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Sunday, June 22, 2014

Sunday, June 22, 2014

Christensen's Disruptive Innovation after the Lepore Critique

Must innovation disrupt everything so that society might have new and better things? Widespread fatigue with this idea inspired a number of headlines last week.  "The Emperor of "Disruption Theory" is Wearing No Clothes," exclaimed one response.  Paul Krugman described a "careful takedown," suggesting that the whole era of innovation might collapse from its own overhype ("Creative Destruction Yada Yada.")  Jonathan Rees referenced an "absolutely devastating takedown."  All three were talking about Jill Lepore's much-discussed New Yorker critique of prominent business consultant Clayton Christensen's theory of "disruptive innovation." Prof. Rees concluded, "Like MacArthur at Inchon, [Prof. Lepore] has landed behind enemy lines and will hopefully force the enemy to pull back and defend ideological territory that they thought they had already conquered."  Obviously something is up when one historian compares an article by another to the "decisive" amphibious assault against the North Korean army early in the Korean War.

What's up is pervasive anger at the corporate and political classes that have used the theory of disruptive innovation to justify an endless procession of company downsizings and closings over the past thirty years (photo credit: Bill Bamberger).  People are also angry at the belief of many advocates that resistance is futile and resisters are losers.  Prof. Lepore spoke for this sense of exclusion when she wrote that in order to avoid actual debate, "disrupters ridicule doubters by charging them with fogyism."  Innovation, she wrote, has become "the idea of progress jammed into a criticism-proof jack-in-the-box."

The stakes of this debate about innovation are high.   Corporate America, health care, manufacturing, and the contemporary university have all tied their reputations to their delivery of innovation. Innovation comes with lots of turmoil, unilateral management decision making, and interference with how people do their jobs.  The critiques of the Lepore article didn't justify disruption as innovation so much as they affirmed that there is a lot of disruption:  responses from DigitopolyVox, Forbes and the Wall Street Journal tried to refight the debate to a draw.   In an interview, Prof. Christensen countered some of her examples while describing her piece as a "criminal act of dishonesty--at Harvard of all places!" (He also seemed to invite her over to talk innovation theory.)

I don't want to try to referee the debate through the examples in Prof. Lepore's piece, but to provide a better socio-cultural context for it, in the hope that the debate will continue.  The main point I will make here is that we can't overcome disruptive innovation unless we realize that it isn't a theory of innovation but a theory of governance. "DI" isn't about what people actually do to innovate better, faster, and cheaper, but about what executives must do to control innovative institutions.  Prof. Lepore's work will be wasted unless we can move from disruptive to sustainable innovation, which she argued is better than the disruptive kind.  But we won't get sustainable innovation until we identify its opposition in current managerial culture.

(1) From Schumpeter to Christensen

A little backstory may help here.  Prof. Christensen is now the most prominent heir of Joseph A. Schumpeter's twin definition of capitalism as the source of all meaningful innovation in life, and of innovation as "creative destruction." For both of these thinkers, the entrepreneur is the fountainhead of new value, and capital must be pulled out of less productive uses and allocated to the entrepreneur, who is the privileged source of all future of wealth-creation.  In Schupeter's view, governments, publics, regulations, communities, traditions, habits, faculty senates, teacher's unions, zoning boards, homeowner's groups, professional organizations, and, last but not least, business corporations, do not create value but interfere with its creation. All that is solid must be melted into air for the entrepreneur to be free to innovate and thus transform.  The resulting wreckage and waste is part of progress, and must not be reduced through regulation.  This is true for shuttered factories, and also for high levels of inequality: both are part of liberating the entrepreneur to create the greater wealth of the future.

Although years of reading Prof. Christensen makes me think he's personally humane, his theory is the business world's single most powerful rationalization for disrupting every type of humane condition, such as job security, tax-funded public infrastructure, or carefully nurtured, high-quality product lines.  Prof. Lepore was right to state, "Disruptive innovation is competitive strategy for an age seized by terror."  Disruption feeds on major and also minor terrors, like being left behind by a change deemed unavoidable, or being excluded from debate about the costs and benefits of undermining entire regional economies by offering tax breaks to companies that offshore production.

One outcome of the theory of disruptive innovation has been the shocking complacency of the U.S. political class about the national devastation wrought by deindustrialization. We have a "rust belt," and ruined cities like Newark and Detroit, and wide areas of social and economic decline amidst enormous wealth, because business and political leaders were taught by consultants like Prof. Christensen that capitalism must destroy in order to advance.  Journalists might come along and chronicle the horrible human costs of the decline of the steel industry in, say, Youngstown, Ohio (see the Tammy Thomas sections in George Packer's The Unwinding (2013)But by the time someone like Mr. Packer arrived, decline has been baked into the regional cake.

The theory of disruptive innovation was arguably head baker, for it taught politicians in Youngstown and elsewhere that industries like steel and their unionized employees had been judged by an impartial market to be uncompetitive.  Consultants would routinely opine that the only logical response to falling profits was the mass layoff and/or factory closure. In The Disposable American (2007), Louis Uchitelle pointed out that layoffs were not wars of necessity but wars of choice, and yet to say that deindustrialization expressed a cultural entitlement rather than an economic law was to stick one's finger in the dike.  Slowly but surely, Youngstown and everyplace like it no longer had economies that supported a broad, stable middle class. In addition, like Beckett's Godot, the renewal to which this disruption was to lead never actually showed up.

Thus Prof. Lepore's critique of disruptive innovation tapped into a pervasive, long-term anger about ruin in America and an anger at the corporate and political classes that deemed ruin necessary.

(2) Jill Lepore's Critique

In "The Disruption Machine," Prof. Lepore held Prof. Christensen's theory to rigorous evidentiary conditions for historical claims, and found that "none of these conditions have been met." (Score Humanities 1, B-Schools 0!--there's a disciplinary matchup in her piece that Michael or I will come back to another time.)   She suggested not just that disruptive innovation doesn't work as advertised when transferred from, say, specialty steel manufacturing to educational services, but that it didn't work well even when applied to manufacturing.

Crucially, Prof. Lepore concluded that "sustaining" innovations--which continuously improve a product--are far more successful that Prof. Christensen's theory admits.  Discussing a core Christensen example, the disk-drive industry, Prof. Lepore posited a more accurate history,
In the longer term, victory in the disk-drive industry appears to have gone to the manufacturers that were good at incremental improvements, whether or not they were the first to market the disruptive new format. Companies that were quick to release a new product but not skilled at tinkering have tended to flame out.
In other words, sustainable innovation works as well as or better than disruption, but the U.S., thanks to figures like Prof. Christensen, wasn't allowed to have it.  Americans could have developed advanced skills for advanced manufacturing and services as did Germany, Japan, China, Sweden, et al, but nooo--economists and business theorists taught that it was uneconomical to invest in all the Tammy Thomas's of the country so that they could "tinker" brilliantly for the sustainability of U.S manufacturing and its heartland cities.

I agree with Prof. Lepore's demonstration of Prof. Christensen's fallibility, and with the conclusion that disruption is a false idol.  It has indeed produced neither social progress nor economic success as such. But it's one thing to critique disruptive innovation, and another to change it into sustainability.   Prof. Christensen has and will continue to promise enormous irreversible change in articles like "MOOCs' disruption is only beginning"--and so will American capitalism in general. To disrupt disruption, particularly in a service sector like higher education, we need a better appreciation of the deeper purpose of disruptive innovation I mentioned above.  The history suggests that Prof. Christensen became influential  because he enhanced an top-down kind of innovation management, not because of his insights about innovation as such.

(3) The Revolt Against Managers 

Prof. Lepore juxtaposes Prof. Christensen to Michael Porter's strategy-based model of "comparative advantage." But Prof. Christensen isn't so much the un-Porter as he is the un-Peters--Tom Peters, that is.  In the mid-1990s, the management book to beat was still In Search of Excellence (1982), which Mr. Peters co-authored with Robert H. Waterman. These two management consultants did a particularly good job of facing up to the decline of American manufacturing, particularly in relation to Japan, which had been influentially analyzed in works as different as Chalmers Johnson, MITI and the Japanese Miracle (1982), Barry Bluestone and Bennett Harrison, The Deindustrialization of America (1984), Michael J. Piore and Charles F. Sabel, The Second Industrial Divide (1984), and  Rosabeth Moss Kanter, The Change Masters (1985). By the time David Harvey's The Condition of Postmodernity (1991) came along to declare a fundamental change in capitalism's mode of production, prominent business writers had been trying to revive capitalism by exposing the deficiencies of top-down corporate management.

Most famously, Mr. Peters and Mr. Waterman decorously criticized management's selfish cynicism about the capabilities of their employees.  They argued that American executives adhered to an outmoded Theory X, "the assumption of the mediocrity of the masses.” Executives wrongly believed, in the words of Theory X's codifier, the MIT industrial psychologist Douglas McGregor (1960),  that the masses “need to be coerced, controlled, directed, and threatened with punishment to get them to put forward adequate effort." Theory Y, which Mr. Peters and Mr. Waterman upheld, like McGregor before them,  "assumes . . .  that the expenditure of physical and mental effort in work is as natural as in play or rest . . . and the capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population(emphasis omitted, 95).  (For a discussion of MOOC-based Theory X in higher ed, see "Quality Public Higher Ed: From Udacity to Theory Y.")

In Search of Excellence implied that American management was holding the American worker back.  The way to compete with Japan, Germany, et al was general employee empowerment.  I understand that the only management book to outsell In Search of Excellence in the 1980s was Stephen Covey's The Seven Habits of Highly Effective People, which was in a different way also addressing the empowerment needs of the ordinary employee. Extending the argument, Mr. Peters called a later tome "Liberation Management (1992), claiming that a kind of self-organized worker activity would grow the company's bottom line through the creative pursuit of higher quality.   Oddly enough, this kind of  "human relations" management theory surged during the Reagan years. One culmination was Post-Capitalist Society (1993),  in which the dean of management theorists, Peter Drucker, prophesized the replacement of the firm's managerial layers with the "intellectual capital" of knowledge workers, who would use their pension-based ownership of their companies to take capitalism away from passive capitalists and their managerial proxies.

(4) Innovation as Governance

I retell this history to help us avoid interpreting Prof. Lepore's account to suggest that Clay Christensen's rise was based on a series of misreadings  of corporate histories that never got fact-checked by his propagandistic discipline.   To the contrary, Prof. Christensen became a pivotal figure in management history by using innovation to re-empower management.  We can see him, in retrospect, as offering a comprehensive antidote to what American capitalists could only regard as the poison of neo-workplace democracy.  Some 1980s business blockbusters were telling stockholders and executives to share power with a new, insufferably smart-ass "no-collar" generation of knowledge workers, and that only this concession would turn the tables on the Japanese.  Many owners and executives must have felt that this price of recovery was too high.

Prof. Christensen was not working alone, of course: the "shareholders revolt" inspired by another Harvard B-school professor, Michael Jensen, was very important, as were other theories and corporate movements. But Prof. Christensen's role was particularly important in "learning organizations" (the subtitle of a 1990 blockbuster, by Peter M. Senge, that disruptive innovation also eclipsed).   Had the future belonged to the Peters, Druckers, and Senges, universities might by now have subjected financial management to the judgments of the collegium, in Jim Sleeper's term. In a post-capitalist university, administration would execute decisions made by faculty and staff collaborating with students in everyday administration and in strategy. But universities have gone in the opposite direction, with their managers controlling not only the allocation of resources but the composition of teaching staffs while, in the online era, shaping the curriculum and its delivery.   If in the 1970s it made sense for Barbara and John Ehrenreich to speak of a joint "professional-managerial class," by the end of the 1990s, managers had broken away from professionals in healthcare, K-12 education, and academia. Management had the easiest time maintaining its authority when it spoke on behalf of innovation.

Prof. Christensen, in short, offered an antidote to an unexpected return of neo-workplace democracy. His work circulated widely in firms who wanted to avoid losing to more "innovative" competitors. But even in those contexts, his work was less about maximizing innovation and more about controlling it.   His theory has rested on three main axioms.

First, as I've noted, he assumed that losing major industrial sectors to other countries is a natural law of capitalism, not a mistake of American management.  This is the meaning of innovation -- it destroys incumbent sectors in the process of creating new ones.  So stop worrying and learn to love the bomb that blew up your (old, less valuable) industries (and communities).

Second, your employees' genuine love of excellence is not the solution: it's the problem.  They will keep making better, higher-quality products (Theory Y is true!).  Meanwhile, disruptive innovation will steal your market share with crappier, lower-quality products at new, low low prices.  Your employees do want to focus on higher quality and smarter technology.  But these are always, in the Christensen model, "sustaining innovations," which are bad for profits.  So a firm needs to lower the quality of goods like photocopying or college teaching.  Prof. Christensen often goaded managers with the inability of great firms with great products to develop worse stuff quickly enough to save themselves. To move downmarket fast enough, they must control their excellence-oriented, highly effective, quality-focused workers, and resubjugate them to the firm's value proposition.

Third, this control must be exerted by management.  It is management that must interpret market requirements, and do so without concern for the human interests at stake and then compel employees to comply with these. In the Christensen antidote to a kind of shared governance with knowledge workers, management had a whole new lease on life and, indirectly, a gigantic claim to company resources. Companies should manage innovation with structures like "heavyweight teams."   Prof. Christensen defined what might have seemed a return of executive Bonapartism as the objective transmission of market signals.  You don't like your product line downgraded or your laboratory closed? Don't blame the messenger! The management team is just transmitting market signals without fear or favor. In the case of university "reform," the management team transmits a preconceived mission: The Innovative University recounts how senior managers at BYU-Idaho pushed through unpopular changes like the elimination of sports teams and summer teaching breaks on the basis of unilateral decision rights--in their case rooted in collaboration with the senior leadership of the LDS Church itself.  (BYU-Idaho has an interesting teaching model that deserves independent analysis: my point here is that it was imposed through top-down managerialism wearing innovation's clothing.)

There's a further aspect of this third feature of the Christensen antidote to knowledge-worker autonomy.   In contrast to professional authority, which is grounded in expertise and expert communities, managerial authority flows from its ties to owners and is formally independent of expertise.  Management obviously needs to be competent, but competence seems no longer to require either substantive expertise with the firm's products or meaningful contact with employees.  The absence of contact with and substantive knowledge of core activities, in managerial culture, function as an operational strength.  In universities, faculty administrators lose effectiveness when they are seen as too close to the faculty to make tough decisions. In the well-known story that Prof. Lepore retold, the head of the University of Virginia's Board of Visitors decided to fire the university president on the grounds that she would not push online tech innovation with the speed recommended by an admired Wall Street Journal article.  The Christensen model does not favor university managers who understand what happens in the classroom and who bring students and faculty into the strategy process.  For employees and customers are exactly the people who want to sustain and improve what they already have, which in disruptive capitalism is a loser's game.

The power of the Christensen script can be seen in the care with which MOOC advocates have been following it since 2012.  They first cast universities as overbuilt incumbents, the kind of places that do indeed hire nonfaculty professionals at ten times the rate of full-time tenured faculty in order to chase high-end customers and avoid the less demanding and underserved masses.  Second, MOOCsters slammed instructional employees as opposed to innovation: articles or books by analysts like Mark C. Taylor, Ann Kirschner, and Richard A. DeMillo heaped scorn on what Dr. DeMillo called "faculty-centered" universities. Third, during the 2012-2013 boom, MOOC entrepreneurs bypassed faculty to connect directly with venture capitalists, politicians, business leaders, and senior university managers.  One triumph of the campaign was the Udacity-San José State contract for three MOOC courses, which must have been the first time in history in which a university's outsourcing contract for one department's remedial curriculum was signed in the presence of the state's governor.  2014's MOOC business plays have continued the outreach to academic managers and the sidelining of teaching professionals (e.g., UC Berkeley, or Udacity's "nano degree").  MOOCs moved in so easy because they fit with the managerial ascendency over the professional authority of professors--the key institutional goal of disruptive innovation.

(5) Towards Sustainable Innovation

Let me steer this discussion back to universities. We need a new era for them, in which they are allowed to find sustainable financing and to support sustaining innovations.  (Something analogous needs to happen for industries that have huge social value, like polymer solar cells, but that can't attract private capital.)   Jill Lepore's critique of Clayton Christensen's historical errors moves us in this direction by discrediting disruption-as-such.  But her effort won't last without broad faculty support for restoring the status of professional knowledge in relation to its decades-long undermining via the theory of disruptive innovation.

One traditional ground of faculty resurgence is to affirm its professional rights and privileges.   This is important, but will not be enough to emerge from a period in which these rights are exactly what disruptive innovation discredited.  The same goes for what I've done here, which is a kind of Foucauldian analysis of innovation as a mode of governmentality.  This is a necessary but not a sufficient condition of moving toward post-disruption.

We also need faculty to tie their professional expertise to the university's anti-elitist, pro-democratic social mission. Michael and I have been posting for a while on faculty- and student-centered higher ed, in company with the MOOC-based focus on learning, which, shorn of the medium's imperial pretensions, was all to the good.

Ironically, faculty can also get help from Clay Christensen's work, where a democratic impulse survives its deep managerial bias.  For example, the impetus of the BYU-Idaho experiment in The Innovative University was the democratic goal of higher quality for more students at a reasonable cost (251).  Figuring out which costs are necessary and which can be dumped required, as it always does in Prof. Christensen's work, asking two questions: (1) what job does the "customer" want done ( not what product does the customer want to buy); and (2), what jobs can the university "do uniquely well."

The Innovative University's answer to the first question was this:
the job that students and policymakers need done is the bestowal of the insights and skills necessary not to just make a living but to make the most of life.  A college degree creates its significant wage-earning advantage because it is designed with more than mere economic goals in mind.  Among those extra-economic goals are the jobs of discovery, memory, and mentoring, jobs that traditional colleges and universities perform as few other institutions can. (331)
This is a fairly basic statement, but it grounds even the "disruptive" (cut-rate) university in human development rather than job training.  It also leads to refocusing the university on its core elements: "(1) discovering and disseminating new knowledge, (2) remembering and recalling the achievements of the past, and (3) mentoring the rising generation" (331).  Again, the formulations are not ideal,  and yet even a university that has been businessed by an innovation gang would look, for example, to reduce the administrative bloat that has raised student costs and disempowered educational staff.

In the company of thousands of educators who've spoken out, Prof. Christensen is right that universities need to recover their educational focus.  It's just not his model of disruptive innovation that will achieve this.  The process cannot be lead by managers and must be lead by faculty and students.  The historical tragedy of the Schumpeter-Christensen model is that it elevated a managerial class that opposed the democratization of invention we now can't do without.  The good news is that there's no reason to make the same mistake twice.

20 comments:

cat said...

Hi Chris, I'm rushing out now to buy the New Yorker and Jill Lepore's article. I say that to underscore that I've not yet read her work. I admire her as a scholar, writer, and human being very much. She is one of my favorite writers. I've also learned a good deal from Clay Christensen over the years, and, back in 1998-2006, when I was Vice Provost for Interdisciplinary Studies, with the charge of thinking through new infrastructures that could bridge intellectual programs across the budgetary silos of the university, I found his work often exceptionally useful--if used selectively. This was back in the days of "The Innovator's Solution," before the avalanche of disruption books. I had him come talk to the leaders who were designing new programs twice and, as you suggest, he is a humane and decent man and, as you suggest, the application of his work and its ascendance as a justification for brutality can be anything but humane. You write: "In the company of thousands of educators who've spoken out, Prof. Christensen is right that universities need to recover their educational focus. It's just not his model of disruptive innovation that will achieve this." I could not agree more. Thank you as always for your wise and quick intervention into the conversation we all need to have. And thank you for the lovely shout out to the book I did with documentary photographer Bill Bamberger, Closing: The Life and Death of an American Factory. The real, tragic, and wrenching personal stories we showed and told together in that book is, to me, the necessary and constant counterbalance to any "disruption theory" that forgets its humanity. Many thanks, Chris.

Joshua Rosenbloom said...

Thanks for this illuminating back story about Lepore and Christensen views of innovation. What seems to be missing from both analyses is a grounding of innovation in relevant economics. As a first order approximation suppose businesses want to maximize profits (of course managers have their own interests at heart). The best way to do this is to create a degree of market power (i.e., monopoly), which you can do by obtaining IP rights to a new, better technology, gaining ownership of scarce resource or erecting regulatory barriers. All of these save you from having to make your living in a competitive market.

Much conventional economic analysis glorifies competitive markets because of their desirable welfare properties, but the above suggests that all businesses want to escape from competitive markets. Once they have done so, however, the monopoly "rents" that they earn are attractive to other businesses. Schumpeterian creative destruction describes the way in which new innovations provide a way to breakdown the barriers that incumbents have erected.

A nice example of this is the way in which MCI and other innovators eventually broke down the Bell System's monopoly on long distance telephone service. Similarly, mobile phones, and voice over internet have created an alternative to the copper wire local phone service monopoly.

The point is that competition is channeled into development of new ways to compete for existing markets (often this competition then leads to new uses that were not previously envisioned). Often this is done by new entrants, because the new techniques require novel skills, or because incumbents have significant investments in the older technology that they are reluctant to jettison. But there is no iron rule that this is true, and in many cases new entrants fail and are replaced by others, or bought by incumbents.

There is no iron law here other than focusing on what motivates businesses and individuals in an economic context. To this extent Christensen and Lepore are talking past each other. Though, on the whole, I think Lepore has the better side of the argument.

For those of us in higher education, there is no definitive prediction about innovation. But just as the staggering decline in costs of the IT industry has altered competitive equations in a stream of other industries -- news, telephone communication, television and movies, photography -- it appears to be destabilizing existing relationships in higher education. We may not like it, but we cannot avoid the fact that the economic environment is changing profoundly.

Tom Abeles said...

In the US and even globally, there are problems in the K-12 education system as it is faced with issues of students with different backgrounds, language skills and preparation. These are passed through to higher education, a system which is even less prepared, pedagogically and organizationally to deal with this, much as manufacturing industry has to deal with variable specifications of its inputs in both quality and quantity.

The analysis here is a bit schizophrenic. Who makes the decisions? management? students? faculty? or, as suggested here, student/faculty? First, a significant admin responsibility at a university such as admissions, campus mgmt, counsel of students,etc have been given up by the faculty in exchange for "?". To change this direction means willingness to seriously take on that which has been, potentially, irretrievably lost. Given the mix of those banging at the door of the Ivory Tower, one can question their ability to take on that responsibility especially with others who are not slipping money over the wall (legislators, foundations, etc) with no strings attached.

The "disruption" is happening in secondary schools in the US where we have sufficiently qualified teachers that students through a variety of programs including early college can be sending students to HEI's able to bypass the cash cows, fresh/soph programs. That factor and "competency" based degrees being taken up by a number of HEI's totally deconstruct the traditional model academically and economically.

What is suggested, here and elsewhere, is shoving more money over the transom to accommodate a present, conservative, idea of the "university" won't work because the institution is changed, but as in Poe's M Valdemer, the trance still holds, the blue pill is still on the lips trying to be swallowed.. Originally, back in about 1000, universities, funded by the State and the Church, had two missions, to educate for society participation and to prepare for gainful work. The balance between the two has shifted back and forth. In today's world, the one size model, maybe with a choice of colors, as we see with the number of alternatives rising, needs to be addressed. This may be, as with the Chinese, a shift to more polytechs from univ status and similar alternatives for obtaining nano-degrees, competency degrees, etc. One may argue the social ramifications of a multi-path to post seconday certification, but the question is whether the original needs of society (civic and economic) can be met otherwise. It may be time to stop trying to push an old foot into a new glass slipper.

Riel Miller said...

Thank you for the lucid distancing of the debate to reveal the underlying power issues. But I wonder if the challenge isn't how to embrace both disruption and continuity? There are times when continuity is very bad, say of a dictatorship, where the ability to incrementally improve is just a way of prolonging a terrible situation. And there is clearly a strong bias towards seeking the immortality of just about everything in our current societies (human life, nations, corporations, industries, etc.). Death is a form of disruption. Might it not be more useful to take the old market dynamics framework of birth, death, entry and exit and ask how to become better at thinking about the full range of choices and which conditions might make that workable? One suggestion - understanding anticipatory systems better might help to continuously identify changing and emergent systemic boundaries - giving us new insights into novelty, ascendance, decline and zombies (fetters of the past).

Chris Newfield said...

thanks Cathy. Closing is a great book. I wish Clay Christensen would link to it from his website . . . @cat

Chris Newfield said...

Joshua, I agree with your general summary of the working of the US economy as driven to a great extent by the pursuit of monopoly profits. But that is of course not the same as pursuing innovation, and one of my arguments is that Clay Christensen is best read as a theorist of the former not the latter (of the dynamics of monopolies more than of technological change) . My related argument is that he has naturalized and even glorified what we might call "managerial destruction" even though innovation is more likely to be advanced by its opposite--continuity, support, long-range tinkering, protection from management (as suggested by much work on the success of 20th century industrial laboratories). It sounds like you agree with a third argument, which was prominent towards the end of Lepore's piece, that there are alternative ways to run business and innovation (also different things). So I don't agree with this sentence: "Schumpeterian creative destruction describes the way in which new innovations provide a way to breakdown the barriers that incumbents have erected," because I think we've confused innovation with what breaks down incumbent barriers (and makes new barriers as fast as possible)--IP litigation; mergers and acquisitions; underselling, tie-ins, and some other practices that used to be called "unfair competition"; lobbying, campaign contributions, and related capturing of the political process; and so on. I would never say that innovation isn't in there too, but it's been exploited as the most palatable front man for what would otherwise look like everyday predatory capitalist behavior that people would then feel justified regulating or eliminating (i.e., it would be seen as a firm pursuing it's narrow self interest and not as tech progress through cheaper-that-becomes-better). I'd say something similar about higher ed. I'm not at all opposed to learning technology, but to its top-down imposition on educators by managers who are using tech to pursue some other strategy, and who don't know or care about the impact on the quality of the product, which in this case is students' "creative capabilities" and which we cannot allow to be lowered and cheapened in the way photocopiers could be. Or so it seems to me.

Chris Newfield said...

Tom - I'd project two desirable results of a better innovation model that I think you'd also like: more institutional diversity, and more professional / bottom-up input into institutional design. The latter is the cure for the schizophrenic situation you describe, over time, and with a lot of redesign of collaborations among admin, staff, faculty and students. I think your slipper belongs to Clay Christensen.

Chris Newfield said...

Riel - I definitely agree. For me the issue is whether employees / students / faculty / front line staff have full decision rights over mixtures of continuity and change (which I think is more effective and ethical) or whether the mix is handed down from senior management on the grounds that they are just passing on objective economic forces (which I don't think is either)

Rick Mueller said...

Hi Chris, I'll keep this short, because my perception is that you are well ensconced in your dogma and happily so. Yet on the off chance that even just one or two neurons have been allowed to remain in the service of authentically critical thinking, I'd suggest that if you were to absorb an understanding of the book rather than just read the words, you'd discover 2 remarkable things. One is that Christensen as always been in favor of revival and restoration of incumbents; at no time does he ever advocate throwing out the baby with the bath water. I'd propose that this is why he's never travelled (what would have seemed to be) the (natural) path of developing a "formula" to invoke Disruption. And if that isn't enough to convince you that you and he are actually on the same side of this argument, it happens that Disruptive Innovation is not just a way to defeat the greed that emerges from shareholder imperialism backed the authority of irresponsible legislators, but it is the only way for those who would be otherwise unempowered to temper that system short of armed insurrection. Engagement on the basis cursory understanding couched in prose which only an academician could love will serve only to put that much more of a stake in the heart of the causes you appear to support.

Happy to discuss at greater length should you be so disposed. Rick Mueller, Manager - Disruptive Innovation Group at LinkedIn (http://linkd.in/1j7kbmT).

Justin Kownacki said...

I think Rick may have cornered the market on conversational destruction with this easy-to-follow-formula.

1. Insult the author's beliefs.

2. Insult the author's intellect via condescension.

3. Hinge your rebuttal of the author on your stated belief that you understand the source material better than the author does.

4. Insult the author's intellect and personal style.

5. Invite the author to join your LinkedIn group.

Ah, the glory of modern communication...

Rick Mueller said...

Justin - it's possible that Chris is a better man than that. I guess we'll see.

Chris Newfield said...

Justin - nice. Rick - CC consults for lots of incumbents and tries to help them. But the limits of his approach appear regularly, including in the MOOC piece I linked. He asserts that higher ed is categorically a "long-stagnant industry," equates sustainable innovation with those "meant to drive up prices by delivering bigger, faster, stronger products and services for the best customers," and winds up by asserting his unchanging finding that "it is nearly impossible for established leaders to disrupt themselves." All of these are wrong as generalizations about higher ed. Lots and lots of everyday employees are innovating all the time--often without support from senior managers who hire consultants to tell them what is going on in their universities. Sustainable innovation has in higher ed consisted in part of major efforts to expand access to the entire population, which required the strong public funding that CC among many others has done his part to cast as anti-innovation. And "established MANAGERS" may have a hard time disrupting themselves, but researchers, teachers, students, and the staff directly involved with education have to disrupt themselves all the time to stay effective. CC has certainly written better things than that op-ed -- I particularly like The Innovator's Solution--but the reality is that innovation is widely distributed in populations as democratic theory, radical pedagogical theory, and management's Theory Y all hold, and it's not credible to claim that CC has been trying to empower these ignored, everyday creative people that could save their industries rather than getting laid off or downgraded by CC's executive interlocutors. Citations to the contrary rather than rhetoric are always appreciated.

Rick Mueller said...

First - Justin - told 'ya so.

Chris, thanks for the cogent reply. I agree that Christensen's vision of education's problems coming from having become too aggregated is likely a misnomer, much as he missed by thinking that the iPhone was a phone and thus represented an improved phone than a new market for computers. It's often that the inventor is not the best at using his invention. That being said, I recoil at and find the idea of at Christensen being held responsible for the great myriad of conventional mismanagement to be not just irresponsible but non-representative of the evidence at hand (and I hope that you'd accept that it's difficult to provide references to something that hasn't been pointed out by anyone because it hasn't happened).

While I agree that we've not become as cognizant of what we have and what we owe all of our stakeholders, including employees, I disagree that workers of any kind, including managers, have the capability to productively cause their employer to ignore the mandates of owners (shareholders in the case or corporations, the public at large in the case of universities) outside of the potential offered by Disruptive Innovation.

The scenario then is that schools are unable (constrained by accreditation requirements) to remain current with the continuously expanding amount of working knowledge needed in the workplace without expanding the scholastic term. As such, it now requires a Master's degree to have access to employment that was once the domain of a baccalaureate. That doesn't sit well with the customer base of course, and as such leads precisely to the Innovator's Dilemma - the choice between competing on the basis of known and honed skills with other incumbents for a larger (or even keep the same) share of a(n inevitably) shrinking market, compared to launching a new product for an undetermined market based on a different and incompatible paradigm.

The problem is that when you look at what's likely to happen via Disruption (with or without Christensen at the helm), the future of education is very likely to include nothing like what we know of it today. Digital means that everyone gets whatever courses deemed necessary whenever deemed necessary on the basis of dynamic offerings driven by dynamic requirements. "Degrees" will not be what they are today and expertise will reside in the form of widely accessible groups rather than unique individuals. I try and paint a slightly more detailed picture at http://lnkd.in/d3hNiXp (for economy, skip to the third comment from the bottom - no need or utility in reading the 40+ comments before that unless you really have some time to kill).

"No more pencils, no more books, no more teacher's dirty looks", as it were and whom working within the existing paradigm might be prepared to provide that?

Christensen's predictions may be awry but his principles are sound. There is no one in the existing industry that can afford and/or is sufficiently skilled in the means needed to re-enter the industry as a start-up and as such I'd predict that the incumbent Titanic will (once again) likely not give up it's crew nor it's passengers.

Thoughts? (and thanks again)

cloudminder said...

electric solar, ...pessimism b/c trillion level in economy

fwiw
higher ed, smart phones-- no pessimism there - also trillion level in the economy.

http://www.msnbc.com/all-in/watch/elon-musk-on-his-reasons-for-pessimism-283252291679

hmar said...

@Rick Mueller
I haven't read Christensen's book, so I wonder whether you'd be willing to point out some passages that show, as you say, "that Christensen has always been in favor of revival and restoration of incumbents; at no time does he ever advocate throwing out the baby with the bath water."
Having read Lepore's article, it sounds to me as if most people who cite his work understand his analysis as implying that innovation *must* be destructive. You (and your linkedin group) may understand it differently, so I'd like to go to the source and decide for myself.
Thanks!

Rick Mueller said...

Hi hmr and thanks - great question. Only problem is that I can't prove that someone didn't do something using a passage from one of their books.

I'd be more likely to be able to prove that he was for or against something if he'd been explicit, and while he's never stated a specific disposition, the implications of all of his examples are warnings against allowing it to happen and the few times he admonishes explicit action is in the context of "self disruption - e.g. make yourself obsolete before someone else does.

That being said, everyone has a tenor about them, whether they like it or not and Christensen's has always been benign to the incumbent, extolling them to save them from themselves from their bad behavior.

I've got a 2 part article coming out in the Financial Brand that is planned for launching Part 1 tomorrow (or shortly thereafter) and Part 2 however soon after that as response warrants. Part 2 has an example of how incumbent banks (on the verge of Disruption as we speak) can self-Disrupt without killing their business. Essentially it boils down to doing what they should have been doing all along - if its not already too late.

The problem with that will be to get authorization from the BOD or at least an executive committee to cut off a portion of entirely certain current revenue in order to launch something that's probably already been declared off limits by way of insufficient margin, not to mention incompatible with maintaining that revenue stream. I didn't get explicit about that hurtle yet in the article (yet), but if you read it and can't figure out what the source of the problem will be, leave a note here or in the Group and I'll be happy to explain.

Thx again for asking.

Anonymous said...

Whether you like it or not, disruption is a real thing that results from companies and other players that refuse to play by the traditional rules, and by doing so, upset the cosy little oligopolies that the incumbents generally settle into over time. For example, Skype must have destroyed hundreds of millions of dollars of profits for telecom companies raking it in on international phone calls. That is the destruction part. Skype makes some money from it, but far less than was destroyed. The creation bit comes from the thousands of web-tutors, consultancies etc. who can now use virtually free global video and voice conferencing to run small businesses, and from the internet cafes that have emerged all over cities like Bangkok to enable American backpackers to call their parents. It is not a linear process, and the creation bit of it doesn't always accrue to the innovator. At the moment, the German supermarket chain Aldi, along with a couple of other similar companies is 'disrupting' the UK supermarket business by refusing to adopt their co-operative pricing strategies and operating with a significantly reduced overhead cost-base. Aldi will no doubt grow sales and profits, but the destruction and unemployment that will comes from the incipient supermarket price wars amongst the incumbents will outstrip that massively. However, in the long run, the low-overhead model will lead to cheaper food for consumers.

Chris Newfield said...

I agree w/ all this Anon 7:17. I don't think any of it justifies mass layoffs that become a form of social destitution, and I also think the very different success of Skype and Aldi begs some questions about where innovation comes from, including whether the telecoms would have been more successful against Skype if they were actually bottom-up innovation systems rather than quasi-dictatorships run for the benefit of major shareholders and also their top executives' incomes. Isn't the fact that tiny companies can cripple or destroy giants built by millions of people over a century a huge indictment of corporate management and management theory? I don't think CC has been nearly hard enough on the management of incumbents.

Anonymous said...

Chris: just a quick heartfelt thanks for the piece. It's a critical part of the story and I hope people link the hell out of it.

Marcel KWEDI said...

Chris, Thanks for the Great Post!
I agree with your review of the article that disruptive innovation is a 'false idol'.
Yet, I think that the time has come for Innovation experts to make a distinction
between Inventions and Innovations.
Inventions come from images in the mind of inventors, while Innovations come
from REAL problems in the markets.
Therefore, Innovation is a logical manifestation of the Darwinian Evolution
applied to human societies.
I explained this, and more, in this recent article The Ultimate Innovation Process.

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