"How Will You Measure Your Life?"

The students seem highly aware of how the world has changed (as the sampling of views in this article shows). In the spring, Harvard Business School’s graduating class asked HBS professor Clay Christensen to address them—but not on how to apply his principles and thinking to their post-HBS careers. The students wanted to know how to apply them to their personal lives. He shared with them a set of guidelines that have helped him find meaning in his own life. Though Christensen’s thinking comes from his deep religious faith, we believe that these are strategies anyone can use. And so we asked him to share them with the readers of HBR. To learn more about Christensen’s work, visit his HBR Author Page.

Before I published The Innovator’s Dilemma, I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldn’t—that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, I’ve got your model. Just tell us what it means for Intel.”

I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel minimills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills.

When I finished the minimill story, Grove said, “OK, I get it. What it means for Intel is...,” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the Celeron processor.

I’ve thought about that a million times since. If I had been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I taught him how to think—and then he reached what I felt was the correct decision on his own.

That experience had a profound influence on me. When people ask what I think they should do, I rarely answer their question directly. Instead, I run the question aloud through one of my models. I’ll describe how the process in the model worked its way through an industry quite different from their own. And then, more often than not, they’ll say, “OK, I get it.” And they’ll answer their own question more insightfully than I could have.

My class at HBS is structured to help my students understand what good management theory is and how it is built. To that backbone I attach different models or theories that help students think about the various dimensions of a general manager’s job in stimulating innovation and growth. In each session we look at one company through the lenses of those theories—using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results.

On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys—but something in their lives sent them off in the wrong direction.

"Simple Rules for a Complex World"

 

Artwork: Nuala O’Donovan, Pinecone Heart, 2008, porcelain, unglazed, 27 x 22 x 24 cm

Photography: Sylvain Deleu

 

Donald Sull on how to simplify your strategy.

A decade ago, in the course of studying why certain high-tech companies thrived during the internet boom, we discovered something that surprised us: To shape their high-level strategies, companies like Intel and Cisco relied not on complicated frameworks but on simple rules of thumb. This was true even though they were in extraordinarily complex, challenging, and fast-moving industries. The rules were not only simple, we found, but quite specific. Typically, managers had identified one critical process—making acquisitions, for example, or allocating capital—where a bottleneck impeded growth, and then crafted a handful of guidelines to manage that process. This approach helped companies to bridge the gap between strategy and execution—to make on-the-spot decisions and adapt to rapidly changing circumstances, while keeping the big picture in mind.

We reported our findings in HBR (“Strategy as Simple Rules,” January 2001). At the time, we knew that simple rules worked in practice, but now—as a result of subsequent research that we and others have done—we have a much richer understanding of why they are effective and how to construct them.

Simple Rules in Action

The story of América Latina Logística (ALL) illustrates how simple rules can help companies shape strategy in an uncertain environment. It also demonstrates that this approach can be useful in a setting beyond the technology sector—such as a dilapidated freight railway in southern Brazil.

In the late 1990s the government of Brazil privatized the country’s freight lines. After decades of neglect, the nation’s freight-rail infrastructure was run-down: Half the bridges needed repair; a fifth were on the verge of collapse. Twenty steam locomotives that were decades out-of-date were still in use. Rail accounted for only 20% of long-haul shipments in Brazil, compared with 80% in most countries.

ALL was spun off from the Brazilian railway authority in 1997 to manage one of the country’s eight freight lines. Its new management team took over an organization that was bureaucratic, overstaffed, and bleeding cash. Transport on the line was so unreliable that crops in the areas it served were routinely left to rot in the fields during the harvest season. Middle managers were confused about what to do, and many pushed their local agendas at the expense of the company’s overall best interests.

The team decided to adopt a simple-rules approach to the work ahead. Let’s look at how that approach helped ALL’s executives achieve alignment, adapt to local circumstances, foster coordination across units, and make better decisions.

Aligning activities with corporate objectives.To set a clear direction, the senior managers decided on four companywide priorities: cut costs, expand services to existing customers to grow revenues, invest selectively to improve infrastructure, and build an aggressive corporate culture. The company had only $15 million available for capital spending—less than a tenth of the total funding requested by managers—but it desperately needed to upgrade the infrastructure and trains so that it could expand services. Accordingly, the management team identified capital budgeting as a critical bottleneck keeping the company from achieving its objectives