The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.
Capitalists seem uninterested in capitalism, even as eager entrepreneurs can’t get financing. Businesses and investors sound like the Ancient Mariner, who complained, ‘Water, water everywhere – nor any drop to drink.’
I helped start a ceramics company called CPS Technologies. We took it public in 1987 at $12 a share. Three months later, there was this horrible cliff: Black Monday. Fidelity had bought 15 percent of our stock, and their algorithm caused them to dump it all onto the market that day. We dropped from $12 to $2.
Management is the opportunity to help people become better people. Practiced that way, it’s a magnificent profession.
I brought one big question with me to Harvard. Why do smart companies fail?
No idea for a new growth business ever comes fully shaped. When it emerges, it’s half-baked, and it then goes through a process of becoming fully shaped.
From my first year on the faculty, there was always so much more I wanted to impart to the students. I decided that, rather than waste the last day of class summarizing the semester, I’d spend my time talking about what I’d learned in life that was useful.
In an environment where you’ve got to push innovations out the door fast and keep the cost of innovation low, the probability that you’ll be successful is actually much higher.
The first two lessons, which we learned early in our efforts to be good member missionaries, have made sharing the Gospel much easier: We simply can’t predict who will or won’t be interested in the Gospel, and building a friendship is not a prerequisite to inviting people to learn about the Gospel.
Venture capital is always wanting to go up market.
I think this is one reason why the Lord invented the Internet – so members can teach one another how to succeed in assignments the Lord has given us, and to give us opportunities to inspire and bear testimony in a horizontal way.
The basic idea that marketing is wrong at its core is one of the main reasons why innovation seems blocked and unpredictable.
By doing what they must do to keep their margins strong and their stock price healthy, every company paves the way for its own disruption.
To become the kind of person you want to become, you’ve got to have discipline. It’s easier to keep to your standards 100 percent of the time versus 98 percent of the time.
Do not be deceived by impostors.
Christine and I haven’t raised our children. A whole community of selfless Christians has contributed to helping them become faithful, competent adults.
Optimizing return on capital will generate less growth than optimizing return on education.
An innovation will get traction only if it helps people get something that they’re already doing in their lives done better.
Understanding motivation is one of the most important things we can do in our lives, because it has such a bearing on why we do the things we do and whether we enjoy them or not.
The concept of disruption is about competitive response; it is not a theory of growth. It’s adjacent to growth. But it’s not about growth.
There are three types of innovations that affect jobs and capital: empowering innovations, sustaining innovations and efficiency innovations.
In the Mormon Church, we believe we can be married for all eternity, not till death do you part. As Mom was getting older, she was excited, truly excited, that within a few years she’d be with Dad again.
I wrote my first piece about the disruption of the Harvard Business School in 1999. Because you could see this coming. I haven’t yet done the one about the disruption of the Stanford Business School.
Children are ready to learn when they are ready to learn, not necessarily when their parents are ready to teach them.
The ability to share the gospel isn’t a ‘gift’ that has been given to only a few Latter-day Saints and denied to the rest.
For online universities, like Liverpool and the University of Phoenix, if prices drop by 60%, they still make money. But for the vast majority of traditional universities, if the prices fall by 10%, they are bankrupt; they have no wriggle room.
Each of our children during their high school years went to ‘early morning seminary’ – scripture study classes that met in the home of a church member every school day morning from 6:30 until 7:15.
The Republicans are wrong in thinking that the rich create jobs. In reality, many of the richest Americans have been investing in efficiency innovations rather than to create jobs. And the Democrats are wrong, because growth won’t happen if they distribute the wealth of the wealthy to everyone else.
Almost always, great new ideas don’t emerge from within a single person or function, but at the intersection of functions or people that have never met before.
India’s prosperity is sectioned by geography, such as in Bangalore, where the information technology industry is prominent. Because they have a conduit out of India, competing in the world by the Internet, it’s not regulated in corrupt ways, and it is very prosperous.
People in private equity complain that they have so much capital and so few places to invest. But you have lots of entrepreneurs trying to raise money at the low end and find that they can’t get funding because of this mismatch. I think that there is an opportunity there.
‘Disruption’ is, at its core, a really powerful idea. Everyone hijacks the idea to do whatever they want now. It’s the same way people hijacked the word ‘paradigm’ to justify lame things they’re trying to sell to mankind.
I believe that we can, in a deliberate way, articulate the kind of people we want to become.
We all have jobs in our lives that we must get done. We reach out and bring products into our lives to get these jobs done. Marketing is all about asking, ‘What job is the customer trying to accomplish?’
People have an idol they want to be like and try to follow what the idols did. But when you do, you find out you’re not very successful and you’re not very happy. You try to copy these models, and it doesn’t yield successful results.
The process of writing ‘The Innovator’s Dilemma’ entailed the developing a new theory. My colleagues, students and I have been improving that theory, and adding others to it, since that time.
My wife comes most of the times I teach and stands on the front row to help me. She’s been wonderfully supportive.
Innovation almost always is not successful the first time out. You try something, and it doesn’t work, and it takes confidence to say we haven’t failed yet… Ultimately, you become commercially successful.
The dumb-manager theory of business problems just didn’t hold water for me. There had to be a deeper reason why smart people would make decisions that lead to failure.
As a general rule, when a new industry takes root, and the first products emerge in a wave, almost always the architecture of the product will be proprietary and interdependent in character.
Empowering innovations transform something that is complicated and expensive into something that is so much more simple and affordable that a much larger population can enjoy it.
A sustaining innovation makes better products that you can sell for better profits to your best customers.
Eighty percent of the cases used in the typical MBA program are about successful companies. Students graduate with this notion that ‘If I do everything that the people in those cases did, then my organization will grow and be successful, too.’
Empowering innovations require long-term investments, which tie up capital for years and years. So companies are using capital to create more capital, and consequently, the world is awash in capital, but the innovations we need to advance aren’t there.
The marginal cost of doing something ‘just this once’ always seems to be negligible, but the full cost will typically be much higher. Yet unconsciously, we will naturally employ the marginal-cost doctrine in our personal lives.
During the early stages of an industry, when the functionality and reliability of a product isn’t yet adequate to meet customer’s needs, a proprietary solution is almost always the right solution – because it allows you to knit all the pieces together in an optimized way.
There is no evidence that success in business will make us happy people or allow us to have happy families.
If you develop a product that gets what the customer is trying to get done, you don’t have to advertise; people will just pull it into their lives.
What’s unique about the Mormon Church is that it encourages inquiry. I really do think my research and religion are all on the same page. I never could have come up with the notion of disruptive innovations, which went against a lot of conventional wisdom, if I hadn’t been raised to always be asking questions.
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