Every generation has its high tech storytellers, pundits who “understand” why products and companies succeed and why they fail. And each next generation tosses out the stories of their elders. Perhaps it’s time to dispense with “Disruption.”
“I’m never wrong.”
Thus spake an East Coast academic, who, in the mid-to-late 1980s, parlayed his position into a consulting money pump. He advised—terrorized, actually—big company CEOs with vivid descriptions of their impending failure, and then offered them salvation if they followed his advice. His fee was about $200,000 per year, per company; he saw no ethical problem in consulting for competing organizations.
The guru and I got into a heated argument while walking around the pool at one of Apple’s regular off-sites. When I disagreed with one of his wild fantasies, his retort never varied: I’m never wrong.
Had I been back in France, I would have told him, in unambiguous and colorful words, what I really thought, but I had acclimated myself to the polite, passive-aggressive California culture and used therapy-speak to “share my feelings of discomfort and puzzlement” at his Never Wrong posture. “I’ve always been proved right…sometimes it simply takes longer than expected,” was his comeback. The integrity of his vision wasn’t to be questioned, even if reality occasionally missed its deadline.
When I had entered the tech business a decade and a half earlier, I marveled at the prophets who could part the sea of facts and reveal the True Way. Then came my brief adventures with the BCG-advised diversification of Exxon into the computer industry.
Preying on the fear of The End of Oil in the late-seventies, consultants from the prestigious Boston company hypnotized company executives with their chant: Information Is The Oil of The 21st Century. Four-billion-dollars later (a lot of money at the time), Exxon finally recognized the cultural mismatch of the venture and returned to its well-oiled habits.
It was simply a matter of time, but BCG was ultimately proved right—we now have our new Robber Barons of zeroes and ones. But they were wrong about something even more fundamental, but slippery—something they couldn’t divine from their acetate foils: culture.
A little later, we had In Search of Excellence, the 1982 best-seller that received a cult-like following. Tom Peters, the more exuberant of the book’s two authors, was a constant on pledge-drive public television. I watched him one Sunday morning with the sound off, his sweaty fervor and cutting gestures reminding me of the Bible-thumping preacher, Jimmy “I Sinned Against You” Swaggart. (These were my early days in California; I flipped through a lot of television channels before Sunday breakfast, dazzled by the excess.)
Within a couple of years, several of the book’s recommended exemplary companies—NCR, Wang, Xerox—weren’t doing so well. Peters’ visibility led to noisy accusations and equally loud denials of faking the data, or at least of carefully picking particulars.
These false prophets commit abuses under the color of authority. They want us to respect their craft as a form of science, when what they’re really doing is what Neil Postman, one of my favorite curmudgeons, views as simple storytelling: They felicitously arrange the facts in order to soothe anxiety in the face of a confusing if not revolting reality. (Two enjoyable and enlightening Postman books: Conscientious Objections, a series of accessible essays, and Amusing Ourselves To Death—heavier, very serious fare.)
A more recent and widely celebrated case of storytelling in a scientist’s lab coat is Clayton Christensen’s theory of disruptive innovation. In order to succeed these days—and, especially, to pique an investor’s interest—a new venture must be disruptive, with extra credit if the disrupter has attended the Disrupt conference and bears a Renommierschmiss from the Startup Battlefield.
Christensen’s body of work is (mostly) complex, sober, and nuanced storytelling that’s ill-served by the overly-simple and bellicose Disruption! battle cry. Nonetheless, I’ll do my share and provide my own tech-world simplification: The incumbency of your established company is forever threatened by lower-cost versions of the products and services you provide. To avoid impending doom, you must enrich your offering and engorge your price tag. As you abandon the low end, the interloper gains business, muscles up, and chases you farther up the price ladder. Some day—and it’s simply a matter of time—the disruptor will displace you.
According to Christensen, real examples abound. The archetypes, in the tech world, are the evolution of the disk drive, and the disruptive ascension from mainframe to minicomputer to PC—and today’s SDN (Software Defined Networking) entrants.
But recently, skeptical voices have disrupted the Disruption business.
Ben Thompson (@monkbent) wrote a learned paper that explains “What Clayton Christensen Got Wrong.” In essence, Ben says, disruption theory is an elegant explanation of situations where the customer is a business that’s focused on cost. If the customer is a consumer, price is often trumped by the ineffable values (ease-of-use, primarily) that can only be experienced and can’t be described in a dry bullet list of features.
More broadly, Christensen came under attack by Jill Lepore, the New Yorker staff writer who, like Christensen, is a Harvard academic. In a piece titled “The Disruption Machine, What the gospel of innovation gets wrong,” Lepore asserts her credentials as a techie and then proceeds to point out numerous examples where Christensen’s vaunted storytelling is at odds with facts [emphasis and edits mine]:
“In fact, Seagate Technology was not felled by disruption. Between 1989 and 1990, its sales doubled, reaching $2.4 billion, ‘more than all of its US competitors combined,’ according to an industry report. In 1997, the year Christensen published ‘The Innovator’s Dilemma,’ Seagate was the largest company in the disk-drive industry, reporting revenues of nine billion dollars. Last year, Seagate shipped its two-billionth disk drive. Most of the entrant firms celebrated by Christensen as triumphant disrupters, on the other hand, no longer exist…
Between 1982 and 1984, Micropolis made the disruptive leap from 8-inch to 5.25-inch drives through what Christensen credits as the ‘Herculean managerial effort’ of its CEO, Stuart Mahon. But, shortly thereafter, Micropolis, unable to compete with companies like Seagate, failed.
MiniScribe, founded in 1980, started out selling 5.25-inch drives and saw quick success. ‘That was MiniScribe’s hour of glory,’ the company’s founder later said. ‘We had our hour of infamy shortly after that.’ In 1989, MiniScribe was investigated for fraud and soon collapsed; a report charged that the company’s practices included fabricated financial reports and ‘shipping bricks and scrap parts disguised as disk drives.’”
There are echoes of the companies that Tom Peters celebrated when he went searching for excellence.
Christensen is admired for his towering intellect and also for his courage facing health challenges—one of my children has witnessed both and can vouch for the scholar’s inspiring presence. Unfortunately, his reaction to Lepore’s criticism was less admirable. In a Businessweek interview Christensen sounds miffed and entitled:
“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.”
At Harvard, of all places. Hmmm…
In another attempt to disprove Jill Lepore’s disproof, a San Francisco-based investment banker wrote a scholarly rearrangement of Disruption epicycles. In his TechCrunch post, the gentleman glows with confidence in his use of the theory to predict venture investment successes and failures:
“Adding all survival and failure predictions together, the total gross accuracy was 84%.”
“In each case, the predictions have sustained 99% levels of statistical confidence without a flinch.”
Why the venture industry hasn’t embraced the model, and why the individual hasn’t become richer than Warren Buffett as a result of the unflinching accuracy remains a story to be told.
Back to the Disruption sage, he didn’t help his case when, as soon as the iPhone came out, he predicted Apple’s new device was vulnerable to disruption:
“The iPhone is a sustaining technology relative to Nokia. In other words, Apple is leaping ahead on the sustaining curve [by building a better phone]. But the prediction of the theory would be that Apple won’t succeed with the iPhone. They’ve launched an innovation that the existing players in the industry are heavily motivated to beat: It’s not [truly] disruptive. History speaks pretty loudly on that, that the probability of success is going to be limited.”
Not truly disruptive? Five years later, in 2012, Christensen had an opportunity to let “disruptive facts” enter his thinking. But no, he stuck to his contention that modularity always defeats integration:
“I worry that modularity will do its work on Apple.”
In 2013, Ben Thompson, in his already quoted piece, called Christensen out for sticking to his theory:
“[…] the theory of low-end disruption is fundamentally flawed. And Christensen is going to go 0 for 3.”
Perhaps, like our poolside guru, Christensen believes he’s always right…but, on rare occasions, he’s simply wrong on the timing.
Apple will, of course, eventually meet its maker, whether through some far off, prolonged mediocrity, or by a swift, regrettable decision. But such predictions are useless, they’re storytelling—and a bad, facile kind at that. What would be really interesting and courageous would be a detailed scenario of Apple’s failure, complete with a calendar of main steps towards the preordained ending. No more wrong-on-the-timing excuses.
A more interesting turn for a man of Christensen’s intellect and reach inside academia would be to become his own devil’s advocate. Good lawyers pride themselves in researching their cases so well that they could plead either side. Perhaps Christensen could explain, with his usual authority, how the iPhone defines a new theory of innovation. Or why the Macintosh has prospered and ended up disrupting the PC business by sucking up half of the segment profits. He could then draw comparisons to other premium goods that are happily chosen by consumers, from cars to clothes and…watches.
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