wondering why she kept focusing on the very first book. She chose to cherry pick her stuff especially by isolating just the first book.

So the iPhone: There’s a piece of the puzzle that I did not understand. What I missed is that the smartphone was competing against the laptop disruptively. I framed it not as Apple is disrupting the laptop, but rather [the iPhone] is a sustaining innovation against Nokia. I just missed that. And it really helped me with the theory, because I had to figure out: Who are you disrupting?

It’s a running joke that Christensen has been consistently wrong about Apple (Christensen has been more of a Google guy). The big reason why Christensen kept seeing Apple’s products as sustaining innovations was due to the higher price tag that Apple products have and the history of Apple in the 1990s. Disruptive products are cheaper, not more expensive. The iphone was not disruptive to Nokia phones, but it was disruptive to laptops. Christensen is making a point I’ve been making. The smartphone is disrupting computers. If that is true, then that means it is NOT disrupting handheld game devices. In the 1980s, everyone from Steve Jobs to Trip Hawkins was convinced that PCs had permanently ended dedicated game consoles. The Atari Crash was ‘proof’ of this. Then came the NES which was accused to be a ‘fad’. Yet, the dedicated game console still thrives.

The entire intent of disruptive strategy is illustrated to what Nintendo did with it. A company wishes to reverse its market problems so they look for business strategies to assist in that. Disruption was what Nintendo chose back then. There is no ideology behind it. It is nothing more than a company wanting to sell more of their ‘stuff’.

So what is the intent of the New Yorker piece? Check out this really evil quote:

In the late nineteen-nineties and early two-thousands, the financial-services industry innovated by selling products like subprime mortgages, collateralized debt obligations, and mortgage-backed securities, some to a previously untapped customer base.

She is implying that disruption or ‘innovation’ means banks to lend money to people who cannot pay it back. The ‘previously untapped customer base’ is implying as if banks wanted to ‘expand their market’. This is such nonsense. While Canada is a different country with its own nuances, I know that in the United States that the banks did not choose to give money to people who couldn’t pay it back. The Federal Government forced them to do so. When the banks went under since you can’t make money when you give money to people who can’t pay it back, the US government bailed them out. Wells Fargo, I know, tried to walk out and refuse to take the money. They were told that they had to sign.

Blaming Clayton Christensen for the subprime mortgage crisis other other financial issues is laughable. But it reveals an evil streak in the author. Christensen is a lovable nice guy. I’ve never heard him say anything mean to anyone. Yet, the author is attacking him academically and even blaming him for the financial melt-down! Incredible!

Disruptive innovation as an explanation for how change happens is everywhere. Ideas that come from business schools are exceptionally well marketed. Faith in disruption is the best illustration, and the worst case, of a larger historical transformation having to do with secularization, and what happens when the invisible hand replaces the hand of God as explanation and justification. Innovation and disruption are ideas that originated in the arena of business but which have since been applied to arenas whose values and goals are remote from the values and goals of business. People aren’t disk drives. Public schools, colleges and universities, churches, museums, and many hospitals, all of which have been subjected to disruptive innovation, have revenues and expenses and infrastructures, but they aren’t industries in the same way that manufacturers of hard-disk drives or truck engines or drygoods are industries. Journalism isn’t an industry in that sense, either.

Let us analyze this paragraph. It starts off saying how ‘disruption’ isn’t an explanation how change happens everywhere. No one disagrees with this especially Christensen. However, the paragraph changes frame to the specifics that ‘public schools, museums, etc. aren’t industries like truck engines’. Why not? The author does not say. She merely goes on.

Every student (I am currently one) of college feels the wrath of expensive college tuition and expensive textbooks. Shouldn’t there be some disruption? Shouldn’t there be some alternative? Health care costs are rising. Shouldn’t that be disrupted or some alternative found?

Doctors have obligations to their patients, teachers to their students, pastors to their congregations, curators to the public, and journalists to their readers—obligations that lie outside the realm of earnings, and are fundamentally different from the obligations that a business executive has to employees, partners, and investors.

This has transitioned away from disruption into a ‘not everything is about profit’ screed. Disruption, in itself, is not about seeking the most profitable solution. Does the author realize it? Irrelevant. The piece is not about portraying disruption accurately. Disruption is about ‘making crappy products for crappy customers’. Everyone remotely familiar about disruption know that disruptive products are not the most profitable products. In many ways, disruptive products threaten to DESTROY the profitable products. This is why Christensen is responding to it as a hit piece. The article frames itself one way, then goes at Christensen another way. The author never contacts Christensen. Disruption isn’t even described accurately in the article.



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