The Business of Life
Scholarly economic theory applies to more than just business. The same causal mechanisms that drive big corporations to success can be just as effective in driving our personal lives, says Professor Clayton M. Christensen. Key concepts include:
- In evaluating major life decisions, it's helpful to employ a tool called discovery-driven planning, which essentially boils down to a single question: What assumptions must prove true for this plan to work?
- Incentives are not the same things as motivators.
- Marginal thinking can be dangerous. It's safer to decide early on that you'll stay true to your commitments 100 percent the time, rather than assess the risk of every "just this once" possibility that comes along.
A few years ago, a colleague at Harvard Business School visited Clayton Christensen's office to talk about leading a values-driven life. "He told me that he had decided against having religion in his life," Christensen recalls, explaining that his colleague didn't see the long-term benefits of sticking to principles every day, considering all the hard work involved. "He told me he thought it had 'a negative net present value.'"
"It's a travesty that somehow our society has gotten to a point where people have the view that science and academia are inconsistent with a spiritual life."
This unusual application of an economic term delighted Christensen, a management professor known around HBS and the globe as both a brilliant business thinker and a deeply religious man. For more than a decade he has been a go-to consultant for several big organizations—his theories on disruptive innovation have steered huge strategy shifts at Intel Corp. and the Pentagon, for example. In 2011, Thinkers50 named him the world's most influential business thinker. At the same time, he has held major leadership positions in his church, and he's never taken a business meeting on a Sunday because his faith encourages its members to keep the Sabbath Day holy. He sees no dichotomy.
"You know, it's a travesty that somehow our society has gotten to a point where people have the view that science and academia are inconsistent with a spiritual life, and the belief that there we've been put here for a purpose," he says. "The reality is that the only reason you're interested in either of these things is that you're interested in finding the truth. We spend most of our waking hours in our professions, but if we can't allow success in our professions to benefit from truth that we have learned in the other parts of our lives, we just deprive ourselves of a very important input."
Christensen explores the synergies between economic logic and personal conviction in his new book, How Will You Measure Your Life? Coauthored with James Allworth (HBS MBA 2010) and Karen Dillon (former editor of Harvard Business Review), the book shows the value of applying scholarly business theories to major life decisions. The key idea is that the same causal mechanisms that drive big businesses can be just as effective in driving our personal lives.
Religion has been a driving force in all of Christensen's own decisions, and he's up front about that in How Will You Measure Your Life? But in explaining the value of applying academic theories, the book avoids a religious bent, thanks in part to coauthor Allworth's avowed atheism. "That was tough," Christensen says of collaborating on such a personal work with someone who had such disparate beliefs. "But in the end I'm glad, because I think that the principles we discuss in this book are broadly applicable to people's lives. I hope that we've been able to frame them in a way that is accessible to people who are religious as well as people who aren't."
DELIBERATE VERSUS EMERGENT STRATEGY
For example, Christensen cites business scholars Henry Mintzberg and James Waters, who in 1985 published a paper defining two forms of strategies: deliberate and emergent. A deliberate strategy, they explained, is a roadmap that a company or an individual puts in place and sets out to follow. An emergent strategy involves the decision to follow a new path when opportunity knocks unexpectedly, or when an unexpected roadblock arises. In work and in life, the question is always which path to take.
To help answer that question, Christensen recommends a tool called "discovery-driven planning," created by Ian MacMillan, a professor at the Wharton School, and Rita McGrath, a professor at Columbia. In the interest of simplicity, How Will You Measure Your Life? distills the tool to a single question: "What assumptions must prove true for this plan to work?"
"That's your job, if you're building a happy family: to realize that they need to be motivated and that there's a clear way to motivate them."
Listing your assumptions about a prospective plan and assessing their plausibility can help determine the likelihood of a successful outcome, Christensen says, whether you are evaluating an executive decision or a family matter. "Whenever you implement something, if it fails, then almost invariably it did so because there was an assumption in there that, looking back on it, clearly was not plausible," he explains.
How Will You Measure Your Life? also stresses the importance of allocating resources in such a way that they match the strategy, starting with tales of woe from giants like Unilever and Apple and segueing into stories of friends whose marriages fell apart due to neglect. "Watch where your resources flow," the authors write. "If they're not supporting the strategy you've decided upon, then you run the risk of a serious problem."
A graduate of HBS and a Rhodes Scholar, Christensen notes that several of his former classmates, while brilliant and driven, ended up unhappy. "Never have I known a student whose deliberate strategy was to go out and get divorced, or to have children who are being raised by an ex-wife's new spouse on the opposite coast," he says. "But the strategy that they implemented took them in that direction."
INCENTIVES ARE NOT THE SAME AS MOTIVATORS
Christensen maintains that motivation is as much a driving factor in building a successful family as it is in building a successful business. He disagrees strongly with the widely-cited concept known as agency theory, which essentially posits that people work in accordance to how you pay them, and that external incentives are the chief motivator. It's just as ineffective inside a family, he says, because it depends on "bribing" them every time you want them to do something—whether it's making their beds or just being nice to each other.
Rather, he advocates psychologist Frederick Herzberg's Two-factor theory, which focuses on the idea that the factors that determine job dissatisfaction ("hygiene factors") are completely separate from those that determine true satisfaction ("motivators"). Insufficient financial compensation, for example, falls into the former camp. But having sufficient compensation will not lead to passion for a job; it just takes away the dissatisfaction. Motivation, according to the theory, is determined not by material incentives, but rather by interesting work, recognition, and personal growth.
"Life is an unending series of extenuating circumstances."
Christensen shares the story of building a backyard playhouse with the two youngest of his five kids. They spent weeks choosing lumber and shingles, and he taught them how to hammer and saw, even though it would have been faster just to build the whole thing himself. The children were thrilled to show their friends the structure in progress, but when the playhouse was finished, they rarely used it. Building the house was the motivating factor—not having the house.
"You have to be sure that your family are engaging in work that is really causing them to feel like they are achieving important things," Christensen says. "And it's important to recognize these achievements. It's not different in any way from running a private enterprise. That's your job, if you're building a happy family: to realize that they need to be motivated and that there's a clear way to motivate them."
THE PERILS OF ASSESSING COSTS MARGINALLY
Christensen also disagrees with the popular idea that in evaluating new opportunities, we should base our decisions on marginal costs and revenues. The book cites the fall of movie rental giant Blockbuster. Ten years ago, the company decided not to explore the market of then-upstart Netflix, because Netflix sported profit margins much lower than Blockbuster's historical margins. History reveals Blockbuster's tactical error, of course: the company is bankrupt, while Netflix now has more than 25 million customers.
Marginal thinking can be dangerous on a personal level, too. Christensen maintains that the road to jail is paved with the idea that it's OK to break the rules "just this once" when an extenuating circumstance presents itself. "Life is an unending series of extenuating circumstances," he says. For that, he argues it's easier to decide early on that you'll stay true to your commitments 100 percent the time, rather than assess the risk of every "just this once" possibility that comes along.
"If you decide that you'll make every decision on a day-to-day basis, you'll never get there from here," he says. "I'm so grateful that I made this decision to commit to my principles 100 percent, because without that, you're just awash in opportunities to take your life in directions that you hadn't intended."
For those that think it is easy for a Harvard Professor to make such pronouncements from an ivy tower, the book explains that Christensen became a professor after a prior career that included being fired from a company he helped to found. He's also faced a series of powerful setbacks. So far in his life, Christensen has lived with Type I diabetes, survived a massive heart attack, endured lymphoma (the same type of cancer that killed his father), and, 18 months ago, suffered a stroke that wiped out his speech. He taught himself to speak again with the help of Rosetta Stone English and his six-year-old granddaughter, but he still gets words mixed up once in a while, and apologizes often for speaking slowly. Three years after his cancer diagnosis, he's still undergoing chemotherapy that sometimes causes his feet to go numb due to neuropathy—a harrowing prospect for a man who stands at six-foot-eight. Suffice it to say he has seen plenty of life's curveballs. And he maintains that his strict principles have kept him steady.
"The person I decide to be has to be robust enough that it doesn't matter what happens in my life," he says. "Life will happen to me. But I don't want what happens in life to determine who Clay Christensen becomes."