RIP Clayton Christensen

Clayton Christensen died last Thursday, at the relatively young age of 67. He was the author of what I think is the best book on strategy for high-tech organizations, The Innovator's Dilemma. I have purchased several copies since I first read it, since people would "borrow" my copy and "forget" to give it back. I actually wrote about this a couple of years ago in my post Clayton Christensen and the Innovator's Dilemma. Not only is the book important for its ideas, it is beautifully written. Now that I'm a writer rather than a programmer or manager, I aspire to be at that standard: having something interesting to say and saying it well.

I met him just once, when he came and gave a keynote at an in-house Cadence event. Back around the turn of the millennium, Cadence had a technology conference where it would bring together about a quarter of our engineering team from all over the world to a sort of mini Design Automation Conference. There would be technical presentations on topics that could not be presented externally since they covered topics that were confidential to Cadence. There would also be keynotes, and one year Clayton gave one of them. He was meant to be on for an hour but he was such a spellbinding speaker that he talked for nearly two, and nobody considered giving him the hook.

You should read The Innovator's Dilemma if you haven't. The thing that makes it so interesting is the counterintuitive nature of its message. Most books on management are roughly "if you do the right thing for your customers, then you will succeed." Clayton realized that in some sorts of innovation, if you do the right thing for your customers, you will fail. Andy Grove, the then-CEO of Intel, stood up at Comdex in the late 1990s and said it was the most important book he'd ever read, so I'm not the only fan boy.

As I said, you should read the book. But let me try and summarize the basic message. There are two types of innovation: sustaining innovation and disruptive innovation. For a big company with existing big customers, sustaining innovation is developing what those big customers want. The examples in the book range from disk drive companies to steel minimills.

Another market discussed in the book was cable-driven and hydraulic excavators. The customers that purchased cable-driven excavators were running large open-pit mines and similar. When hydraulic excavators came along, the seals and pumps were not very good so they were no substitute for those customers, the hydraulic technology didn't scale to the size of those machines. They could only do little jobs such as digging the trenches for the main electricity, gas, and water lines in the street to houses being built in a tract (and similar small jobs). The alternative to those little hydraulic excavators mounted on the back of a tractor was not a big cable excavator but doing it by hand with a shovel. Meanwhile, the cable excavator companies competed on reach (how far out the excavator could operate) and lift (how heavy a load the bucket could hold). Sustaining innovation was improving those two factors that the customers cared about. But it would turn out that hydraulic excavators were the disrupting innovation, the way of the future. Today, almost all excavators are hydraulic, even the biggest. The cable excavator companies got driven from the market in the end. Here's the kicker: not a single cable-driven excavator company ever built a hydraulic excavator of any kind. They got driven to the most premium end of the market, which ended up being a small niche, and most of them went bankrupt.

In the 1980s and 1990s, there were many computer companies. IBM introduced the PC in 1981 but it was of no interest to the customers of Digital Equipment (DEC), Sun Microsystems, or any of the other computer companies of the era. It was way too underpowered. However, in an analogy to the first primitive hydraulic excavators replacing people doing things by hand, PCs were used in business for things that were not done on mainframes, such as running the Visicalc spreadsheet (see my post 40 Years Ago, "Spreadsheet" Didn't Mean Excel, It Meant VisiCalc for more on that story). The computer companies competed on building better computers for their engineering and business markets. But one of Clayton's messages is that low-end disruptive technology improves faster than products in the existing market. The PC got so good that its descendants fill all the cloud data centers and most of those older computer companies were driven from the market. Many, such as DEC, even introduced version of the PC but they were not of interest to the customers their salesforce was calling on until they got much more powerful, by which time it was too late. Fan-boy Andy Grove won as Intel increased the performance of microprocessors on a tick-tock schedule until nobody wanted to bother with anything else. Almost all other architectures were driven from the market completely as everything became a "PC".

A couple of years ago, I went to an event at the Computer History Museum where Clayton presented on his book extending some of his ideas to whole countries. I wrote about that in my post Clayton Christensen on the Prosperity Paradox. The equivalent of disrupting innovation at the country scale are new low-end markets that didn't exist before. That is what creates prosperity for the country. Prosperity for individual companies doesn't result in prosperity for the country unless they enlarge the market with products that people could not afford before. You can read my post for more details, or for even more detail, buy his prosperity paradox book (once you've read The Innovator's Dilemma).

Here's a prediction that Clayton threw out in that evening to give you a flavor of what he was talking about:

Some of you own a car called a Tesla…and we would all hope to have a Tesla. But the theory says they won’t create jobs or growth. A Tesla has to compete against BMW, Mercedes, etc. When you go to Beijing and look to left and right, and if you walk 30 yards you will come across an electric car, the $4,000 Shifeng. Electric cars just need to be better than nothing, not like Teslas that need to be better than other luxury cars. Theory says the people who are selling Teslas will not survive. That's not my arbitrary opinion, that’s what the theory says. The bottom of the market is where new markets begin.

In my post about his book from a couple of years ago I wrote that:

The initial products that are eventually going to slay the giants are never that compelling, or the giants would be selling them already.

That's as concise a way of expressing Clayton's outlook as I can come up with.

There are obituaries all over the net, here's Harvard Professor Clayton M. Christensen Turned His Life Into a Case Study from the Wall Street Journal.

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