CLAYton christensen revisited, featuring Mark Hatch

episode 68

In Episode 68, we re-visit a true titan of innovation. We were saddened when he passed away earlier this year.

We are joined by a very special guest, Mark Hatch - Speaker, Writer, Advisor and Consultant in Exponential Innovation, Advanced Manufacturing and the Maker Movement.

Clayton wrote many books (buy on Amazon) on and around the topic of innovation and was a Harvard Business School Professor. Arguably, his most significant contribution is his theory of "disruptive innovation" - considered the most influential business idea of the early 21st century.

We previously delved into Clayton in Episode 39.

show NOTES

ARTICLES

• https://www.greencarreports.com/news/1126267_toyota-vs-electric-cars-smart-strategy-or-innovator-s-dilemma

• https://www.linkedin.com/pulse/tesla-trojan-horse-german-car-industry-practical-example-wobser/

• https://www.linkedin.com/pulse/transferwise-revolut-how-retail-banking-being-dilemma-deobhakta/

VALE & TRIBUTES

• https://www.deseret.com/faith/2020/1/24/21079323/clayton-christensen-harvard-disruptive-innovation-lds-mormon

• https://hbr.org/2020/01/clayton-christensen-the-gentle-giant-of-innovation

• https://steveblank.com/2020/01/28/what-clayton-christensen-taught-me/

VIDEOS

• https://www.youtube.com/watch?v=yUAtIQDllo8

• https://www.youtube.com/watch?v=Zn6-KksdOgE

• https://www.youtube.com/watch?v=rHdS_4GsKmg

TRANSCRIPT

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mike parsons 0:10

Hello, and welcome to the moon shots podcast. It is a massive, huge and epic Episode 68 and your co host Mike Parsons. And as always, I'm joined by the boy from Brooklyn, Mr. Shadow and

Chad Owen 0:25

but we're not alone today Mike. I'm so excited. We're bringing a guest back on to the moon shots podcast. So why don't you introduce our illustrious guests here we have with us this evening.

mike parsons 0:35

I am very, very happy to introduce somebody who has talked innovation, thought innovation, and most importantly, he's got the job done. Joining us today on the show is Mr. Mark hatch, who is a speaker, writer, advisor and general all around innovation guru Mike hatch. Welcome to the men shots podcast, Mike and Chad. Thank you. So Much and it is great to have you here because all three of us share a love for one of the greatest business writers in history. And we are going to revisit someone today. So Chad. with no further ado, let's set up today's show, which is a very, very special episode of The moonshots podcast.

Chad Owen 1:21

We don't often revisit subjects here on the podcast. But after the recent passing of Clayton Christensen, we could not go another week without recording a show a bit In Memoriam for him both to revisit the innovators dilemma but also his wonderful book, how you measure your life. And we wanted to bring a guest on who's both done lots of reading, but as Mike mentioned, more importantly, been one of those innovators out there in the world doing the work. So we're real excited to bring you some more clips from clay in to see how much more learning we can do from him.

mike parsons 1:59

Absolutely. I think that how lucky are we to revisit clay Christiansen and to also share this experience with one of our friends who's been in the trenches? He has the scars of battle. Is that fair to say, Mike? Absolutely. So how exciting and look for our listeners that haven't had the chance to know clays work. I think there's a couple of thoughts here. Personally, I think for all of us here on the show, his work, and particularly his book, The innovators dilemma has been a permanent piece of our must read bookshelf. It's one of those books, the innovators dilemma that perhaps you could read every year and get new insights. But without a doubt, it is recognised as by far the preeminent book on innovation. But I think what says the most is it's often regarded as the most influential business book of the last hundred years. I think it's fair to say Christians and is right up there with Peter Drucker's the two co godfathers of business innovation Chad, how do you feel revisiting clays body of work knowing that we are going to the source, if you will of innovation?

Chad Owen 3:15

Yeah, I can't help but see all kinds of similarities to Drucker and I'm curious, Mark someone you know the tide, your recent experience of reading lots of innovation articles as you're continuing your educational journey and innovation, how you see clays work as kind of the foundation of so much of what's come out in the intervening 2025 years, I couldn't agree more

Mark Hatch 3:37

with the one the recognition of wrecker and then the movement to clay actually had the opportunity to take one of my MBA classes innovation and entrepreneurship from Peter at Claremont. But Peter really based his views off his, you know, personal experience of just being in the trenches. And so, he described this seven different ways that people tend to innovate. What clay did was he took that idea and he drove it down to empirically based data. And this was one of the very first times where he took a broad topic like innovation, and was able to dig into the data that was available and give practitioners not just his opinion, and what he's seen as far as trends, but actual hardcore. This is what you're seeing in the trenches. This is what's happening empirically. And here's the response that you need to have, and that an innovation in and of itself, the ability to start professionalising, the innovation thought process was absolutely genius.

mike parsons 4:40

And it's so remarkable because that's really the approach that we've seen a number of our favourite authors of recent times, you would argue that that's exactly how Jim Collins built the good to great model and then even if you go towards Rene Brown, Simon Sinek they're all using that pioneering approach from Clay Christensen But here is what the craziest thing is, apart from being a godfather of innovation, writing one of the most influential business books in history. What's totally ridiculous about Clay Christensen is he actually, in his body of work produced another book, which was turning the lens away from the business onto ourselves. And Chad, I know we've shown a fondness for this. Why don't you explain how remarkable clays in terms of his other great piece of work?

Chad Owen 5:35

He also wrote a book, how will you measure your life and I think as he got older and wiser, then began to reflect on his career and students that he was teaching. I think he wanted to be able to leave them with something above and beyond just some good business advice and you know what it means to be an innovator. And so he takes the seed of these three questions that he has everyone asked themselves and he allowed braid said into the book. But he has an interesting way of kind of taking the innovators dilemma framework and asking similar questions, but as you said, kind of applied to your personal life. And so I think what kind of underlies it all is to not just be satisfied with yourself and to be asking continually asking more, not only of your company, but also of yourself. And so in some ways, it's kind of only natural that he would write a book like that. But yeah, the fact that he's so well written on kind of both ends of the spectrum. I think it just goes to show that the kind of deep and contemplated, you know, wise thinker he was, absolutely, well, we shouldn't keep everybody hanging. I know everybody's dying to see us decode, understand and interpret clays work. Just quickly. Before we do that, Chad, where should everybody go? If they want to know more about moonshots you can always find previous episodes list of future episodes and contact form@moonshots.io and we always love those ratings and reviews on iTunes. Big shout out to those of you that have left recent reviews.

mike parsons 7:03

Yeah, we've been pushing that pretty hard. I think we're up to like 74 reviews and ratings across the podcast planet. That's so so great because we're very grateful for this because it gets our show in front of new listeners, and builds the moonshot community. So thank you to everybody who's doing that. And if you are sitting on the train or the bus and you're listening to the show, please jump over into your favourite podcast, application software and leave us some thoughts give us a rating because it really helps us and the show. Alright, Chad, I think we're dying to jump in Where should we start our adventure into the world of clay Christians and

Chad Owen 7:45

why I think we have to start with what is the innovators dilemma. So here we've got a clip of clay telling us exactly what the dilemma is.

Clay Christensen 7:54

Yeah, so the dilemma is in every company every day, every year People are going into senior management knocking on the door saying, I got a new product for us. And some of those entail making better products that you could sell for higher prices to your best customers. The disruptive innovation generally has to cause you to go after new markets, people who aren't your customers, and and the product that you want to sell them is something that is just so much more affordable and simple, that your your current customers can't buy it, you know? And so the choice that you have to make is should we make better products that we could sell for better profits to our best customers? Or maybe we ought to make worse products that none of our customers would buy? That would ruin our margins? What should we do? And that really is the dilemma.

Unknown Speaker 8:52

So one of the things I really like about your ideas that they really do have had an impact out there. I mean, there's some of this thinking has without question influenced a whole generation of men. mentors, including people like Steve Jobs, you're referenced in the biography that he that he read the book was very influenced by the book, and possibly Apple one and Apple to, you know, him resolving the innovators dilemma, but also Andy Grove at Intel. You had a you had a contact with him.

Clay Christensen 9:15

Yeah. Yeah. It's, I never imagined that I could ever meet these people, you know, let alone be just as having helped them. But I taught I learned a lot from Andy Grove. So, what happened was, I was just at HBS minding my own business, and Indian Andy Grove caught me just out of the blue and said, Look, I'm a busy man, I don't have time to read drivel from academics, you know, but somebody told me you had this theory. And I wondered if you could come out and present what you're learning to me and my staff. And then tell us what it how it applies to Intel. And for me was a chance of a lifetime.

So I flew out there and turned out. And he was he's quite a gruff man. And he said, you know, stuffs happened to us. We only have 10 minutes for you. So just tell us what it means for Intel. And I said, Andy, I can't because I have no opinion about Intel, but the theory has an opinion. And so I have to describe the theory. So he sat back and patiently and 10 minutes into it, he shut me off. And he said, Look, take out your stupid theory, tell us what it means for Intel. And he got what he got. And he really did get it, you know? And I said, Andy, I need five more minutes, because I got to describe how this process of disruption worked its way through a totally different industry. Just so you can visualise what can happen to Intel. So I described how the mini Mills came in to the steel market at rebar and then went up market. When I was done with that Grove said, Oh, I get it. So what you're telling me it means for Intel is And he described him, they had two companies coming at him from below and Intel needs to go down. And and not let them go up against us. It was very successful. And that was the set of them. Yes, that's right. And I thought about this, if I hadn't been suckered into telling Andy Grove, what he should do, I'd have been killed, because he knew so much more about microprocessors than I ever would know. But rather than telling him what to think, I taught him how to think. And he could reach his own conclusions.

And that changed the way I teach. It's changed the way I talk. And the insight is that, you know, for whatever reason, the way they designed the world, data is only available about the past. And when we teach people that they should be data driven and fact based and analytical is they look into the Future in many ways, we condemn them to take action when the game is over. The only way you can look into the future, there's no data. So you have to have a good theory. And we don't think about it. But every time we're taking an action, it's predicate predicated upon a theory. And so by teaching managers to look through the lens of a theory into the future, you can actually see the future very clearly.

mike parsons 12:32

Seeing the future, clearly. Hello is so much in that clip. I don't really know where to start, but I love the focus on understanding the theory. So, Mark hatch, I want to hit you up with a question when you listen to clay then, apart from being amazed that here is one guy who has influenced two of the most important companies of the last 50 years, both Intel an apple. Stepping back from that when you relate to what he describes as this innovators dilemma,

Mark Hatch 13:07

I'd love to know where you experience it, where you see it the most when you reflect on your career, your adventures in entrepreneurship, when you talk to executives, where do you see this the most today? How does it manifest? What does it look like? What's a good example of this innovators dilemma? So picking up where clay just left off, it gives them the how to think and they're thinking about innovation, how you think about innovation, particularly disruptive breakthrough and so forth, is completely different than how you manage an existing enterprise. And, you know, General Managers didn't get to the general management role. And even the CEO did not get to the CEO role, unless their founders on average, really thinking about how to innovate. They got there by optimising what they're currently doing. motivating employees meeting the quarter by quarter. And what clay was talking about is just, you know, it's brilliant. I describe it as rear view mirror development, where you use the data that you've seen in the rearview mirror, and the faster you go, it's like they're trying to race potential highway patrolman coming on to the freeway. The faster you go, the more time you spend looking in the rearview mirror, the last time you're looking out in front of you. And there's so many examples of this. The computer one of the inventors of the computer was amdahl came to I don't remember the name, but they did an analysis and said, Well, you know, a mainframe, we only need five computers, because all the data that we've ever created can be housed on those five computers and we don't need any more than that. For cell phones were famous consulting firm came back to at&t and said the total market for cell phones is 10,000. Please are completely rational conclusions based on looking in the rearview mirror. And I personally, I was involved in trying to convince a company to get into the white format inkjet printing business in a very big way. And again, a consulting company came in did a global survey and discovered you know that the total market size was $100 million. And that if a doubled over the next five years would be a $200 million market and that wasn't anywhere near large enough to be interesting. And what they missed was like massive new uses for wide format printing retail or JC Penney's and Sears could then distribute and print rather than print and distribute flyers and where we could put cool mats on the ground. And people could walk over them highlighting things that were on the show, I mean, entirely new markets that were painfully obvious if you are willing to look through the windshield. They just weren't there in the data. And the trick, I think, as clay was saying, it's not you know what to think it's how to think how do you train executives to think differently about innovation than they do about their day to day job?

mike parsons 15:54

Isn't it so powerful that the greatest teacher himself became better teacher through actually working with Andy Grove at Intel, and showing him the theory showing him how to think rather than trying to quickly prescribe, if you will, the medicine to the patient. So I'm thinking out loud here, Chad. I mean, how do we think in the right way using close thoughts like now knowing that there is this innovators dilemma? What are some of the things we can do to stop in the same place? What do you see people doing? Well, when they practice case theory,

Chad Owen 16:31

practising plays theory is quite difficult, because if you kind of look at the letter of the law, you are operating at a fundamental disjointedness from your core business in we've got a clip coming up here in just a little bit that really dives into what exactly does he mean when he says disruptive innovation, but I still to this day, I think I first read this book, maybe six or seven years ago, but I'm always collecting data points and examples of companies that have entered the market as disruptive innovators or companies that came out with disruptive innovations. And even today, I was reading an email newsletter from someone, and he was bringing up the example of Dollar Shave Club. I was like, Oh, that's a perfect example of a disruptive innovation. You know, p&g spent 60 $70 million to buy the Gillette brand. That was going to be their, quote, unquote, low entry, you know, into the market, but then they get totally disrupted by a company that comes in and ships razors to your door for a buck a month. And it was just fun for me to come across that example today. But I think on a practical level, it's going back to the book and understanding all the different examples that he gives, you know, whether it's the hard drives, companies that he talks about, or the steel mills or even like the backhoe, you know, ground shovelling and moving excavator companies, you know, very funny seeming examples, but they're all proved really fantastic examples that make it easier to identify the type of innovation in the wild.

mike parsons 18:03

So before we get to this other clip, one thing that is really coming to my mind when we talk about this innovators dilemma, I think about the characteristics of when companies are trapped in the dilemma when they can't see the disruptive innovation that they should do, or they wake up too late to somebody else coming into their market. And characteristically I want to try this on both of you. I think when an organisation becomes obsessed with operating in today, when executives are literally fully booked on calls from eight till six, when companies and teams never get outside of the office for a day to think when nobody is talking about the next three or five years when the vision is something that is only plastic On the wall, and it's not something that is embedded in their practice. I'm going to suggest to both of you, I don't know what you think, Matt. But I think those are some of the symptoms. If you're suffering the dilemma, you've lost four sides, you you are consumed by keeping the trains running on the time. And you're not thinking, you know, creating time and space to think about what might be next. What do you think not, it's a

Mark Hatch 19:22

natural by product of what's required in the typical office. No, just attending to the existing businesses a full time job. And the discipline is in carving out part of the time to actually think about the future. And you know, you're in trouble when investing in the future and thinking about the future gets that second seed, and you view it as a penalty. It's like, this is a penalty I'm trying to pay, and I just don't have time for it. At that point, you're in deep trouble. And you know, the problem is the markets don't respond well, the when you're thinking about what's going to happen in five and 10 years, and what kind of invest Once I'm going to be making, they want to see that cash flow come out on the bottom, because they're trying to maximise our current quarter. So balancing the two, in my mind, that's true management. The other thing that you're doing is you're just working fine. There's a difference between work and management. You work responding to every task that hits your desk. Management is prioritising those tasks and creating a balance so that you are working on today's requirements and tomorrow's. Well, I think that's why calls a dilemma. It is a dilemma. And if you're not feeling it, you're probably in trouble.

Chad Owen 20:33

Yeah, it's almost that classic discussion between what's important versus what is urgent. And there's a reason that philosophers spend so much time on paradoxes and dilemmas there. They're endlessly fascinating and can bottomless discussions that we can have. So to bring us out, Clay's work can often be misconstrued or mislabeled. I think he's a pioneer in his later years. That The term disruptive innovation was kind of CO opted and began to mean things that he had never intended. So to help get all of us back into the right mindset, and maybe a bit more true to his original writings, let's hear from clay himself what he actually meant when he's talking about his description of disruptive innovation, you're best

Unknown Speaker 21:19

known for the idea of disruptive innovation. What exactly is disruptive innovation explain.

Clay Christensen 21:25

A disruptive innovation is not a breakthrough innovation that makes good products a lot better. But it has a very specific definition. And that is, it transforms a product that historically was so expensive and complicated that only a few people with a lot of money and a lot of skill had access to it. disruptive innovation makes it so more so much more affordable and accessible than a much larger population have access to it.

Unknown Speaker 22:00

There's almost an element of democratisation of technology. That's

Clay Christensen 22:02

exactly right. And so it creates markets. But the leaders who made the complicated expensive stuff, find it very hard to move in the direction of affordable and simple, because it is incompatible with their business model. And so it's, it's a, almost a paradox within itself. But what it says is, if you're a little boy and you want to kill a giant, the way you do it, is by going after this kind of a product, where the leader is actually motivated to walk away from you rather than engage you.

Unknown Speaker 22:43

So give us an example of this mean that most people are familiar with the computer industry and how that's developed. Perhaps you can use that as an example.

Clay Christensen 22:50

Yeah, so at the beginning, the first manifestation of digital technology was a mainframe computer cost several million dollars to buy And it took years to be trained to operate these things. And so that meant that the largest corporations and the largest universities can have one, you know. And so we had to take our problem to the centre, where the experts solve that for us. But then there's a sequence of innovations from the mainframe to a mini to a desktop to a laptop and now to a smartphone that has made democratised technology to the point that everybody has access to it around the world, and we are much better off. It was very hard, though, for the pioneers of the industry to catch these new waves, most of them were created and dominated by new companies.

mike parsons 23:48

I mean, this is some of the most exciting thinking possible because as you listen to clay, you begin to understand that the disruption really By virtue of the scaling of the technology, and I think there's such an important lesson here that a great idea or even, you know, a great prototype in a studio or a lab somewhere, is not yet a disruptive innovation. And I think what we've seen with the iPhone, what we've seen with the internet, what we see with a lot of technologies that have the promise, whether it's quantum computing, or you know, mixed reality AR machine learning, they all have the promise of this disruption. But it's actually when we look back, not only at those internet technologies that I mentioned, you could even say it's electricity on the grid. It's the railroad system. It's jumbo jets, these are disruptive technologies because they do it at scale. And I think, in this lays such an important lesson, and the job is not done simply having the prototype it's creating a product or service at scale, and mock You listened to clay then what are some of the important lessons you've learned about scaling? A big idea scaling a disruptive innovation?

Mark Hatch 25:10

Yeah. So one of the key things in working with clays definition is that he is very specifically describing disruptive innovation as an innovator coming in from the bottom having the cheapest solution, scaling it up, and then slowly eroding from the bottom what the incumbent has. And so when he described the mainframe, and then the minis came in below the mainframes, and eventually they became powerful, and then the computers came in and then so forth. And so I mean, he describes the iPhone is disruptive as in disrupting the laptop market. He does not describe the iPhone is disrupting the phone market. And it was a very expensive phone, but it was a very cheap laptop. So therein lies some of the nuance and where some thinkers getting a little bit of trouble when they describe disruptive innovation, just because it was disruptive. Innovative in clays definition doesn't make it disruptive innovation. It's an extension of an academic argument. But he tried very hard to keep that very clear, specifically disruptive in his mind, disruptive innovation, his mind was a cheaper process or didn't do as much as the high end Intel processor. And that over time, it would climb kind of up market. And then, you know, relative to what the maker movement experience was, what we were essentially doing. These were large facilities, 20,000 square feet, every tool you need to make anything on the planet. But we were charging a monthly fee 125 to $150 a month. And so what that did was You didn't have to buy the $20,000 laser printer, you didn't have to buy the $10,000 3d printer or the $50,000 CNC. You could just come in learn how to use it and build your prototype and launch for your company. So we were disrupting the equipment sale market by coming in and say no, you can lease these on a monthly basis and I kind of ad hoc. So that's kind of context for specifically disruptive innovation. And then we talked about breakthrough. Those are like rattle jumps where you're like the microprocessor was a breakthrough. It wasn't an incremental improvement. I would argue that the iPhone, there was a business model breakthrough when he moved from the iPod to the iPhone, and you are now able to keep your music, you know, inside of a phone that you already had, and more importantly, the business model that he broke. You were able to buy one song at a time. I mean, he broke the entire music industry where you were had to buy 12 to 14 songs at a time on an album or a cassette or a CD.

mike parsons 27:37

It was the it was the death of the album, followed by by version three, he introduced the App Store, right?

Mark Hatch 27:44

Yeah, he kept doing it. He broke business models all the time. I got the iPhone because of Visual Voicemail like the ability to not have to sit at my desk or call into a phone and listen to 35 voicemails one right after another front to back to hauled me was worth $1,000 by itself. And what was interesting is it actually required at&t to re architect their switches. This was not just a software thing. He actually convinced at&t, you know, in exchange for an exclusive contract to re architect their internal infrastructure so that it could solve a particular customer problem. That was a breakthrough. You know, what the Chinese are doing is they're just knocking off the iPhone. They're coming in from the bottom and giving them minimum features needed in order to be able to serve the customer. That is a classic disruptive innovation.

mike parsons 28:40

So would you say you're you're looking at companies like Xiao Mei has potential disruptors who are coming in from the bottom and working their way up?

Mark Hatch 28:49

Absolutely. Yeah, absolutely. It's a classic approach.

mike parsons 28:52

And Chad, I'm wondering, do you see any other companies sort of practising this disruptive approach to innovation coming in From the bottom and working their way up,

Chad Owen 29:02

I already gave my one example from today Dollar Shave Club. But the exciting ones for me are the direct to consumer companies. I still think many or most of them are overvalued. I mean, I actually, I think Casper IPO, quite underwhelming leave today or yesterday. But you know, going up against a company like Procter and Gamble, I do not envy the founders of those small direct to consumer companies because they're fighting behemoths, but going after the riches in the niches saying, I absolutely believe it, getting one product done well, in being much closer to the consumer. I think it's a model for success, but you have to be sure that you can, you know, have the business processes in place to keep you know, the costs low. And there's so much that goes into being a disruptive innovator. You know, Clay may make it sound like it's easy because he's taking these examples, but yet again, I don't envy any of those companies that are trying to go against some of these giant Companies,

mike parsons 30:01

what a powerful lens. Like if you were starting a company right now, in any whether it's b2b or b2c, you could almost just start with clays format. Where is there a big incumbent that's not interested enough in this low hanging fruit is busy servicing the cream of the crop, where we can come in and still the low end and do the match upwards? I mean, it's almost like the perfect way to start a new company, isn't it? Mark?

Mark Hatch 30:29

It's a great way. And one of the things that he describes is that it's really a natural outcome of focusing on your best customers and continuing to give them more and more of what they want. And you know, what happens over time is you start out with, say, a word processor that has a fairly simple instruction set, and it's, you know, fairly obvious. And then over time, you know, 95% of the functionality isn't used by most of the folks. It's just too complicated. Like, who cares how you do footnotes, I'm just trying to write a message. And then all of a sudden, Google comes along, buys actually a fairly poor piece of software and upgrades it and you get the basic functionality that you need now for free. You can see it happens all the time, you're adding more bells and whistles to a car, you're adding more bells and whistles to computers, you're adding more bells and whistles to an office environment. And then somebody else comes along and says, What's the core need for, you know, 30% of the market at the low end? Can I meet that particular thing? And as he said, the Giants isn't interested in that part of the market. It's lower margin. It's not customers are currently servicing. They're hard to reach, and they don't care. So they walk away. That's how you beat a giant, you convince me to walk away?

mike parsons 31:41

Well, I mean, it just gets us to this point where we really need to sort of play into the dimensions of disruption. And I think Chad, the good way of thinking about it is there's really two sides to this whole world of disruption.

Chad Owen 31:58

Yeah, and we're just gonna keep going I'm back to clips of clay because he describes it so well, but he frames it in terms of threat and opportunity. So let's hear straight from clay.

Clay Christensen 32:07

I have a question for you. Is disruptive innovation low end or a new market an opportunity or a threat?

It's a good question, isn't it? Because almost always, disruption is an opportunity a long before it's a threat. So new market disruption allows you to create new businesses, whole new markets, it's a great opportunity for you. And if you use it as a low end disruption, it's an opportunity to gain market share from the existing players later on, as the technology gets good enough, so the customers of the core business now start to defect or 10 customers away from you. If you're being disrupted, that's a threat. But almost always it's a it's an opportunity long before it becomes a threat.

Mark Hatch 33:11

I think the first part is what is the mental mindset when you're looking at it? If your mindset is I'm looking for the next big deal. It's got to be a billion dollar market for we're just not interested. I'm actually literally quoting scientist at a centralised Research Centre. If it's not what billion dollars, then we are not actually tasked with looking at it. It's like, Well, great, but it could be a billion dollar market in five years. And here are the reasons why. What he's looking at is what are the low cost entrance? What are the ways of creating a product that has 80% of the functionality at 20% of the price. One of my favourite examples there was Adobe's consumer version of Photoshop. In Photoshop Scott stunning capabilities and for the professional photographer, You know, magazine layout person, they needed those functionalities. But when they became concerned with these low end products were coming out, they went out and did a focus groups and audits to find out, what does the consumer actually need. And there were like four to seven features that they needed. And sure, there may have been three or four others that they would have liked to have had, but they didn't build those in they built that seven feature, you know, Photoshop light, they launched it $49 and they crushed the market. And most importantly, they also blocked potential competitors. It was a genius move. But the fascinating thing is the product managers within Adobe now, I don't know this for a fact. But you can imagine what they were thinking. They've come up through the ranks, they came out of the best design schools, they've been building this feature set and their whole mill you is with these professional photographers, now this company is going to launch what in their mind is a piece of junk? The internal conversations must have been fascinating. So again, it's like how are we looking at the market now? How are we looking at it the future then leads to the innovation. You're saying, What's my feature set, you're looking at it wrong, because nobody in the world is going to say, Well, what I would you know, I'm going to build x, but we're going to take out 90% of the functionality.

Chad Owen 35:13

Well, and they did it again, Adobe did it again, with their Adobe cloud subscription service, because it used to pay $1,000 per programme. And, you know, there were at least a dozen programmes in the Creative Suite. They disrupted their own business model and figured out how to adopt a SaaS model and allow anyone to use any of their products for just 4999 a month. So yeah, I mean, they're a great example of seeing that opportunity before. I mean, I remember people that were complaining like I'd rather pay $1,000 and own Photoshop, then, you know, have to pay some subscription where I have to keep updating and downloading, but I think the success of Adobe has proven those naysayers quite wrong.

mike parsons 35:56

So Chad, if we're sitting in our office, sitting at a desk and were like, We want to take a look at the future. What would be some of the practical advice you'd have? What would you do? If you were there sitting at Adobe? And you're thinking about the next disruption? What are some of the things we can do to start forging our way towards that? How can we uncover those opportunities?

Chad Owen 36:22

I feel like this is a real softball Mike, this is like t ball here. If you know Mike and I at all, we are in love with this analogy of working from the bottom up. And that can mean from the bottom of your organisation and company. So putting out sensors and feelers to the bottom of the organisation to understand what it is that people inside of the organisation actually want to do and build. And then those people are working in close conjunction with customers out in the real world. And it can be existing companies or existing customers, but more importantly in the case of disruptive innovation, people who aren't your customers So if you have a product or service, put it in front of people who aren't your customers and understand why they aren't. And maybe what are some of those lower market entry points that you could try and prototype and bring to market that would serve those customers. And we'll link to some of these visuals. And there's some really interesting charts that are in the book. But most of the markets are that's gained by these disruptive innovators, or people that were never buying this type of product or service before. So it's opening up entirely new markets for these companies, which gives them that fuel that they can use to continually kind of ratchet up the value chain and build better products, you know, better features, etc.

mike parsons 37:41

to build on that, Chad, I would say the first and most primary action if you want to really unlock some opportunities with disruptive innovation is to stay close to your customer and your potential customer. And there's a really good lens by which To do that, that clay gave us which is what are the jobs to be done of your customer? What are they trying to get done in life? What are the pains they experienced from the gains they're looking for? And make sure that you objective Lee know and and importantly don't guess what customers need and want in their lives. I truly believe that we all continually do surveys, do customer interviews, get out in the real world, be a mystery shopper and truly do an objective look at what customers need. I believe that that is the sharp end of innovation and opportunity. That's where we find the next big thing. But you know, this world of innovation is not for everyone. And some people can do this and some people can't. So we've got this next clip coming and this is clay talking about why some people are more innovative than others.

Clay Christensen 38:58

It appears as If, when we are born

there, our brains are really quite similar but early experiences in our childhood, determine how our brains get wired to be more or less creative, okay? And really creative people almost always have had two experiences as, as young children. One is their fathers, their mothers had a disposition always to fix things for themselves. So if something went wrong in the house, they would never call the repairman. They would always take it apart and fix it. And when when they they then worked with their fathers or mothers to fix things, it did two things. One is it gave them a curiosity to know how things work in innovative people always have that curiosity. They see, see something and they see, I wonder why that happens that way, and they want to take it apart and see. And that's a very important one. And then the other thing that that that experience does for them is it gives them the confidence that if something is wrong, they can fix it. And innovation almost always is not successful the first time out you, you try something, and it doesn't work. And it takes confidence than to say, well, we haven't failed yet. Let's try something else. And then let's try something else. So ultimately, you become commercially successful.

Chad Owen 40:42

Yeah, this idea of who we are rooted in childhood is one that strikes home for me. I was a child that grew up with lots of computers in the home and so that was my experience of repairing and building my own computers. I'm curious for you mark. If you had any other similar experiences. In your younger years,

Mark Hatch 41:01

so my father grew up during the Depression, yeah, on a farm. And you know, there was no way you had time or the money to go down to the hardware store which was 35 miles away by the part, which you couldn't afford drive back and fix it. So if the fan belt fell off the tractor, he went in and got a bicycle inner tube, and you temporarily fixed the thing and finished the harvest. And that caused him to think differently. My favourite example, slightly off topic, but my mom came out once my dad pulled up into the driveway, and with his suit on immediately dove into the engine compartment to fix something of course, mom comes out and says, you know, Dean, what are you doing? You know, you've got a dress shirt on and he turned around at her and it's like, again, he's just a different mental models. He turned around and says, What do you want me to do? Put on a $3 t shirt for us this dress shirt that I bought for a buck at the Salvation Army. You know, it's a perfectly good dirt at work just fine. And it's kind of a Christian era Yeah, he fixed absolutely everything. On the confidence side. It's fascinating. Kauffman did a study a few years ago. And one of the most important correlations they had between a successful entrepreneur and kind of their background and their approach is I like this term irrational confidence. And this is Kaufman. So they did this statistics like 93%, this was in Clayton's book, 93% of the companies that are successful, are successful on a product they did not launch with or a market, they did not go after 93%. So if you know that kind of statistic, or you've seen it over and over, trust me, it's a lot easier to manage an existing business than it is to start a new one. That's just statistically true. And you do need to have some level of I would consider it lots of confidence. Kaufman would describe it as your rational. What I'll take issue with Kaufman is that they were looking at single at bats. They were not looking at a career trajectory, right. So if you're an innovator, it's not a single at bat, and so yes, you've got that confidence that you can figure it out. And you know what? So what if it didn't work this time? I call that cheap morning. Do again. Do it again. Do it again. You know, in baseball, your batting a 300 is great. All you need is one real good success for yourself.

mike parsons 43:14

And that is so, so simple with entrepreneurship, to think everything's gonna be a home run is just playing crazy so bad at 300 days, in fact, a great run right, guys what I decode from what clay said, Justin is a theme that we've seen across so many of the people we've studied, when he's saying being curious, I think this is just a proxy for saying, always learning people who have this vast appetite to understand how the world works. So I love this idea of be curious and be confident and inside of that confidence. On the other side, we can also learn that there's a resilience because you will strike out but it's about the capacity to continue The face of a failed experiment or a failed test, and I think these hallmarks that he calls out here in his work, I mean, if I was to look back at the 68 episodes, being strong and hard as nails, being courageous and relentless as Lady Gaga said, and also being a lifelong learner, being curious about how the world works, and having the confidence to go out and fix it, I mean, these are not only lessons we can take from Calais, but they echo amongst all our shows don't nature,

Chad Owen 44:34

especially some of the earlier ones like Bill belcheck. You mentioned Lady Gaga, Oprah Yeah, many of our oldies, but favourites, talk about those attributes, and I like how this is kind of a nice transition for us into the more personal side of Clayton's writing. We have a really fantastic clip that summarises his thinking, why he decided he wanted to write a book on how you measure life. Some of the core tenants within it. So let's hear from clay on how you measure your life. Well.

Clay Christensen 45:06

When I go back to my graduating classes, I graduated from the MBA programme at Harvard in 1979. We have a reunion every five years. When we came back for a fifth reunion, man, everybody was happy. Most of our classmates had married people who were much better looking than my classmates. They're doing well in their career. But as we hit the 10th, and 15th, and 20th, and then the 25th anniversaries, oh my gosh, my friends were coming back, not happy with their lives. And very many of them had gotten divorced. And their spouses had remarried and they were raising their chip, my classmates, children on the other side of the country, alienated from them. And I guarantee that none of my classmates ever planned when they graduated from the business school to go out and get divorced, and have children who hates hate their guts and have been raised by other children. And yet a very large portion of our quote, my classmates actually implemented a strategy that they never plan to do. And it turns out that the reason why they do that is the very same mechanism. And that is the pursuit of achievement. So we all everybody here is driven to achieve. And when you have an extra ounce of energy or 30 minutes of time, instinctively and unconsciously, you'll allocate it to whatever activities in your life give you the most immediate evidence of achievement. And our careers provide that immediate evidence of achievement. We close the sale, we ship a product, we finish it presentation we close close the deal we get promoted, we get paid in our careers provide the most very tangible, immediate achievement. In contrast, investments in our families don't pay off for a very long time. In fact, on a day to day basis, our children misbehave over and over again. And it really isn't until 20 years down the road that you can look at your children and be able to put your hands on your hips and say we raise great children. But on a day to day basis, achievement doesn't it hand when we invest in relationships with our family, with our children and our spouses. And as a consequence, people like you and I who plan to have a happy life, because our families truly are the deepest source of happiness in our lives, find that that that's what we want, the way we we invest our time and energy and talents causes us to implement a strategy that we wouldn't at all plan to pursue. And so I wanted to just offer that one is something to think about. The reason why successful companies fail, is they invest in things that provide the most immediate and tangible evidence of achievement. And the reason why they have such a short time horizon is that they are run by people like you and I. And we then apply that very, very same thinking process in our personal lives and with sad results.

mike parsons 48:48

Hmm, this book has been huge for me personally, what clays book did was point out to me the interrelationship between Personal life and work life. And that we often fall into the addictive trap of all the success and feedback you get professionally and run the big risk of not putting the same effort and attention towards your personal life. The lesson here is you need to treat both as equally important, and you need to be as rigorous and committed and active on your personal life to the same extent of your professional life. But here's the big trap. The problem is everything in our personal lives. It's a long term play, it doesn't have that immediate job, the main release, you know, it is a longer slower burn that doesn't give you that immediate feedback. So we kind of get hooked to the instant feedback that work gives us but we have to watch out for the risk that just because you know bringing up children really the payoff, there is Maybe when the kids are 20 or 30. So don't neglect the 20 years before because you won't get the end result. To me. This book beautifully points out this powerful reminder to pay attention to both your professional and personal lives. And be aware that naturally work can sort of distract us. So Mark, I want to ask you, how have you navigated, if you will close the other dilemma between measuring not only our professional life, but our personal life too.

Mark Hatch 50:31

It's hard. You have to make explicit choices to deal with it. You know, otherwise, you get tied into the day to day and I love how he was able to tie the innovators dilemma into the personal side. It was quite a surprise when I read through the book, but as a personal example, as I was starting these shops in the maker movement, it Trust me. I was on the road constantly. I was typically out of my home city. For four or five days at a time, you know, every single week, but I chose to be the coach of my son's elementary and junior high basketball team. And it required me to manage. And again, we get back to that term rather than respond manage my commitments at work. And so I made every game I made most practices. And you know, if I had to fly down to LA and back to San Francisco, then that's just what I did. I'm certainly no perfect father, but was an explicit choice to make that time commitment and poor discipline and excellence into my actually both of my sons. And it's something that has to be managed. You just keep going achievement day to day particularly in a work environment and you're not investing in family, you know, you're going to end up in a place the clay was describing. And so, you know, Sundays are for my wife and I carve time out for my kids did it because I'm investing in the long term, I want my kids to be my friends. I want my grandkids to honour and respect me, my wife, we've been 32 years now. I want her to be my wife for the rest of my life. I've invested so much in these, like, why would I want something different? But it requires a focus and a management of our time, resources commitment in order to pull that off. And Will I ever get the jet that I want? You know, I don't know, who cares? It's not going to be as fulfilling right? As Thanksgiving or Christmas with my family.

mike parsons 52:31

There's this little mantra that I often remind myself of is nobody sits on their deathbed wishing they had worked

Chad Owen 52:40

more. The thing that you mentioned right at the end mark is you know how he ties it from not just innovators dilemma, but you know, the practice of management in business, to your personal life. I just love that he thought to ask that question of Well, I've been an academic for 30 plus years. What can I learned from the realm of business and try and apply it to my personal life and share those learnings with others. And the allocation of resources is just one definition of business strategy or what, you know, leadership and managers inside of a business do. And so just turning that question internally, I think is really fascinating. And what the book spurred inside of me was just to be asking the questions, that little question of the title is, how will I measure my life? Because everyone's answers going to be a bit different. Some people have kids and grandkids, some people don't. Some people love to travel and some people don't. And so just being sure that you're continually asking those questions, and then you're allocating those resources to help you fulfil the long term objectives behind those questions. That's really what this book hits bird inside of me.

mike parsons 53:46

Yeah. And it sounds like where we're leading towards here is make conscious decisions, make conscious choices and build structured habits, you know, that help us Keep the commitments to the things that we really value. The way I relate to this is that business and at curry is, I mean, if you're all in for the work you do, and for your role and for your career, the self discipline required is to like close the computer at night, there will always be work to do so create time and space for the other things because I think the greatest challenge we all face in the professional universe is that there's always more work to do. And so we can find ourselves working very long days deep into the night. And I think it's about making the choice like Okay, I'm done for today. And I feel like I tried very hard to draw that line to shut everything down and to be with my family, but I do believe this is the modern day pressure. Everything is in real time. The world has never been flat and there is alerts and notifications. There's always something to read a note to send a call to plan. But I would say that the greatest attention needs to go to is just drawing that line and saying, I need to spend time with my friends with my family on myself. And I think that's when you look at the challenge that clay presents to us in how you measure your life. That's where it gets real every single day. Do you find that? That's the true test Mark every single day is where do you draw the line?

Mark Hatch 55:32

It's critical to create that balance, whether it's every day or every week, you've got to have that balance in place. One of things I really loved about that book was his recognition for serendipity that he wasn't necessarily saying that you know, when you graduate from B school or you graduate from whatever you finish training, you've got your life mapped out ahead of you, and it's going to be a straight line from point A to point B, you know, he talked about wanting To be the editor of the New York Times, and then he got a consulting job, and he thought maybe that'll help him, you know, be a better editor at the New York Times. And then he got an opportunity to start a company and he figured well start a company that'll probably help me be a better writer if the New York Times and then ended up being a professor. And he was thinking, well, maybe that'll help me, you know, be a great editor at the New York Times. And then he discovered, wow, I really have enjoyed my life. And maybe the New York Times will call me and what was fascinating in the book, he also described that serendipity in the context of companies where you know, Honda motorcycle came to the US tried to knock off Harley Davidson and ended up creating the off road dirt bike industry, you know, they actually weren't that interested in it initially, but their local folks needed to cash and that's where they were getting the money, even a little margin. And my point there was like Clayton was really balanced. It's like, you know, have your objectives, but hold them loosely hold your values. more closely. It's like, what is it that you're driving to what attributes of what it is that you're driving to? Don't forget that it's a very long game. And if you focus on the short term, that game is going to end. And then what do you have? Exactly?

Chad Owen 57:15

Chad, as you think about practical things you're going to think about on being accountable to your personal life. What are some of the things you're going to be putting into place? What are the sort of habits and rituals you're going to build so that you can achieve that harmony? The simplest one for me is just how long has it been since my last touch point with extended family members? I'm fortunate enough to live in a city where I have two out of three siblings and so I can get together with them. But also, you know, what are my touch points with my parents and other extended family members as well? So I think for me, it's like, you know, has it been five days since I've seen her talk to the family members, it's been 20 days and if it's 20 days, you know, that's the Red Flag moment where I know I need to reach out and get in touch with someone because it's so true that those are the people that will be there for you no matter what, and you'll be there for them as well. And it can often get so lost in the day to day focus on work and our professional lives.

mike parsons 58:15

I have the same thing I literally have in my to do is to app I literally have a recurring weekly to do of call my mom. And it's so helpful, because it gets to me on my own. I've got to call her and funnily enough today, it's popped up on my to do list so I will make time today to call her. And that's just a simple way in which I am trying to make sure I measure my life correctly and I'm doing the right things. Listen, before we wrap up, Mark hatch our listeners, I've only had a dash of your epic tales of founding Tech Shop. They've had only a sense of the prolific work you've done in innovation. I mean, oh my gosh, you've written several books around the maker movement. You've written for Fast Company, how do our listeners get more Mac hache in their life? Where can they find you on that famous thing called the internet?

Mark Hatch 59:09

Mark our hatch calm, the links got the lead page. I'm fairly prolific with LinkedIn. Those are the best places. Yeah, we'll

Chad Owen 59:17

link to your books to will give you the moon shots and boost there on Amazon.

mike parsons 59:22

And Chad, what a wonderful adventure together with Mark, you and I and all of our listeners we've revisited without a doubt one of our true favourites Clayton Christensen, we've had not only the joy to decode that classic innovators dilemma, but also being able to ask ourselves that very big, scary, very hairy question of how will you measure your life? How do you feel post clay Christiansen revisited.

Chad Owen 59:52

I'm already thinking of what upcoming shows we can invite more guests on market was a real pleasure to have a 30 Voice here on the show to maybe bus Mike and I out of our little new chats echo chamber here.

Mark Hatch 1:00:06

Hey, it was my pleasure. Thank you so much. I really appreciate the opportunity.

mike parsons 1:00:09

Well, we are so glad to have a friend on the show and we will have lots of links to not only your books but to your blog and to LinkedIn to people can track you down. Low Chad, we pull us on these epic innovation riders such as Sinek, Collins and Christiansen, we are about to get a whole lot of girl power going on. Why don't you just remind our listeners what's coming next?

Chad Owen 1:00:36

Yeah, we've got a trifecta of shows diving deep into the wisdom of Michelle Obama, Melinda Gates and Arianna Huffington. I think we have to bring on a guest for at least one of those shows Mike we have to put out our feelers for that but yeah, I'm very excited. I'm huge fans of all three of those individuals and can't wait to do some deep dives on each of them. them.

mike parsons 1:01:00

Sounds great. Well listen, Chad mark, it's been a wonderful adventure. Thank you both to you. Thank you to all our listeners. This was a big, huge epic and thoroughly enjoyable deep dive on episode 68 into the world of Clayton Christensen. Thanks to all of you and we'll catch you next time on The moonshots podcast. That's a wrap

Transcribed by https://otter.ai