The Industrialized Revolution

Christensen seems an unlikely sort to be asking such uncomfortable questions. He's a devout Mormon and a highly credentialed Harvard Business School professor with the warm, helpful demeanor of a grade school teacher. He's toweringly tall (6 feet, 8 inches) but unimposing. He's so soft-spoken you have to lean forward to hear him in his immaculate office decorated with a collection of disk drives and framed posters marking his son's tenure on Duke's legendary basketball team. He's a Boy Scout, literally. He has led Boy Scout and Cub Scout troops since the mid-1970s.

But his question is a tough one. Why is it that only one in 10 companies can sustain the kind of growth that translates into above-average increases in shareholder returns for more than a few years? We know it's not bad management, unless you believe the management talent pool is "like some perverse Lake Wobegon where 90% of managers are below average." No, the odds of lasting success are "frighteningly low," says Christensen, because of bad theory.

Businesspeople, says Christensen, are victims of a kind of "academic malpractice" perpetrated by the interlocking worlds of management training and education. Though careful not to name names, he says "the whole arena of building management knowledge and understanding is fundamentally flawed." Take business school. "Eighty percent of the cases used in the typical MBA program are about successful companies," says Christensen. "Students graduate with this notion that 'If I do everything that the people in those cases did, then my organization will grow and be successful, too.' But in many ways, the causality goes the other direction. If you're successful and growing, you can manage any way you want to. Growth makes so many dimensions of management easier. It's when growth stops that things get tough."

Success, he argues, is the worst teacher of success. Yet ever since Tom Peters and Robert Waterman ushered in the era of pop management wisdom with their original business blockbuster, In Search of Excellence (Harper & Row, 1982), the advice industry has been engaged in a game of best-practices bingo. It's not that "lessons from the best," "success secrets," and "habits of greatness" are wrong. It's that they're right only some of the time. Consider the history of man's efforts to fly, Christensen urges. Humans observed the most successful fliers and tried to emulate them by strapping feathered wings on their arms and jumping from cliffs.

So much for best practices. It turns out that "many of the widely accepted principles of good management are only situationally appropriate," says Christensen. And the best way to know whether and when to trust the advice promulgated in the principles is . . . good theory. "Managers are already voracious consumers of theory," he argues. "Every time they make a decision or take action, it's based on some theory that leads them to believe that action will lead to the right result. The problem is, most managers aren't aware of the theories they're using, and they often use the wrong theories for the situation." In the lessons-of-success school of management thinking, theory usually consists of observing a few successful companies and then writing a book introducing a set of rules ("big companies are slow to innovate") and advocating a collection of practices ("promote top leaders from within").

Good theory isn't about copying attributes, says Christensen. That's just strapping on feathers and hoping they'll make you fly. It's about discovering the "underlying causal mechanism behind the success" and identifying the circumstances in which a solution works and those in which it doesn't. Our would-be flier, for example, must understand the mechanism by which airfoils create lift and determine things like the speed and weight that result in successful flight.

It's not lost on Christensen that using theory to make crucial decisions is an unnatural act for most leaders. "The whole enterprise of teaching managers is steeped in the ethic of data-driven analytical support," he says. "The problem is, the data is only available about the past. So the way we've taught managers to make decisions and consultants to analyze problems condemns them to taking action when it's too late. The only way you can look into the future is with theory. And that's a big leap for managers to take."

The key to good theory is good categorization--understanding the circumstances you're in, and the circumstances you're not in. For example, Christensen says, there are two key approaches companies use to formulate strategy: deliberate planning and an emergent or discovery-driven process. The deliberate approach doesn't make much sense in circumstances in which the future is hard to read. A case in point: Prodigy, the online pioneer, assumed that customers would use its service mostly to collect information and shop, and built its infrastructure accordingly. When users instead went online to send email, Prodigy's managers were confounded and began charging extra. Email was an emergent strategy signal they missed because it contradicted the company's original, deliberate process.