Lessons: How Will You Measure Your Life by Clayton Christensen

Clayton Christensen, who was a world renown professor, entrepreneur, and business theorist, writes in How Will You Measure Your Life:

Good theory can help us categorize, explain, and most important, predict.

People often think the best way to predict the future is by collecting as much data as possible before making a decision. But this is like driving a car looking only at a rearview mirror—because data is only available about the past.

The above boils down Clayton Christensen’s worldview. He studies business then synthesizes theories to help explain why certain businesses succeed where others fail.

He’s best known for his book The Innovator’s Dilemma which describes the problems incumbent companies face with regards to innovation. Throughout the startup world, business moguls from Steve Jobs to Jeff Bezos cite The Innovator’s Dilemma as one of the most influential books on their thinking.

In How Will You Measure Your Life, Clayton Christensen distills his theories on business into theories on Life. He provides a framework for how ambitious people should make decisions with regards to career, relationships, and personal values. The reader learns valuable information that can be used in the business world while also learning how to navigate their adult life.

He emphasizes taking the time to think through your goals, your values, your purpose, and to make career and relationship decisions consistent with those goals, values, and purpose.

At the beginning of the book, he tells the story of his Harvard Business School class. At each successive Class Reunion, more of his former classmates were unhappy and in unfulfilling careers, they’re marriages were in turmoil, and some, most infamously Jeff Skilling, the former CEO of Enron, were in jail.

He asked how this could happen. These people were the best of the best in Business School but something went wrong along the way. In seeking answers, he came up with the ideas that became this book.

But for many of us, as the years go by, we allow our dreams to be peeled away. We pick our jobs for the wrong reasons and then we settle for them. We begin to accept that it’s not realistic to do something we truly love for a living.

Too many of us who start down the path of compromise will never make it back. Considering the fact that you’ll likely spend more of your waking hours at your job than in any other part of your life, it’s a compromise that will always eat away at you.

Motivation

Whether you are a business owner and attempting to motivate employees, or you are reflecting upon your own life and potential career decisions, knowing the theories of motivation will give you an advantage.

The first theory is Incentive Theory. Incentive Theory says that you pay (incentivize) for what you want. Therefore the more you pay an employee, the more motivated they will be.

However, there are numerous industries and professions that prove exceptions to this theory such as the military and non-profits.

The second theory of motivation, which Christensen believes to be correct, is called Two Factor (Motivation) Theory.

Two Factor Theory states that there are two factors that motivate employees: Hygiene Factors and Motivation Factors.

Hygiene Factors include status, job security, work conditions, supervisor, and compensation. Poor Hygiene Factors will cause you to be dissatisfied. However, improvement of Hygiene Factors will not make you love your job.

The second set are Motivators. These are intrinsic factors such as challenging work, recognition, responsibility, & personal growth.

The key insight is to make job decisions based on Motivators rather than Hygiene Factors. Motivators lead to fulfillment, passion, and an enjoyment of work.

But somehow that early pledge to return to their real passion after a couple of years kept getting deferred. “Just one more year …” or “I’m not sure what else I would do not.” All the while, their incomes continued to swell.

It wasn’t too long, however, before some of them privately admitted that they had actually begun to resent the jobs they’d taken—for what they now realized were the wrong reasons. Worse still, they found themselves stuck. They’d managed to expand their lifestyle to fit the salaries they were bringing in, and it was really difficult to wind that back. They’d made choices early on because of the hygiene factors, not true motivators, and they couldn’t find their way out of that trap.

Strategy

At a basic level, a strategy is what you want to achieve and how you will get there. In the business world, this is the result of multiple influences: what a company’s priorities are, how a company responds to opportunities and threats along the way, and how a company allocates its precious resources. These things all continuously combine, to create and evolve a strategy.

There are two primary strategies that both businesses and people utilize.

Both strategies are contextually dependent. Neither one is better than the other, you must consciously choose the appropriate strategy depending on your situation.

The two strategies are (i) Deliberate or Anticipated and (ii) Emergent or Unanticipated.

Deliberate Strategy is making a concrete plan based on known conditions, then sticking to that plan in order to achieve your goals. Calculation.

Emergent Strategy arises due to interaction with the environment. By definition, Emergent Strategy involves unanticipated opportunities that emerge from the environment. Serendipity.

Life involves a balance between Deliberate and Emergent Strategy. When you know exactly what you want to do, follow a deliberate plan. Otherwise, stay agile and be open to emergent opportunities.

Strategy almost always emerges from a combination of deliberate and unanticipated opportunities. What’s important is to get out there and try stuff until you learn where your talents, interests, and priorities begin to pay off. When you find out what really works for you, then it’s time to flip from an emergent strategy to a deliberate one.

Capabilities

Capabilities comprise the company. They are a snapshot of what a company can and cannot do. This also applies to people.

Capabilities fit into three, mutually exclusive buckets. They are Resources, Processes, and Priorities.

Resources include the people, things, relationships, assets, and customers of the company. When applied to a person they answer the question: What?

Processes are how the people interact, make decisions, and solve more complicated problems. Processes are how you do the things you do.

Priorities define the companies Mission. Priorities teach employees the guiding principles that direct every decision made in the company. Priorities define why you do the things you do.

When you boil it down, the factors that determine what a company can and cannot do—its capabilities—fall into one of three buckets: resources, processes, and priorities. These offer an accurate snapshot of a company at any given time, because they are mutually exclusive (a part of a business cannot fit into more than one of the categories) and are collectively exhaustive (together, the three categories account for everything inside the business). Together, these capabilities are crucial in order to assess what a company can and, perhaps more important, cannot accomplish.

Cost

The theory of Marginal vs Full Cost teaches us how entrenched companies can be overtaken by lean upstarts. It also teaches how a Harvard Business School graduate could go to jail for corporate fraud.

Most established companies fail because they analyze potential opportunities through the lens of the existing business. This creates a paradox as established companies scoff at new ideas whereas small entrants don’t.

Hence, the paradox: Why is it that the big, established companies that have so much capital find these initiatives to be so costly? And why do the small entrants with much less capital find them to be straightforward?

The answer is in the theory of marginal versus full costs. Every time an executive in an established company needs to make investment decisions, there are two alternatives on the menu. The first is the full cost of making something completely new. The second is to leverage what already exists, so that you only need to incur the marginal cost and revenue. Almost always, the marginal-cost argument overwhelms the full-cost. For the entrant, in contrast, there is no marginal-cost item on the menu. If it makes sense, then you do the full-cost alternative. Because they are new to the scene, in fact, the full cost is the marginal cost. 

When there is competition, and this theory causes established companies to continue to use what they already have in place, they pay far more than the full cost—because the company loses its competitiveness.

The same idea applies to making decisions in your personal life.

If you give in to “just this once,” based on marginal-costs analysis, you’ll regret where you end up. That’s the lesson I learned: it’s easier to hold to your principles 100 percent of the time than it is to hold to them 98 percent of the time. The boundary—your personal moral line—is powerful, because you don’t cross it; if you have justified doing it once, there’s nothing to stop you doing it again.

Decide what you stand for. And then stand for it all the time.

Purpose

Purpose. Whether you own a company or you are attempting to live a better life, defining your purpose is crucial.

A worthy purpose takes time to cultivate. It requires deep thought, reflecting upon your principles, and defining your values. A worthy purpose is chosen deliberately and reached emergently.

There are three components to a useful statement of purpose. 

Likeness: a clear picture of what you will be.

Commitment: a deep conversion to always strive for your likeness.

Metrics: how you will measure progress.

Finally, in order to figure out your purpose, answer the question: Who do I truly want to become?

I promise my students that if they take the time to figure out their life’s purpose, they’ll look back on it as the most important thing they will ever have discovered. I warn them that their time at school might be the best time to reflect deeply on that question. Fast-paced careers, family responsibilities, and tangible rewards of success tend to swallow up time and perspective. They will just sail off from their time at school without a rudder and get buffeted in the very rough seas of life. In the long run, clarity about purpose will trump knowledge of activity-based costing, balanced scorecards, core competencies, disruptive innovation, the four Ps, the five forces, and other key businesses theories we teach at Harvard.

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