Wednesday, March 29, 2006

IT Conversations: Clayton Christensen - Capturing the Upside

IT Conversations: Clayton Christensen - Capturing the Upside

The above is a link to a talk by Clayton Christensen from two years ago (3/17/2004). While it's a little dated, it's still a good listen.

Clayton wrote The innovator's Dilemma, which is a popular book among startup folks (any book that says a tiny company can kill a big company is going to be popular among small companies...). I've tried to get through the book a couple of times, but I've never made it all the way through. I always seem to get lost in the first few chapters. Perhaps it's all the jargon, or the lack of relevant examples (disk drive manufacturing is just not as exciting as one might think), regardless I just never connected with the book. So it was really nice to hear him talk through some of his ideas. Perhaps this is the motivation I need to try again.

The premise of his talk is that he's introducing a theory for one reason businesses fail. He goes out of his way to emphasize that it is a theory, and that we need more theories in the business world. Why? One of the reasons he gave is that we typically make business decisions based on data. But you only have data on the past, which means that by the time you have the data it's the signal that you are at the end of the game, not that you need to start changing. A theory allows you to predict how something will behave, allowing you to act before the data has shown you a problem.

How valid his theory is? I think it's pretty good - certainly worth hearing out. Some parts of the theory make great sense (like how you should pick an unserved market, versus an already served market) and others didn't make sense (he talks about how Linux is modular and Windows isn't - which I'm not sure I agree with).

If you are a small company, you should probably take an hour and give it a listen. It could be just what you need to topple IBM, GM, and lots of other companies that have accroyms for names.

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