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Quote by Clayton Christensen

“I was lucky enough to build on the work of a number of people who had already run laps around this theory-building track. The original classification scheme, years ago, distinguished radical from incremental change. The theory said that established firms managed incremental change well, but would be expected to founder when their industry encountered a radical change.”

Quote by Clayton Christensen

Author

Clayton Christensen

Clayton M. Christensen is an esteemed professor known for his contributions to the fields of business management and innovation. Born on April 6, 1952, he is a professor at Harvard Business School and the author of 'The Innovator's Dilemma'. more

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“If you want to make better theory, you've got to use the best that's available and look through the lens of another discipline to see if you can uncover more anomalies. By looking at the phenomena of failure from the perspective of sales, marketing, finance, general management, and the equity markets, I was able to see things that Rebecca [Henderson] hadn't.”

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“If you ask the average guy on the street to name five companies that have truly transformed themselves over the few decades, Hewlett-Packard would be on everybody's list. You'd also put on this list GE and Johnson & Johnson.”

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“The transformation at the corporate level was achieved by selling off business units in old markets and by creating new business units to pursue the new opportunities. But the individual business units themselves within those transformed corporations were almost inert to change.”

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“It's like in biological evolution: The population will evolve, even though individuals can't. The same thing happens in the corporate world: The population of business units within corporations evolves, even though individual business units can't. That's because the capabilities of business units reside in their processes and their values, and by their very nature, processes and values are inflexible and meant not to change.”

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“How could Digital's collapse be so precipitous? It's because, in many ways, financial performance data is misleading. As you move up to the top of the market, you're getting rid of the less profitable products at the low end and adding business with more attractive margins at the high end. The rate of unit volume growth might be tapering off as you pursue these smaller markets, but your margins actually look better. So Wall Street rewards your stock price until you hit the ceiling.”

“You can invest to create the new growth business while the core business is still growing, because new business units don't need to get big fast. But when the core business stops growing, investing to create new growth businesses becomes impossible.”

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“To prop up the stock price, managers have to turn down the screws on everybody. That forces them to cancel all the projects that would lead to future growth in order to drop money to the bottom line. This is HP's dilemma today. Once a company's growth has stopped, the game as we have known it is over. It's a scary thing.”

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“But actually theory is very practical. Gravity is a theory, for example. It allows you to predict that if you step off a cliff you will fall; you don't have to collect data on that.”

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“Disruptive technology is a theory. It says this will happen and this is why; it's a statement of cause and effect. In our teaching we have so exalted the virtues of data-driven decision making that in many ways we condemn managers only to be able to take action after the data is clear and the game is over. In many ways a good theory is more accurate than data. It allows you to see into the future more clearly.”

“If you just look at the data, you are led to believe that things are getting better, rather than worse. That's why the fall is really precipitous, once you hit the ceiling.”

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Author:Clayton Christensen