The Disruptive Voice's 100th Episode - Anomalies Wanted

Hi, this is Clay Christensen and I want to welcome you to a podcast series we call the Disruptive Voice. In this podcast, we explore the theories that are featured in our course here at hbs, Building and Sustaining a Successful Enterprise. In each episode, we'll talk to alumni of our course and others who are trying to put these theories to use in their lives and in their organizations. It's great fun to hear from them, and I hope that you find these conversations inspiring and useful.

Hello and welcome to the Disruptive Voice. My name is Katie Zambergen and rather than take on the role of host today, I'll simply introduce the episode to you. This is the Disruptive Voices 100th episode and we wanted to do something special and a little out of the ordinary. To mark the occasion, we're going to be hearing from a number of different people who worked with Clay and who knew him well. Specifically, we're going to hear their thoughts and insights on topics related to the theme of anomalies. Wanted to Many listeners will know that Clay had a homemade wooden sign in his office at Harvard Business School that read Anomalies Wanted. It was the backbone of his approach to research as he worked to strengthen his theories. Many past guests on this podcast, when asked about what made Clay such a powerful thinker and teacher, have responded saying that he was humble and that he was always open to learning from everyone from CEOs of Fortune 500 companies to his students to his his young grandchildren. In those conversations, Clay was, among other things, on the lookout for anomalies. Clay's theories are, of course, circumstance based, and Clay in particular hoped to find contexts wherein the outcomes of a given situation were not accurately predicted using the lenses of the frameworks. He used these examples to further refine and to strengthen the theories. That is, Clay viewed anomalies not as threats to the viability or applicability of his work, but but quite the opposite, as opportunities to learn and to improve the frameworks. Today's episode begins with an example that Clay shared with us back in 2018 when we were producing an Introduction to BSSE video for Harvard Business School students who wanted to learn more about the course. You'll then hear from a number of people who were near and dear to Clay as they reflect on how he used anomalies as a crucial tool with which to build and to improve his theories over the years. Why is the search for anomalies an important mental habit for our students to acquire?

A lot of people wonder as they.

Take the course about whether these theories are vibrant. Do they sustain themselves year after year.

Or are they only situation specific?

And what we learn through the course is that the theories are deeply developed statements of causality. But the students coming to class with anomalies is critical to their vibrancy. So we want you to understand the.

Theory, but then we also want you.

To come to class with a sense for are there other situations where this.

Might not be applicable?

And why?

And just as in science, if the.

Students will come to class looking for anomalies, then the theory gets better. And some of the most important elements of the theories in the course were developed by students who saw anomalies.

For example, one day I came to.

Class and the student said, you know, this theory of disruption, it doesn't apply to hotels. Gosh, you're right. Disruption has never happened in hotels. And another student came with a Diet Coke and stuck it on the table.

In front of him.

And I said, what's the Diet Coke for? And he said, diet Coke doesn't go on market. And in both of those cases, it took me several years to figure out why did they observe what they observed. And it was because they were very insightful. And the theory is vibrant because the students help it become so.

My name is Derek Van Beaver. I was friends with clay for about 20 years. I taught with him for 10 years, and I ran his research group, the Forum for Growth and Innovation, here at hbs, across that same decade. And the choice of anomalies and anomalies wanted as the theme for this hundredth episode is perfect. To my mind, it guided not just Clay's research, but it really guided how we teach the course to HBS students. Students, listeners to the podcast are aware that our course here at HBS is called bsse, or Building and Sustaining a Successful Enterprise. And from the first day of the course, we introduce a distinctive and in some ways challenging concept to the students. And that is that Clay always viewed the course not as an opportunity to share things he had already learned, but rather as what he called a theory building enterprise. So he and Paul Carlisle wrote a note some years ago that we would hand out to the students that talked about the concept of using the classroom to do what he called course research. And so Clay made quite clear to the students from day one that this is a course built around theory. But we are super interested at any point in students raising what they see as anomalies to the theories that we're teaching that we can talk about. And we did say that, you know, there are some theor of ours, like disruption that are, you know, pretty well baked. And so, you know, we'd be surprised if there was some wholesale new way of thinking about it. But there were others that came later in the course, like good money, bad money, or interdependence and modularity, where we were still thinking of those theories as being under construction. And so we would invite students in the course of discussion to talk about ways to improve the theory, circumstances in which the theories didn't fit. For example. Now, I will confess, this was Clay's default, natural approach to the classroom. It scared the rest of us. You know, for me, coming here new in 2011 and going in on the first day and saying, here I am. Take shots at me. You know, I'm teaching these theories, but just go ahead and have at it. That felt super scary. And a little bit. I don't know, it felt like we were working at cross purposes a little bit that would be teaching, and the students would not like the ambiguity. But it turned out that this was one of the things that they loved. And when we, as the newer teachers, shied away from it, boy, did we hear about it. The students would say, you made a promise on the first day that you need to make sure that you keep. And so, you know, to this day, that desire of Clay's that we not stop learning just because we're teaching is something that we try to follow as best we can. And it's hard for me to express how different Clay was from his peers in this regard. So here's the number one management thinker in the world who's inviting MBA students to criticize his theories that he was known for. And if you know anything about academia, you know how unbelievably different that posture is. Most of Clay's peers would develop a theory or two that they would become known for, and. And then they'd spend the rest of their lives defending those theories to the death. Right? If anybody comes along and criticizes some aspect of it, you know, they go to the mattresses, and it's all about, you know, fighting off the assault so that their idea emerges unblemished. This was something critics of disruption never understood, that Clay welcomed critique and felt that it made the theories stronger. Someone at the Institute said in their recollection of him that he would rather be correct than be right. And that's a really good way to think about it. If you remember, like in the Star wars saga, when the Emperor was always trying to encourage the Jedi to get angry because that would make the Emperor stronger in some weird way. The more that people attacked the theories, the better they got. This wasn't a game of win or lose to Clay. This was a game of how do we work together to understand things better. And, you know, in that way, his humility, number one management thinker in the world, he. His humility was his superpower. And it's what made disruption get better and better and better. And that allows the theory to continue to improve even after his passing. All of these memories of Clay in the classroom and his courage and bravery and his desire to learn with the students makes me smile even still to think.

I'm Tom Baartman. I worked with Clay and the team at the Forum for Growth and innovation for two years from 2014 to 2016, where I had the pleasure of working with Clay to understand business model innovation, you know, and really unpack the challenge that successful companies have innovating their business model and fighting the inertia of sustaining innovation to find new growth avenues. And it was some of the happiest and most enjoyable years of my life, certainly the most intellectual stimulating years of my life. To have the opportunity to every day come in and think about the theories of disruptive innovation and to get to test my thinking, to evolve it with Clay and with the folks in the BSSE course at HBS is something that I look back fondly on to this day. One of my best memories was really being in the BSSE class and the way that Clay organized it. That was quite different from from most other courses at hbs, which was that as a student in Clay's class, you were not just there to consume, you were there to create. Clay viewed the class as an engine of learning for the theory, not just for the students. And so every class was designed to build the theory by pressure testing it. And Clay invited each student to look critically at the theories and to identify anomalies in our own life and our backgrounds in current events that we brought into the room so that we could unpack the anomalies and understand what did they teach us about the theory that would allow us to improve it. Clay famously had his anomalies wanted sign outside of his door. That truly was Clay's philosophy for how he lived his life and how he ran his class. And so the classes opened with current events where we discussed what we saw out in the world and in the business landscape and how that may or may not cooperate or bring anomalies into certain theories that we were learning. And we'd spend time as a class unpacking what we thought about that. And frequently those discussions would trigger research that Clay would then ask his team to go and unpack further. And another great memory that I have is just the way that the paper at the end of the BSSE class shaped Clay's thinking. There were numerous stories of Clay adding to his library of cases out of the papers that students wrote. A famous one that Clay often told was the story of the Nintendo Wii and how students introduced him to the concept of the low end disruption in video games. When Nintendo introduced the Wii and opened a completely new market for video games that didn't exist and that wasn't on the sustaining competition that folks like PlayStation were taking. One of my favorite stories that Clay would often tell about how studying anomalies progressed human understanding is the story of how humans figured out flight. And this really espouses Clay's belief in the use of anomalies to differentiate correlation and causation. And so if you think about correlation and flight, and you take yourself back a few hundred years, you probably pretty quickly land on the highest correlation between flight and features of an animal are feathers. Nearly every animal that can fly has feathers. But as humans started to identify anomalies to that and study them, we learned that it's not actually feathers that cause flight. There's correlation there, but there's anomalies. And so there are animals with feathers that can't fly. Ostriches, peacocks, chickens, and there's animals without feathers that can fly. Flying squirrels have fur, but somehow manage okay. Bats don't have feathers, but they can fly. And so Clay tells this fabulous story about how humans studied these anomalies. And through that discovered that there are other factors that are related to flight. Whether your bones are hollow or solid is another one. But it wasn't until we discovered the airfoil that we found the causal factor of flight. If you can create an airfoil, you can fly. Until we could do that, humans perennially strapped wings with feathers to their arms made of boards and hopped from the top of steeples as Clay tells the story. And you can imagine the results. And it happened over and over and over again until we discovered the airfoil. And the study of the anomaly allowed us to progress. And that was the approach that he took to his whole life. He never stopped taking his theories and putting them under the microscope of anomalies to try and identify other ways to explain the phenomenon that he believed. Disruption. And the other theories the BSSE course were the best able to explain. One common topic that came up and that Clay and I researched when I was working with him was the concept of high end disruption. It seemed that every semester there was an example a student wanted to cite of a entrant that came in with a business model at the high end. And one of the funny things to remember about disruption is that it's a theory of competitive response. When we go back to the original reading of Clay's research, disruption is about industry revolution, where incumbent dominant players are displaced nearly completely, if not entirely, by new entrants. And this concept of the high end disruption is one that we've looked at over and over and over again, and it is one that doesn't foot to disruption. The biggest challenge that you have as a high end entrant trying to take a disruptive business model is that the forces of progress are against your organization. When you start at the low end, you have this magical confluence of everything aligning in the right direction to continue on sustaining innovation. Each innovation generates more for the business in terms of revenue. It has higher margins that drop more profit to the bottom line. It creates a flywheel of progress that the organization rallies behind and that the resource allocation mechanism is designed to promote Attempting to enter at the high end and move down market fights that tendency. Now every innovation is attempting to make less money at smaller margins and the ability to allocate resources just isn't there. And so eventually what you see is that players that enter at the high end remain in the high end. They may establish a foothold in the market, they may establish a place in the market, but they don't disrupt the market. The business model and the resource allocation process fundamentally don't allow it. But we only learn that by unpacking the this repeated ask for why does this anomaly exist, but does it explain disruption? And I think that's just a wonderful example of Clay being willing to break out the microscope every time and say, what does this tell us about the theory and what can we use to improve it?

My name is Cliff Maxwell. I'm an investor at Rose Park Advisors, which is a investment firm that Clay and Matt Christensen founded in 2007. And I should add here that I'm not speaking on behalf of Rose Park Advisors and I'm not soliciting investment or providing investment advice. I've done a handful of things professionally up to this point. But most relevant for this discussion is I was formerly Clay Christensen's chief of staff and helped him manage this vast constellation of research and advisory teaching and other work that he was involved in. And prior to that was working with Clay at his research Institute, the Clayton Christensen Institute. So have certainly traversed the world of theory in and out the hallways and in offices with Clay for many years. And Clay has written actually in some depth and spoken as well publicly about what he described as the theory of theory building. Clay took a very scientific based approach to the work that he did, wanting to arrive at what he would describe as statements of causality, what causes what to happen and why. And that to him was the definition of a good theory. It moves from a very descriptive or correlative phase into something that is actually prescriptive and causal in nature. And Clay took that very seriously. In one of the works that he would often reference is the Structure of Scientific Revolutions by Thomas Kuhn, who really coined the term paradigm and then coined as well the work of anomalies in helping us rethink or restructure paradigms when we found anomalies and things that an existing paradigm couldn't explain. And Clay's approach to that was really textbook in the way that scientists have approached a lot of the work in the past and just really at a high level. Before talking about how Clay's research really took anomalies in that world to understand and unpack what causes successful firms to fail, which is the hallmark causal description that he unpacked with disruptive innovation. Clay would describe the theory building process in two facets. The first is this high level descriptive phase where you have really just a large set of unstructured data. You've got stuff happening, you don't know what's happening, you don't know how to categorize these things, but you've got a set of data points that you want to unpack, and you've got to dive in the dumpster, you've got to just crawl inside of it, poke around. And this process is really starting to take this raw data, try to observe what you're seeing, and then categorize it in ways that allow you to segment things that are interesting or that are relevant, whether it be types of companies or demographics. You're trying to parse out what it is that you're looking at. And once you've got some categories, you can start to make some inferences and correlations around what you're seeing. Right? And this is the process of most research, which is you start with a large data set, you start to observe it, you categorize it, and then you build some regressions or you build some models to arrive at some statement of what's happening. And this is what Clay would describe as the inductive or descriptive process of theory building. And then you arrive at a statement of what you think is going on. But then you have to pivot. You have to then take that and say, okay, let's look at now an n of 1 use case and ask the question, does this thing that we arrived at originally, does it describe what's happening in this case? And if it doesn't, then we have what we call an anomaly. We have a situation where the theory can't explain this new set of data or this new category scheme. And so we have to then revisit the assumptions that we made in the categories that we had originally and be willing to say the categories are wrong. And Clay would often describe with a lot of researchers or people he would work with, he would always caution them to say, are you sure that you have the categories right? Because you have to be willing to revisit a lot of those assumptions for you to then arrive at a statement of what you think is actually happening and disruptive innovation. For Clay, this process of theory building, it was this exact use case. So he approached his research in the disk drive industry really on the backs and the shoulders of a lot of management scholars who at the time had posited various reasons for why companies fail. And there were many versions of this. One of the more recent ones at the time that he was writing his research was this notion of radical versus incremental change. This idea that large companies struggle when they are confronted with very radical or breakthrough technologies. It's hard for them to adopt them, bring them into their business, and they don't struggle with incremental changes, but they really struggle with radical changes. And that's what causes certain firms to fail. But Clay immediately started looking at the disk drive industry and realized, well, wait a minute. All the leading firms in this burgeoning computer industry, they were very quick to adopt the latest disk drive technology and the latest hard drive designs and hire the best engineers to build them. They were actually very aggressively adopting the radical technologies and using it in order to improve their products. So in this very situation, you have, from Clay's description, an anomaly, right? You have a situation that can't explain it. And so from Clay's standpoint, he had to reorient and redefine the categories, which led to this notion of there's a difference between a sustaining or improving innovation and a disruptive or a low end, good enough innovation at the bottom of the market. And that really led to the discovery that is disruption. But again, this process now shifts to a much More prescriptive phase, Because Clay would then take that statement of theory and say, well, does it apply in other circumstances, can apply in other industries? And you're constantly trying to refine this engine of building and refining the theory. And if you read the innovator's dilemma, you note that Clay took the theory from disk drives and then said, does this apply to the hydraulic excavator industry? Does it apply to the steel industry? Right. And as you go through this exercise, you start to build a much more robust and rich understanding of the circumstances that are at play when you're looking at these questions. And, of course, the dilemma then exposes you to multiple frameworks about value networks and business models and resources and capabilities. And a lot of the things that we now really use and that are the byproduct of Clay being very prescriptive now in the theory building process. And really, I think it's worth quoting Clay here as this process unfolded. This is from a paper he wrote about theory building, which he says, anomalies are valuable in theory building because the discovery of an anomaly is the enabling step to less ambiguous description and measurement and to identifying and improving the categorization scheme in a body of theory. And that's really how he approached his entire work. And whereas most people would see an anomaly as a bad sign or a way to disprove a theory, Clay would take the anomaly and say, how can we then improve it? What do we learn about the categories? What do we learn about the circumstances? And how can we refine, improve, and expand and develop new theory as we seek for and understand these anomalies? And for me, you know, this work at Rose park is quite meaningful because in an investment capacity, you know, investors are swimming in a world of bad theory and bad categorization schemes, which on the surface are correlative. Or, you know, we use the term pattern matching. We think that we see these patterns and these correlations and these categories over time, but in many cases, they lead to abject failures. Right. Or the notion of, you know, we want to invest in companies that are led by former founders. Well, statistically, companies led by former founders do well, but they're also dramatic failures of companies who were led by former founders. And so that categorization scheme simply can't be the right measuring stick to evaluate an investment opportunity. And for us at Rose park, you know, we tried to be very careful about the theory that we're using, which obviously stems from all of his research, and ask ourselves, are we in the same circumstance? Is this company or this founder in the same circumstance as another opportunity that we've seen in another sector. If so, what can the theory predict? If not, what questions do we have? What risks do we now understand? If the circumstances are different and if they're different enough, can the theory be predictive here at all, or can we actually learn and expand upon the theory? And so this notion of being very circumstance driven, being very anomaly focused, and always asking the question, do we have the right categories? Bleeds into everything we do at Rose park and is really the byproduct of Clay being such a scholar and a scientist about developing theory in a way that we really try to take to heart at Rose park in the investment decisions that we make.

Hi, this is John Palmer. I had the opportunity of a lifetime to serve as Clay's chief of staff from 2015 to 2017, and then began my PhD at HBS with him as one of my advisors before his passing. And what's been wonderful about the doctoral program, it's given me time to reflect on my time with Clay and on his work. And one idea is that the theories are thinking tools. So just as physical tools help us do more than we can with our bare hands, thinking tools help us do more than we can with our bare minds. The beauty of tools, of course, is that they are designed by highly knowledgeable and skilled person or group of people, but then can be passed along for others to use. And the people who use them don't have to have the same set of knowledge or skills to use them. And thinking tools are actually super prevalent, even though we take them for granted. So One is the base 10 number system, which makes tabulation computation so much easier. When we use these thinking tools, they help our minds make sense of the welter of complexity in the world around us. Information about the past, about the present, and thoughts about what might happen in the future. And these thinking tools help us simplify information, consider information that maybe is not as salient but is still very important, and then to make decisions with some degree of confidence. And thinking tools are usually designed to work under certain circumstances and for certain purposes. But when you create a thinking tool, it becomes publicly available, and you in a way, forfeit the ability to control how people use it. But it's actually a really good thing that they're used in ways that the original creator didn't contemplate, because that's where ideas are recombined and new theories are developed. So having a whole crowd of people who are testing out the tool in many different circumstances can be very helpful for improvement. So when we look back at the intellectual history of disruptive innovation theory, especially in the early days, there were massive improvements and changes to the theory. The title of his 1997 book, The Innovator's Dilemma, talks about disruptive technologies. But then fast forward five years or so in 2003, the Innovator Solution refers to disruptive innovation. And part of this was that new evidence was brought forward that showed that it wasn't always just, for instance, low end products that disrupted, but there were sometimes what were called new market innovations, and updates were made to the theory, and changes were made to the actual thinking tool, this theory that we call disruptive innovation, based on the strength of that evidence. And there were a whole community of people around Clay during those years that made just tremendous contributions to the theory and continue to people like Michael Rayner and Scott Anthony, Mark Johnson, bringing in anomalies from their own experience, from their research. Bob Mesta, I know, was talking with Clay about jobs theory in those days, and they had a major influence on the trajectory of the theory and the tool that it is today. As the idea gained wider popularity, there were many suggestions for ways to improve it or change it. And extraordinary claims about what disruptive innovation theory should or should not be need extraordinary evidence backing them. So that's influenced me and the way that I'm trying to pursue my own research and thinking. So one of the really special things about working closely with Clay was that I would attend just about every meeting he was in throughout the day. And I got to see his process for tinkering with thinking tools. And he was constantly creating new ideas. And one of the ways he would do it is he would come into his office with an idea that maybe he picked up while he was traveling or that he thought about while he was in the line at the grocery store, or usually a conversation you'd had with a collaborator. And what I noticed is Clay would take that idea and say, we had six meetings that day with each person. He would somehow introduce the idea into the conversation and try it out on them. And you know, these people are coming in. It's their one interaction with them during the day. They don't realize that the same bit he's been trying out on three or four or five other people in the same day, and certainly in the same week. And, you know, a lot of that experimentation resulted in just stuff. As Karen Dillon said to me once, you know, it's the stuff that hits the cutting room floor. But certain ideas developed into more Significant pieces of kind of intellectual machinery, if you will. It was wonderful to watch this. And something I noticed as I watched Clay present over and over to audiences all over the country, all over the world, is he would often speak in we instead of just I when talking about his own research. And I thought that was really appropriate given how I observed him working on these theories and working with this community of people who have all made such remarkable contributions to it.

Hi, I'm Karen Dillon. I am a former editor of the Harvard Business Review. And I was given the gift of being Clay's co author for his last three books. One of the greatest pleasures I had of working with Clay over the course of a decade, working with him on the three books, was watching how his mind worked. And he was so interested in the anomalies, wanted question, because he didn't need to be right. He wanted to have answers for people. He wanted to understand things. So for him, it was almost a continual pursuit of better understanding, framing the question differently. It was a pursuit when something didn't fit, when a theory did not explain something. For him, it was just a cue to go further and understand it better or categorize it differently. It was just so interesting watching how his mind worked. It wasn't what people might have thought, which was he wanted to make sure he was always right. It was that he really wanted to learn and understand and then be able to share that with people. Because for him, theories were tools and he was sharpening the tools with his anomalies, wanted thinking, you know, he made the tools better or created a different tool, because this theory didn't explain this situation, but it explained that situation. So I loved watching how he thought about it. And it was for him a joy to figure out that something was not explained by a theory because it led him to new and different questions. And as many people know, Clay always thought a good question was more important than the right answer. Because if you know how to ask the right questions, you're starting to understand the problem you're trying to solve. And I saw that at work in our book the Prosperity Paradox. Instead of trying to ask the question, how can we solve poverty? Which is the obvious question, you see poverty everywhere. How do we solve poverty? Clay and our co author, Afosa, thought of the problem very differently. Not just how do we solve poverty, but what causes prosperity? That's a completely different lens on the problem and one that led to the really interesting answers that we wrote about in the book. What do we know about what causes prosperity? You start to think about it differently. You start to see solutions in different areas. It's a completely different way of looking at a really giant problem in the world. And it was fascinating to watch his mind do that, to turn from the obvious answer to the better question. And the better question leads to so many good things. And I just love watching Clay's mind do that. It was fascinating. When we were working on how will you measure your life? We were trying to write about and think about and share the ideas of what really motivates people. And Clay was fascinating talking about how in his classes and how he came to understand the question of what really motivates people, why he was able to dismiss the idea that you can pay people to do what you want them to do. You know, the incentive agent theory, People will do it because you pay them to do it. You give them incentives because we talked about, well, if that's true, what explains why teachers and not for profit workers and people in the military who are most motivated to do something are not the most well paid. In fact, they're sadly underpaid for a lot of what they're doing. If money is not a motivator and it's not, what does explain why they do what they do. And that's how we came to understand the value of understanding intrinsic motivators, the things that people don't necessarily see but really deeply influence why people feel satisfied with the work that they're doing. And it was just fun to be able to make such an awesome insight about why some of the people we most admire do the work that they do when we were writing about it in how well you measure your life. So I had the honor and gift of working in Clay's office for many, many hours over the 10 years that we worked together and watching him wrestle with problems and questions and getting to better thinking. And I remember the day that I turned up when the anomalies wanted sign. The beautifully wooden card sign was outside of his office door, and it was kind of like a billboard, you know, it was not only did Clay welcome anomalies, but it was what he was about. He was trying to better understand things all the time. And so you walk through the process portal, the door, it was anomalies are welcome here. And eventually it moved inside the office at some point. But it became a guiding principle is to do the best thinking and to share the ideas that are most helpful to people. We really have to understand what these theories do not explain because that will help more people, basically. And so it became, you know, the symbol of what we were trying to do. It was to be a better thinker. Anomalies were wanted, and Clay literally had it in the room with us all the time. And that influenced the way we talked about, thought about, and wrote those books.

Hi, my name is Bob Mesta, and I have been so lucky to have Clay be part of my Life for almost 30 years, 27 years. And one of the most important things that he taught me, and that has been reinforced throughout my entire life, is a sign that was hanging above his office and kind of what lured me in the door or at least reduced my anxiety. Walking in the door of a 6 foot 9 person where you would go to shake his hand and your hand would disappear. And it said anomalies wanted. And as a dyslexic, illiterate kid from Detroit who was always insecure about basically people finding out that I couldn't do those things, I resonated that I was an anomaly and that I don't know what that meant, but I know that I was not normal and I know I was not normal and I was not labeled normal ever. And so him building that was kind of a safe space for somebody like me was kind of amazing. I think, at the same time, anomalies to me and my other mentors in my life, Dr. Deming, Dr. Taguchi, Dr. Moore, they're all people who basically also loved anomalies because they learned from them. The saying I've come up with is basically embedded in the anomalies of the past is the DNA of the future, and that I am always looking for anomalies and that what was so interesting to me is most people throw anomalies out and say, oh, that doesn't count because of this and this and this. And I'm like, yeah, but why did that happen? And so my whole life I've always been looking for anomalies. And that anomalies are the key to really most innovations, as you start to look at it, right? And one of them that sticks out most is Scott Cook. And when he talks about the anomaly of, like, why are small businesses using Quicken to run their business? Like, this is personal finance software. And out of that grew QuickBooks. And so you start to realize that anomalies are actually those things that are the seed for innovation. And they help us see where things don't seem to fit or the workarounds or the things that are going on. And so to me, learning to see anomalies and learning to appreciate anomalies and learning how to unpack Anomalies and anomalies. Anomalies. I get excited about where most people hate anomalies because they script their data. And so I just would want everybody to know that, like, I feel like anomalies is at the core of who I am because of Clay and because of the innovators I've worked with. And that to be in the innovation space, we need to actually embrace anomalies with way more grace and appreciation and curiosity than throwing them out because it didn't work.

Hi, my name is Michael Horn and I'm the co founder with Clay of the Clayton Christensen Institute. And I got to write the book Disrupting Class with Clay among variety of other publications over the years. And obviously Clay meant a ton to me and I loved his ability to continue to learn and continue to evolve the theory based on new information. And that certainly happened with disruptive innovation. When I learned it as a student in Clay's class, we didn't talk about where does disruptive innovation not apply. But as Clay continued to study the phenomenon, he started to view it as maybe it doesn't have weight in all sectors or based on certain circumstances more accurately. And two of those just stood out to me. And one was this great story where Clay, he went to Nice, France, I think it was. So, you know, picture wine and all things not Clay around him with a beauty supply company, high end cosmetics business. So again, all things not Clay. And they wanted him to give a talk to the board meeting. And he just loved this story afterwards because he said, I had no idea why I was there. And he started talking to them about jobs to be done, because he said, well, jobs to be done, it relates to marketing and they're in cosmetics and high end beauty and so forth. So there's got to be a relationship here. And yeah, they seem somewhat interested. And then he talked about disruptive innovation because he couldn't figure out what else to talk to them about. And they got super excited. And he just said, pause, like, I can't figure out what's going on here. How does disruptive innovation possibly apply to you? And they said, you know, it doesn't, Clay. But the phenomenon has stuff to teach us. And basically what we learned from it is that in high end markets where a company or an organization derives value from who it excludes, not who it includes. So you try to limit supply, you try to limit the number of people who are able to consume your product or service, that those organizations tend to be impervious from disruption, but that if they stay in that sort of mindset, they can get commoditized. And that's what was really happening in the beauty supply industry. Closer to home, where I think about in terms of education, it's really helped me conceptualize why places like Harvard or other selective colleges and universities probably don't have to worry about disruptive innovation, because their value is not derived from seeking to, to educate huge numbers of students, but it instead comes from who they exclude, from the limited number of people that they serve. That's directly where their value comes from, of being part of a small club, in effect. And so in many ways, disruption. It has a lot of parts to the theory, but the ultimate story is told when the volume in the inner circle or the back plane of competition collapses into the outer circles. People flock out to the new product or service, delighted by how it does the job to be done in a good enough fashion. And it's more affordable, convenient, accessible and simple. That relates to the second one that Clay often talked about, which was you need a technology enabler that allows you to take what is initially that low cost, accessible, simple value proposition and go up market to tackle more and more complicated problems over time. And Clay loved to talk about how the hotel industry for years, years and years just had no upmarket technology enabler. And so he would cite the story of Holiday Inn coming in in the 1950s at the low end, and the theory would predict that they would have gotten better and better and better and disrupted Marriott in Four Seasons. But if anyone had stayed at a Holiday Inn recently, or he would like to joke, a Motel 6, as was his preference, you could see very quickly that hadn't happened. And he would say, so what happened? Was the theory of disruptive innovation wrong? Or was it in fact that they just didn't have a technology enabler that allowed them to improve, to tackle more and more demanding customers without replicating all the cost and features of a Marriott or Four Seasons, ultimately the very high end. And that also relates obviously to higher education, because we've seen state universities and comprehensive regional universities and community colleges decentralize the world of higher education, but not disrupt it. And that was why he felt that online learning was so different, because it had that upmarket enabler that could allow universities or programs that were starting online to start to become better and better and able to serve more challenging, more demanding customers over time without changing their fundamental value proposition around accessibility, affordability and simplicity. So I always found that really interesting about Clay. He used those anomalies, those industries, and improved the theory for sure. And you know, the last part of this, I guess, is my own side of this. And I remember talking to him about this too, and he agreed, which was that in many ways, disruptive innovation is what Bob Mester would call a supply side theory. It's basically talking about disruption in terms of the categories. Right. And so Clay would often tell the story about personal computers disrupting minicomputers. And he loved to talk about how poor Apple, when it got started, sold those early machines to children and hobbyists who couldn't afford a $250,000 minicomputer. He just loved telling that story. And I always thought about it, though, from a jobs to be done perspective, because surely those kids and hobbyists had, you know, kits or toys or other things that they could hire to do whatever the job was that they were hiring a computer to do. And so it wasn't like non consumption in the jobs to be done since, was it? And I think that's the powerful thing about the theory is it's sort of a supply side view of what non consumption is. But you have to marry that with jobs to be done to get the demand side view of how to think about non consumption, which I think looks very different. And so those perspectives and being able to continually figure out how do these things fit together and improving them are things I think a lot about in my work. Because, you know, in education, where I spend the vast majority of my time thinking about how do we create a more afford, accessible, more valuable set of education experiences for all learners that help unleash their potential. Ultimately, I use the theories on a daily basis to help improve my recommendations. But then I got to step back and think about, you know, when it doesn't play out the way I thought it would. Is it me being simplistic or is it something else that's occurred that maybe the theory didn't quite understand, or I didn't quite understand the circumstance correctly so that I can better apply that theory in the future. And I think it's something that we all get to push ourselves on and learn from Clay. Not to be defensive about it, but instead just to be caught. It's great to be wrong because it's a great learning opportunity.

Hi, I'm Max Wessel. I'm Chief Learning Officer at SAP and I had the pleasure of working at the Forum for Growth and Innovation with Professor Christensen for a little bit more than two years and have very much valued a decade of learning from and thinking alongside Clay. Clay's ability to spot a question worth asking was phenomenal. Completely unprecedented. And he talked about anomalies a lot because that was how he zeroed in on a question worth asking. A question worth asking pushed you to understand why something strange was happening in the world. And it pushed all of us towards thinking more deeply and being more considerate around the phenomena that caused situations in business or in life to arise. I remember almost a decade ago we started working on what would become Surviving disruption, published in December 2012. It all started with a thought experiment. At the time, Amazon was on a tear in retail. And for the first time in a decade since the dot com collapse, people were starting to believe that this e commerce spender could become dominant in terms of how all retail was delivered across industries in the United States States. And I remember walking into Clay's office, sitting down and talking a little bit about retail. And the two of us in our exchange continued to hone in on the inevitable capacity of Amazon to disrupt almost every company. A decade later, that conversation is still playing out amongst very, very senior executives in the retail world world. But in that moment I wanted to push on something that I saw as a unique problem in the theory, in the application of disruption. And I asked Clay, who was at the time going back and forth to New York quite often, if he could imagine walking down fifth Avenue and not seeing any street level retail. And in true Clay response he just said huh, that's a good question. Isn't that interesting? And we spent the next year building out a framework to better understand the role of the retail that we knew would exist in a post e commerce world. How did we understand the jobs for which disruption would occur quite quickly and quite thoroughly and those for which our desire to be present, to walk into into a showroom, to look and feel and touch would require us to have physical proximity. As we built out the answer to that question, we understood the framework by which we could apply disruption in other environments. How we could take a similar situation where disruption was quite thoroughly occurring, but understand where the limits of that change might be be. I feel extraordinarily grateful that I had the opportunity to spend time with Clay thinking on a question that was new, that was different, that violated the norms. And unlike most people, whether it be in business or in academia, in most walks of life, when Clay saw a question that he couldn't answer with the theory that he'd spent so long developing, he saw that as an opportunity, not a challenge, not an affront. And I think all of us every day can push our own success, our own thinking, the performance of our Teams, our organizations, our communities. If we treat anomalies as sources of inspiration in the same way that Clay did, instead of as cause for fear.

Hi, I'm Scott Anthony. I am a professor at the Tuck School of Business at Dartmouth College and a managing director at Inside, a place that I've called home for almost 20 years now. I first met Clay 22 years ago. It was October 2000. I was a student at the Harvard Business School. He was teaching the first version of a class that ultimately became known as building and sustaining a successful enterprise. After graduating from hbs, I stuck around for a couple years and did research with Clay before joining the fledgling team at Innisight back in 2003. When I started that work with Clay, I distinctly remember the search for anomalies. The first project we did was a research report that was sponsored by Cisco Systems. It was about the future of telecommunications. But Clay wasn't really interested in looking forwards. He was more interested in looking backwards. Because if you study the telecommunications industry, there was a big anomaly just staring you at the face. If you go back to the origins, the telephone itself is a classic disruptive innovation. In the early days, there's clear technological limitations. Signals can't go very far. Which rendered the technology not something that was particularly useful for the dominant users of the telegraph. People who needed to have a signal go over long distances to coordinate how railroads went or had stock information go over distances. The leader in the industry at the time, Western Union, dismissed the technology. A new company at&t helped to grow it. A classic case study of disruption. Here's the anomaly. Wireless technologies begin in a very similar way. They've got performance limitations. They can't do everything that you can do with a wired phone connection isn't that good. It can't go over that great a distance. Yet the story plays out in a very different way. It's generally the mainstream organizations that grab and successfully successfully launch the technology. A real anomaly in the disruption literature. We got pretty deep into some pretty arcane topics as we sought to understand this. What's the role of regulators as you think about new technological innovations? What happens when you have different value networks or infrastructures overlapping? The ultimate conclusion we came to, and this was described in the 2004 book Seeing what's next is it was that choice to have the value next networks interconnect. That choice in the early days to make sure that a wireless call could connect to a wireline call that created the possibility for an incumbent to co op the technology. The regulators made it even Easier by forcing structural separation where you separated the wireless and wireline assets. I also reflect on Clay and his fundamental optimism. Why does this lead to a view on optimism? Well, if you study anomalies and you seek out anomalies, everything is good. When you get something that doesn't fit, you say, this is a wonderful thing that I've discovered. And this idea of being optimistic, I think, was really core to who Clay was. I remember when he was going through some of the worst of his many, many health conditions. Never once would he get despondent or say, woe is me, or I've been dealt a bad hand. Maybe a little frustrated at times because he felt like he had so much more to do, but. But the optimism was always there. I try to model this when I'm in the field doing advisory work with companies. You have a tough client meeting or a client's pushing you a little hard. I say to the team, what data does this provide about the organization? How can we learn from this? Or a moment from a couple years ago that's really seared in my brain. We were doing a major strategy project for a super well known company and it was the big moment. We'd work closely on individual pieces of the strategy and it was all coming together. We were going to present to the very top leaders the 2030 strategy. So we go through it. We paint the picture of what the world's going to look like. We detail the strategy. It's in our view, a thing of beauty. We then ask a question using an online polling tool. We say, how excited are you about the strategy? From a scale of one, not at all to 10, very excited. We wait. The answers come in. There's a 9 and a 7 and a 5 and a 5. I can see the faces of some of my colleagues begin to sag a little bit. But to me, what a moment. You turn to the person who gives a nine. You say, okay, tell us more. What are you super excited about? The five. You say, what would it take for you to be a nine? What's the thing that's holding you back? We have this amazing set of data now about where everyone stands anomalies, the things you don't expect. The answer you didn't want to hear can be tremendous gifts. And Clay taught me that that's what you really need to do as a research advisor, scholar, parent person. To seek those things out, to study them, to understand them.

I'm Ann Christensen. My day job is as the president and CEO of the Clayton Christiansen Institute for Disruptive innovation. I am, as my name may suggest, Clay's daughter. So I grew up around a lot of these ideas when dad to me. But Clay at work, I Clay more widely known to most of those who listen to this podcast. When Clay wrote his first book, it was the Innovator's Dilemma because he knew that he had seen a pattern that he could articulate that was very puzzling to him. He certainly did not have all of the answers at that point. And the Innovator's Solution came several years later and was named such in part because in working with so many people who had come to him having read his book and said this works, this doesn't, we had this happen to us and here's what we did wrong, he learned a lot. And so it was the solution because he could offer in that second book a lot more context and framing around what he'd learned and offer more in the way of solution. Not just there seems to be a pattern here. Not that the Innovator's Dilemma was lacking for ideas and recommendations, but it was a lot clearer to him by the time he got to the second book. And that is to say, I think there was a longer arc for Clay of finding anomalies and being able to learn from those anomalies and have people's questions and pushback and insight really inform his work and his ability to fine tune his own research. And so when he started saying anomalies wanted, I really couldn't tell you. But I do think that we society broad brushstrokes become fat, fascinatingly unforgiving of people learning and changing their mind. Many public figures get lambasted for flip flopping on an issue or changing their position. In many ways, I think we should be grateful for people who are willing to come forward and say I've learned something or I see this differently now. We've got bigger problems if we think we know everything already. And this idea that we can be constantly learning and improving both ourselves and the quality of our insights, I wish that that made more sense to more people and that we were more forgiving publicly of the process of learning and gathering anomalies, because certainly our lives are an unending process of finding anomalies and figuring out what to do with them on anomalies in our work. Now, I had a couple of thoughts there. One is I haven't found anomalies that I don't think we can resolve per se. One that keeps coming up is more of a wording challenge than a anomaly. But a lot of our Work at the Christensen Institute. We look at what the theories have to say about transforming education and what the theories have to say about access and affordability in healthcare. And those are sectors where we often don't like to use words like profits and customers. In a public school system there's a revenue model in that you, you are getting public funding but not a profit model in the same sense or you certainly don't use the words profit to talk about it. And so that often creates some pushback. But if you peel back the layers, I think in every way in both healthcare and education there are customers and profits and revenue. It's often a break even at best situation. So some challenges as we think through how the theories apply. But to date I don't know that any the of them constitute an anomaly that the theories don't explain. And I would say if that doesn't resonate with anyone, I would love to have a longer conversation. If you're listening to that and thinking, no, I just don't think the theories apply in this sector, I am all ears. I think there are a couple of places where we struggle. Again, this is kind of a wording thing and Clay would talk about this too. Where regulation plays a big role in a sector or where we're thinking about stakeholders as a bucket term, stakeholders is so non specific that it's hard to categorize. But when you're thinking about a whole school system, K12 public system, for example, how do you think about parents and teachers unions and the different part that some of these different entities play in the system. And as you're thinking about business models and jobs to be done, how do all of those parties fit into the business? Bigger picture and I think there's some fine tuning we can do in those spaces. So is there a lot left to explore? I think there's a ton. I'm so excited about some of the directions we have yet to go and certainly invite collaboration. For anyone who is listening and might be interested, there are a lot of topics where we have barely scratched the surface. I'd say energy in particular, cleaner energy sources and just the energy grid challenges that we face as a society. Early childhood education. I think there's a ton to say there that we've only scratched the surface on. Incarceration and criminal justice, a lot of dimensions of healthcare and education, data security. Clay had started in on some work around what he called the capitalist dilemma, which is really looking at basically finance and capital markets and how we fund and invest in businesses and some of the short term ism dynamics of that really shooting us in the foot in terms of long term growth. There are extensions of the prosperity paradox to explore. Certainly that is a body of research that has taken off. Afoso Ojomo on our team has led the charge on that. And there's a lot more to do there. Also, there's some corollaries for that work. That one focusing mostly on emerging markets, but in even wealthier countries, there's certainly, you know, cities that are not thriving in particular manufacturing centers. And how you reinvent and reinvigorate those, I think is a really interesting question. I think the theories have a lot to say. It's been a really rough few years and I have had a lot of people coming to me and to the Institute wanting to talk about how we measure life, which is an interesting one, I think. You know, some years of hard times, a lot of people asking important, important questions about their purpose and their time and have they balanced in a way that is going to make them happy and that they're proud of. I think there's a lot around credentials and accreditation in education, workforce readiness, fintech, also mobility. So I think we've got our work cut out for us. I think there's a lot ahead for the Institute for this body of research and all of the different people who are doing fascinating things, building on, on this research and Clay's legacy. I think he would probably cringe at the word legacy. Let me say for all of those who are building on and continuing to apply Clay's ideas, Clay loved learning from everyone. I think those who have spoken before me today, and certainly so many of you have picked up that torch and are carrying that forward. I certainly think that the search for anomalies continues and that there is a lot left to learn and to find. If you have thoughts or questions, you, you who are listening, if you found anomalies or things you feel like the theories can't explain, we're all ears. We'd love to have you join us and reach out. We'd love to hear about it.

Thank you for listening to us at Disruptive Voice. Until next time, good luck, everybody.