BIF and Clayton Christensen

Clayton Christensen  Professor of Business Administration, Harvard Business School

Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School. His research and teaching interests center on managing innovation and creating new growth markets. A seasoned entrepreneur, Christensen founded three successful companies: CPS Corporation, Innosign, and Innosign Capital. Christensen is also author or co-author of five books and is presently completing two books concerning the problems of our health care and public education systems.  Books: The Innovator’s Dilemma, The Innovator’s Solution, Seeing What’s Next

• WM: I thought I’d start by getting a few reactions.   So, you’re Balmer, what would you do?
• CC: the dilemma is that the business unit was not built to evolve. A profit model, processes were designed to do the same thing, better and better, over and over.  The org owns those intangibles.  The way that IBM evolved, the mainframe business unit died and others changed,  The corporate stayed, the unit dies.  If someone gets out of the gate ahead of you and you try and do the same the odds favour the first  you have to disrupt them by coming in underneath.  Sony and Nintendo are ahead and the xbox may not work, you have to disrupt them,  Looking at Google, that game is defined, so you cannot beat them, you have to disrupt?
• WM Google?
• CC: can’t think of a way now?
• WM: and you are Apple, what are they doing?
• CC I had student tell me I was like the Jewish mother in business there is always something going wrong.  what is disrupting Apple is the cell phones, the music, here you see the phones saying you can get the music on the phone
• WM: I’m sitting here with an apple phone that can download music without going to the computer
• CC: the handheld product platform is the one that is disrupting the computer.  Apple jumped right ahead of Nokia…but the research predicts that you will put in place massive creative energy in the others.  It is a sustaining innovation, they have stuck themselves right n the path of Nokia, my research would put the money on Nokia.
• WM: you are working on 2 new books, they are about fixing public education and the other is about healthcare
• CC: these are 2 very sick industries.  Those that have studied have only studied in the field education in education,  We have been looking at innovation and other things and are looking at the 2 industries from the outside.  On Healthcare, if you look at business history, in a lot of cases the first products were expensive and complicated,  healthcare is in the realm of a mainframe, very expensive and complex.  For a disruption there has been 2 things, one is a technological enabler and a distribution,  In computing the tech enabler was the microprocessor.  DEC did not create a process innovation and could not change the model, IBM did.   IN health, the tech enabler is precise diagnostics.  Molecular medicine is just opening up, what we called type 2 diabetes is looking to be 20 different things.  At the level of our genes, it is very precise.  Over the next 20 years, it will change, being able to say you have this gives you the ability to treat effectively.  And then we need a new business model.  There are 3 generic types of a model; the first is a value shop, this is like consultants or advertising agencies.  The 2nd is a value chain and the 3rd is a value network,  In a hospital it is a value shop, for the diagnosis.  Then you move into the chain activities, to get an operations etc.  a chain works well for a standard process.  As everything is in a hospital the value chain gets overpriced and the value shop gets underpriced.  We need to break the connection.   You would still have to have therapy in the diagnosis, because you still have to test things is diagnosis not there,.
• WM: ie baby ear infections – they happen enough to make it pretty standard
• CC: we have not allowed business innovation in hospitals to change things.  to make it happen, by analogy, if IBM wanted to rethink the mainframe they could have, they had the whole system,  If someone wanted to do the PC now, then it is impossible, no one owns it all.  The system is disintegrated that way.  For heath care, the system needs to be re-integrated to fix it.    People can work on their pieces and what is really required is a whole re-architecture.  The most innovative are the Veterans administration,  They use state of art electronic records, they are the most innovative in pushing things.
• WM: education?
• CC: the model of my research is about modular architecture or dependent architecture.  To customise something like windows is very difficult.  Modular make sit easy to change,   like a computer, or Linux.  In education, the teaching side is very interdependent.  You have to do this in 7th grade before you do this in 8th.  The interdependence mandates standardisation in teaching and testing.  This buts up against the reality that there are multiple types of intelligence and we all learn differently.  
• WM: so how do we do this?
• CC: one of a teachers job is instruction.  if we can migrate instruction from a teacher center mode to a pupil centered mode, then options,  This is computer based learning.  so we could individualise.    You put the great teachers to design the courses.  The software should be tuned to the type of the intelligence. 
• WM: does the pupil not have a interaction?
• CC: yes, but spends time 1 on 1.
• WM: my wide spent 10 years as a learning disabilites tutor.  These kids were often high intelligence, she had to reteach in the way the kid learnt. 
• CC the teachers would spend time to ensure students were connecting.  A tale about a girl who could not learn to read, until 5th grade.  a teacher noticed that she was a dancer, a teacher talked to her and asked her to choreograph the alphabet.  Asked her to dance a sentence and a paragraph,  her brain was wired differently, so in 8 months she learnt to read
• WM: do we have to bust up schools for different models, or is it a tech thing that can change it
• CC: we need to have schools within schools, like setting up different business units. Need flexibility to create new business modules.