How Will You Measure Your Life?

by Clayton Christensen, James Allworth, and Karen Dillon

Print | eBook | Audiobook

From the Back Cover

“From the world’s leading thinker on innovation and New York Times bestselling author of The Innovator’s Dilemma, Clayton M. Christensen, comes an unconventional book of inspiration and wisdom for achieving a fulfilling life. Christensen’s The Innovator’s Dilemma, notably the only business book that Apple’s Steve Jobs said “deeply influenced” him, is widely recognized as one of the most significant business books ever published. Now, in the tradition of Randy Pausch’s The Last Lecture and Anna Quindlen’s A Short Guide to a Happy Life, Christensen’s How Will You Measure Your Life is with a book of lucid observations and penetrating insights designed to help any reader—student or teacher, mid-career professional or retiree, parent or child—forge their own paths to fulfillment.”

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I read this book after hearing about the death of Clayton in late January of 2020. I knew a lot about his work after reading the Innovator’s Dillemma years ago, and I was blown away by the Jobs To Be Done Framework (JTBD) without realizing that Clay pretty much invented it.

After getting the book and browsing through the contents, it occurred to me that Clay didn’t write this book for the same reasons as his other books, which were mainly academic in nature. He knew that he was in poor health and that he was likely not going to live much longer. I think this book was written as his final legacy, and as a fitting eulogy to his life. He partnered with the two other co-authors to summarize his life’s wisdom before he passed away.

This book is like a compendium of everything he lectured about while at Harvard, but with the addition of the spiritual wisdom that he gathered from his lifetime of being very involved in his Morman church. I was so blown away by the wisdom in this book that I decided to include both a short and long summary.

If you don’t have time to read this in it’s entirety, you can scroll down to the end to watch some videos of Clay speaking about the themes of book.

Introduction

• “At graduation they had plans and visions for what they would accomplish, not just in their careers, but in their personal lives as well. Yet something had gone wrong for some of them along the way: their personal relationships had begun to deteriorate, even as their professional prospects blossomed.”
• “I am among those who have been fortunate so far—in many ways due to my wonderful wife, Christine, who has helped us see into the future with remarkable prescience. It would be folly for me to write this book, however, to proclaim that everyone who replicates the decisions we have made will be happy and successful, too. Instead, in writing this book, I have followed the approach that has characterized my management research.”
• “In my MBA course, Building and Sustaining a Successful Enterprise, we study theories regarding the various dimensions of the job of general managers. These theories are statements of what causes things to happen—and why. When the students understand these theories, we put them “on”—like a set of lenses—to examine a case about a company. We discuss what each of the theories can tell us about why and how the problems and opportunities emerged in the company. We then use the theories to predict what problems and opportunities are likely to occur in the future for that company, and we use the theories to predict what actions the managers will need to take to address them.”
• “By doing this, the students learn that a robust theory is able to explain what has and what will occur across the hierarchy of business: in industries; in the corporations within those industries; in the business units within those corporations; and in the teams that are within the business units.”
• “In the past several years, on the last day of my class after I’ve summarized what so frequently happens in the lives of our graduates, we have taken the discussion a step further, plumbing to the most fundamental element of organizations: individuals. For this discussion, rather than use businesses as the case studies, we use ourselves.”
• “We are there to explore not what we hope will happen to us but rather what the theories predict will happen to us, as a result of different decisions and actions.”
• “To help structure this discussion, I write the theories we have studied along the top of the chalkboard. Then I write three simple questions beside those theories. How can I be sure that:
  • I will be successful and happy in my career?
  • My relationships with my spouse, my children, and my extended family and close friends become an enduring source of happiness?
  • I live a life of integrity—and stay out of jail?”
• “These questions might sound simple, but they are questions that so many of my classmates never asked, or had asked but lost track of what they learned.”
• “Year after year I have been stunned at how the theories of the course illuminate issues in our personal lives as they do in the companies we’ve studied. In this book, I will try to summarize some of the best of the insights my students and I have discussed on that last day in class.”
• “I expressed my gratitude that I could use this time with them to summarize what my students and I had learned from focusing these theories on ourselves. I spoke about the things in our lives that are most important—not just when you are confronting a life-threatening illness, as I was, but every day, for every one of us.”
• “I don’t promise this book will offer you any easy answers: working through these questions requires hard work. It has taken me decades. But it has also been one of the most worthwhile endeavors of my life. I hope the theories in this book can help you as you continue on your journey, so that in the end, you can definitively answer for yourself the question: How will you measure your life?”

Short Summary (key themes of book)

• Motivation trumps monetary incentives (or principal-agent theory) when it comes to job satisfaction.
  • “True motivation is getting people to do something because they want to do it.”
  • “Motivation factors include challenging work, recognition, responsibility, and personal growth. Feeling that you are making a meaningful contribution to work arise from intrinsic conditions of the work itself. Motivation is much less about external prodding or stimulation, and much more about what’s inside of you, and inside of your work.”
• A proper career strategy combines using opportunities that we anticipate (deliberate strategy) as well as those that we don’t (emergent strategy).
• Your life is your “business”. Like a business, you need to properly manage your resources.
• Your relationships with family and friends are the most important sources of happiness.
• We need to use both intuition and empathy to make our family and friends feel loved and content (using the Jobs To Be Done Theory, or JTBD).
• Raise your kids right by allowing them to face challenges and solve problems for themselves. Allow them to develop processes, so that they know what to do when you are not with them. Instill a family culture because culture drives behavior.
• Compromising ones integrity is a slippery slope. Don’t fall for the “just this once” trap of marginal thinking. Follow your rules 100% of the time. And stay out of jail.

Long Summary (contains lots of quotes from the book)

Just Because You Have Feathers

“There are probably dozens of well-intended people who have advice for how you should live your life, make your career choices, or make yourself happy. Similarly, walk into the self-help section of any bookstore and you’ll be overwhelmed with scores of choices about how you can improve your life. You know, intuitively, that all these books can’t be right. But how can you tell them apart? How do you know what is good advice—and what is bad?”

The Difference Between What to Think and How to Think

• “There are no easy answers to life’s challenges. The quest to find happiness and meaning in life is not new. Humans have been pondering the reason for our existence for thousands of years.”
• “What is new, however, is how some modern thinkers address the problem. A bevy of so-called experts simply offer the answers. It’s not a surprise that these answers are very appealing to some. They take hard problems—ones that people can go through an entire life without ever resolving – and offer a quick fix.”
• “That is not what I intend with this book. There are no quick fixes for the fundamental problems of life. But I can offer you tools that I’ll call theories in this book, which will help you make good choices, appropriate to the circumstances of your life.”

I Don’t Have an Opinion, the Theory Has an Opinion

• “When people ask me something, I now rarely answer directly. Instead, I run the question through a theory in my own mind, so I know what the theory says is likely to be the result of one course of action, compared to another. I’ll then explain how it applies to their question. To be sure they understand it, I’ll describe to them how the process in the model worked its way through an industry or situation different from their own, to help them visualize how it works. People, typically, then say, “Okay, I get it.” They’ll then answer their question with more insight than I could possibly have.”
• “A good theory doesn’t change its mind: it doesn’t apply only to some companies or people, and not to others. It is a general statement of what causes what, and why.”
• “People often think that 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 the rearview mirror—because data is only available about the past.”
• “Indeed, while experiences and information can be good teachers, there are many times in life where we simply cannot afford to learn on the job. You don’t want to have to go through multiple marriages to learn how to be a good spouse. Or wait until your last child has grown to master parenthood. This is why theory can be so valuable: it can explain what will happen, even before you experience it.”

The Power of Theory in Our Lives

• “How do fundamental theories relate to finding happiness in life? … Solving the challenges in your life requires a deep understanding of what causes what to happen. The theories that I will discuss with you will help you do exactly that. This book uses research done at the Harvard Business School and in some of the world’s other leading universities. It has been rigorously tested in organizations of all sizes around the world. Just as these theories have explained behavior in a wide range of circumstances, so, too, do they apply across a wide range of questions. With most complex problems it’s rarely as simple as identifying the one and only theory that helps solve the problem.”

“You might be tempted to try to make decisions in your life based on what you know has happened in the past or what has happened to other people. You should learn all that you can from the past; from scholars who have studied it, and from people who have gone through problems of the sort that you are likely to face. But this doesn’t solve the fundamental challenge of what information and what advice you should accept, and which you should ignore as you embark into the future. Instead, using robust theory to predict what will happen has a much greater chance of success. The theories in this book are based on a deep understanding of human endeavor—what causes what to happen, and why. They’ve been rigorously examined and used in organizations all over the globe, and can help all of us with decisions that we make every day in our lives, too.”

Section 1 – Finding Happiness in Your Career

“The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”—Steve Jobs

What Makes Us Tick

“It’s impossible to have a meaningful conversation about happiness without understanding what makes each of us tick. When we find ourselves stuck in unhappy careers—and even unhappy lives—it is often the result of a fundamental misunderstanding of what really motivates us.”

Do Incentives Make the World Go Round?

A Better Theory of Motivation

• “The problem with principal-agent, or incentives, theory is that there are powerful anomalies that it cannot explain. For example, some of the hardest-working people on the planet are employed in nonprofits and charitable organizations. Some work in the most difficult conditions imaginable—disaster recovery zones, countries gripped by famine and flood. They earn a fraction of what they would if they were in the private sector. Yet it’s rare to hear of managers of nonprofits complaining about getting their staff motivated.”
• “You might dismiss these workers as idealists. But the military attracts remarkable people, too. They commit their lives to serving their country. But they are not doing it for financial compensation. In fact, it’s almost the opposite—working in the military is far from the best-paid job you can take. Yet in many countries, including the United States, the military is considered a highly effective organization. And a lot of people who work in the military get a deep sense of satisfaction from their work.”
• “How, then, do we explain what is motivating them if it’s not money? Well, there is a second school of thought—often called two-factor theory, or motivation theory—that turns the incentive theory on its head. It acknowledges that you can pay people to want what you want—over and over again. But incentives are not the same as motivation. True motivation is getting people to do something because they want to do it. This type of motivation continues, in good times and in bad.”

What Makes Us Tick

• “Understanding what makes us tick is a critical step on the path to fulfillment. But that’s only half the battle. You actually have to find a career that both motivates you and satisfies the hygiene factors. If it were that easy, however, wouldn’t each of us already have done that? Rarely is it so simple. You have to balance the pursuit of aspirations and goals with taking advantage of unanticipated opportunities. Managing this part of the strategy process is often the difference between success and failure for companies; it’s true for our careers, too.”
• “You can talk all you want about having a strategy for your life, understanding motivation, and balancing aspirations with unanticipated opportunities. But ultimately, this means nothing if you do not align those with where you actually expend your time, money, and energy. In other words, how you allocate your resources is where the rubber meets the road. Real strategy—in companies and in our lives—is created through hundreds of everyday decisions about where we spend our resources. As you’re living your life from day to day, how do you make sure you’re heading in the right direction? Watch where your resources flow. If they’re not supporting the strategy you’ve decided upon, then you’re not implementing that strategy at all.”

Section 2: Finding Happiness in Your Relationships

“The happiest moments of my life have been the few which I have passed at home in the bosom of my family.”—Thomas Jefferson

The Ticking Clock

• “The relationships you have with family and close friends are going to be the most important sources of happiness in your life. But you have to be careful. When it seems like everything at home is going well, you will be lulled into believing that you can put your investments in these relationships onto the back burner. That would be an enormous mistake. By the time serious problems arise in those relationships, it often is too late to repair them. This means, almost paradoxically, that the time when it is most important to invest in building strong families and close friendships is when it appears, at the surface, as if it’s not necessary.”

What Job Did You Hire That Milkshake For?

• “Many products fail because companies develop them from the wrong perspective. Companies focus too much on what they want to sell their customers, rather than what those customers really need. What’s missing is empathy: a deep understanding of what problems customers are trying to solve. The same is true in our relationships: we go into them thinking about what we want rather than what is important to the other person. Changing your perspective is a powerful way to deepen your relationships.”

Sailing Your Kids on Theseus’s Ship

• “We all recognize the importance of giving our kids the best opportunities. Each new generation of parents seems to focus even more on creating possibilities for their children that they themselves never had. With the best of intentions, we hand our children off to a myriad of coaches and tutors to provide them with enriching experiences—thinking that will best prepare our kids for the future. But helping our children in this way can come at a high cost.”

The Greek Tragedy of Outsourcing

Understand Your Capabilities

• “Clearly, if Dell’s leadership had known what the outcome would be from taking the approach they did, they would have been much more hesitant to accept Asus’s overtures. But how could they have known? The answer lies in understanding the concept of “capabilities.” You need to understand what capabilities are, and which of them will be critical to the future, to know which capabilities are important to keep in-house and which matter less.”
• “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 of the business).”
• “Together, these capabilities are crucial in order to assess what a company can and, perhaps more important, cannot accomplish. Capabilities are dynamic and built over time; no company starts out with its capabilities fully developed.”
• “The most tangible of the three factors is resources, which include people, equipment, technology, product designs, brands, information, cash, and relationships with suppliers, distributors, and customers. Resources are usually people or things—they can be hired and fired, bought and sold, depreciated or built. Many resources are visible and often are measurable, so managers can readily assess their value. Most people might think that resources are what makes a business successful.”
• “But resources are only one of three critical factors driving a business. Organizations create value as employees transform resources into products and services of greater worth. The ways in which those employees interact, coordinate, communicate, and make decisions are known as processes. These enable the resources to solve more and more complicated problems.”
• “Processes include the ways that products are developed and made, and the methods by which market research, budgeting, employee development, compensation, and resource allocation are accomplished. Unlike resources, which are often easily seen and measured, processes can’t be seen on a balance sheet.”
• “If a company has strong processes in place, managers have flexibility about which employees they put on which assignments—because the process will work regardless of who performs it.”
• “The third—and perhaps most significant—capability is an organization’s priorities. This set of factors defines how a company makes decisions; it can give clear guidance about what a company is likely to invest in, and what it will not. Employees at every level will make prioritization decisions—what they will focus on today, and what they’ll put at the bottom of their list.”
• “Managers can’t be there to watch over every decision as a company gets bigger. That’s why the larger and more complex a company becomes, the more important it is for senior managers to ensure employees make, by themselves, prioritization decisions that are consistent with the strategic direction and the business model of the company.”
• “It means that successful senior executives need to spend a lot of time articulating clear, consistent priorities that are broadly understood throughout the organization. Over time, a company’s priorities must be in sync with how the company makes money, because employees must prioritize those things that support the company’s strategy, if the company is to survive. Otherwise the decisions they make will be in conflict with the foundation of the business.”

Never Outsource the Future

• “Like Dell, companies in the pharmaceutical, automobile, oil, information technology, semiconductor, and many other industries have increasingly pursued outsourcing without considering the importance of future capabilities. They are encouraged to do this by financiers, consultants, and academics—they see how quickly and easily they can reap the benefits of outsourcing, and don’t see the cost of losing the capabilities that they forgo in doing so. They risk creating their own version of Asus.”
• “The theory of capabilities gives companies the framework to determine when outsourcing makes sense, and when it does not. There are two important considerations. First, you must take a dynamic view of your suppliers’ capabilities. Assume that they can and will change. You should not focus on what the suppliers are doing now, but, rather, focus on what they are striving to be able to do in the future.”
• “Second, and most critical of all: figure out what capabilities you will need to succeed in the future. These must stay in-house—otherwise, you are handing over the future of your business. Understanding the power and importance of capabilities can make the difference between a good CEO and a mediocre one.”

What Your Child Can and Cannot Do

• “Whether we realize it or not, we are assessing capabilities all around us every day. We assess everything about our organizations; our bosses, our colleagues and peers, and our employees. We assess our competitors. But if I asked you to turn that lens closer to home, could you do it? What are your capabilities?”
• “What about your family’s? It may seem funny to think of ourselves as a composite of resources, processes, and priorities, just like a business. But it’s an insightful way to assess what we are able to accomplish in our own lives.”
• “I’ll bet if you listed your own capabilities, there are some that you know are real strengths and assets. But every one of us has a few areas that we wish were stronger—capabilities you would go back in time and develop better if you could.”
• “Unfortunately, none of us has the luxury of doing so. Just as Dell can’t wind back the clock on the decisions it made to outsource its capabilities, we can’t go back to our youth to figure out ways to develop the capabilities we wish we had.
• “But, as parents, we do have the opportunity to help our children get it right. The Resources, Processes, and Priorities model of capabilities can help us gauge what our children will need to be able to do, given the types of challenges and problems that we know they will confront in their future.”
• “The first of the factors that determine what a child can and cannot do is his resources. These include the financial and material resources he has been given or has earned, his time and energy, what he knows, what his talents are, what relationships he has built, and what he has learned from the past.”
• “The second group of factors that determine a child’s capabilities are processes. Processes are what your child does with the resources he has, to accomplish and create new things for himself.
• “Just as within a business, they are relatively intangible, but are a large part of what makes each child unique. These include the way he thinks, how he asks insightful questions, how and whether he can solve problems of various types, how he works with others, and so on.”
• “The final capability is the child’s personal priorities. They’re not that dissimilar from the priorities we have in our own lives: school, sports, family, work, and faith are all examples. Priorities determine how a child will make decisions in his life—which things in his mind and life he will put to the top of the list, which he will procrastinate doing, and which he will have no interest in doing at all.”
• “Resources are what he uses to do it, processes are how he does it, and priorities are why he does it.”

The Greek Tragedy—Inside Our Families

• “I worry a lot that many, many parents are doing to their children what Dell did to its personal-computing business—removing the circumstances in which they can develop processes. As a general rule, in prosperous societies we have been outsourcing more and more of the work that, a generation ago, was done “internally” in the home.”
• “Step by step, over the past fifty years, it has become cheaper and easier to outsource this work to professionals. Now the only work being done in many of our homes is a periodic cleanup of the mess that we make.”
• “In the absence of work, we’ve created a generation of parents who selflessly devote themselves to providing their children with enriching experiences—so-called soccer moms, a term that wasn’t even part of the American lexicon until fifteen years ago. They lovingly cart children around to soccer, lacrosse, basketball, football, hockey, and baseball teams; dance, gymnastics, music, and Chinese lessons; send them on a semester abroad to London; and to so many camps that many children don’t even have the time to get a part-time job in the summer.”
• “Taken individually, each of these can be a wonderful chance for a child to develop, and an excellent substitute for all the work that used to take place around the home. Kids can learn to overcome difficult challenges, take on responsibility, become good team players. They’re opportunities to develop the critical processes that kids will need to succeed later in life.”
• Too often, however, parents foist all these experiences on their children without that in mind. Now, on one hand, exposing them to lots of activities is commendable. You want to help your kids discover something that they truly enjoy doing, and it’s actually critical for them to find something that will motivate them to develop their own processes.”
• “But that’s not always the impetus of parents imposing these activities on their children’s lives. Parents have their own job to be done, and it can overshadow the desire to help their children develop processes. They have a job of wanting to feel like a good parent: see all the opportunities I’m providing for my child? Or parents, often with their heart in the right place, project their hopes and dreams onto their children.”
• “When these other intentions start creeping in, and parents seem to be carting their children around to an endless array of activities in which the kids are not truly engaged, it should start to raise red flags. Are the children developing from these experiences the deep, important processes such as teamwork, entrepreneurship, and learning the value of preparation? Or are they just going along for the ride?”
• “When we so heavily focus on providing our children with resources, we need to ask ourselves a new set of questions: Has my child developed the skill to develop better skills? The knowledge to develop deeper knowledge? The experience to learn from his experiences? These are the critical differences between resources and processes in our children’s minds and hearts—and, I fear, the unanticipated residual of outsourcing.”
• “Many parents are making the same mistake, flooding their children with resources—knowledge, skills, and experiences. And just as with Dell, each of the decisions to do so seems to make sense. We want our kids to get ahead, and believe that the opportunities and experiences we have provided for them will help them do exactly that. But the nature of these activities—experiences in which they’re not deeply engaged and that don’t really challenge them to do hard things—denies our children the opportunity to develop the processes they’ll need to succeed in the future.”

What My Parents Didn’t Do for Me

• “The end result of these good intentions for our children is that too few reach adulthood having been given the opportunity to shoulder onerous responsibility and solve complicated problems for themselves and for others. Self-esteem—the sense that “I’m not afraid to confront this problem and I think I can solve it”—doesn’t come from abundant resources. Rather, self-esteem comes from achieving something important when it’s hard to do. At the time of this writing and for the first time in modern economics, unemployment among young men is higher than almost any other group in America and, indeed, this is true of many developed countries around the world.”
• “I worry that an entire generation has reached adulthood without the capabilities—particularly the processes—that translate into employment. We have outsourced the work from our homes, and we’ve allowed the vacuum to be filled with activities that don’t challenge or engage our kids. By sheltering children from the problems that arise in life, we have inadvertently denied this generation the ability to develop the processes and priorities it needs to succeed.”
• As I look back on my own life, I recognize that some of the greatest gifts I received from my parents stemmed not from what they did for me—but rather from what they didn’t do for me.

Children Learn When They Are Ready to Learn

• “Denying children the opportunity to develop their processes is not the only way outsourcing has damaged their capabilities, either. There is something far more important at risk when we outsource too much of our lives: our values.”
• “Yet again, in outsourcing much of the work that formerly filled our homes, we have created a void in our children’s lives that often gets filled with activities in which we are not involved. And as a result, when our children are ready to learn, it is often people whom we do not know or respect who are going to be there.”
• “There’s a wonderful conundrum left to us by the Greeks. It was first put to print by the author Plutarch, and it’s known as the Ship of Theseus. As a tribute to the mythical founder of their city—famed for slaying the Minotaur—the Athenians committed to keeping Theseus’s ship seaworthy in the harbor of Athens. As parts of the boat decayed, they were replaced … until eventually, every last part of the boat had been changed.”
• “The conundrum was this: given that every last part of it had been replaced, was it still Theseus’s ship? The Athenians still called it Theseus’s Ship … but was it? I want to turn that into a similar philosophical question for you: if your children gain their priorities and values from other people … whose children are they.”
• “Even if you’re doing it with the best of intentions, if you find yourself heading down a path of outsourcing more and more of your role as a parent, you will lose more and more of the precious opportunities to help your kids develop their values—which may be the most important capability of all.”

“You have your children’s best interests at heart when you provide them with resources. It’s what most parents think they’re supposed to do—provide for their child. You can compare with your neighbors and friends how many activities your child is involved in, what instruments he is learning, what sports she is playing. It’s easy to measure and it makes you feel good. But too much of this loving gesture can actually undermine their becoming the adults you want them to be. Children need to do more than learn new skills. The theory of capabilities suggests they need to be challenged. They need to solve hard problems. They need to develop values. When you find yourself providing more and more experiences that are not giving children an opportunity to be deeply engaged, you are not equipping them with the processes they need to succeed in the future. And if you find yourself handing your children over to other people to give them all these experiences—outsourcing—you are, in fact, losing valuable opportunities to help nurture and develop them into the kind of adults you respect and admire. Children will learn when they’re ready to learn, not when you’re ready to teach them; if you are not with them as they encounter challenges in their lives, then you are missing important opportunities to shape their priorities—and their lives”

The Schools of Experience

“Helping your children learn how to do difficult things is one of the most important roles of a parent. It will be critical to equipping them for all the challenges that life will throw at them down the line. But how do you equip your kids with the right capabilities?”

Is It Really The Right Stuff?

• “In 1979, writer Tom Wolfe captured the public imagination with his depiction of one of the most competitive professional environments in the world: the screening of American fighter pilots. To find out who should rise to the top, the pilots battled it out in an ever-increasing test of nerves, a kind of Darwinian gauntlet. Early NASA executives had decided this was how to identify who had been born with the “right stuff.” Those who thrived under the white-knuckle pressure of the program were deemed natural-born heroes.”
• “Many companies looking to make top staffing decisions tend to replicate the same kind of thinking: that somehow there is a definitive way to identify the difference between the good and the great. In business, the “test” is what a résumé shows; you can tell by this whether a candidate is likely to thrive in a challenging new position. Underlying this is a belief that top candidates achieved what they did because of innate talent; that all these talents were qualities the candidate was born with, lying dormant, waiting to be used and honed.”
• The book goes on in depth that the right stuff model does not work a significant portion of the time and that it shouldn’t be relied on based on the statistics.
• “So if a “right stuff” screen doesn’t predict future success, what does? I spent a lot of time searching for and attempting to develop a theory that would help my students avoid such hiring mistakes in their future careers.”
• “It wasn’t until I came across work initially developed by Morgan McCall, a professor at the University of Southern California, in a book called High Flyers, that I finally found a theory that could help people make better decisions about whom to hire in their future. It explained why so many managers make hiring mistakes.”
• “McCall has a very different view of the “right stuff.” While Wolfe’s fighter pilots may indeed have been the best of the best, McCall’s theory gives a causal explanation of why. It wasn’t because they were born with superior skills. Instead, it was because they had honed them along the way, by having experiences that taught them how to deal with setbacks or extreme stress in high-stakes situations.”
• The “right stuff” thinking lists skills that are correlated with success. It is, using the description of theory discussed earlier, looking to see whether job candidates have wings and feathers. McCall’s schools of experience model asks whether they have actually flown, and if so, in what circumstances. This model helps identify whether, in an earlier assignment, someone has actually wrestled with a problem similar to the one he will need to wrestle with now. In terms of the language of the capabilities from earlier, it is a search for process capabilities.”
• “Unlike the “right stuff” model, McCall’s thinking is not based on the idea that great leaders are born ready to go. Rather, their abilities are developed and shaped by experiences in life. A challenging job, a failure in leading a project, an assignment in a new area of the company—all those things become “courses” in the school of experience. The skills that leaders have—or lack—depend heavily on which “courses”, so to speak, they have and have not taken along the way.”

The Right Stuff Isn’t Right at All

• Clay goes into detail about his own failures in hiring the right people. Without going into the details of the story, he was the head of a company being funded by venture capitalists (VC’s). There were two candidates. Candidate A that looked good on paper, and who the VC’s liked, and Candidate B who had the experiences required, but with less formal credentials. They went with the first candidate which ended up being a complete failure.
• “At the time, we didn’t have McCall’s theory to guide us—but I sure wish we had. Candidate A had presided over a massive operation, but one that was in a steady state. He had never started and built anything before—and as a consequence, he knew nothing of the problems that one encounters when starting up a new factory and scaling production of a new process. Furthermore, because of the scale of his operation, Candidate A had a large group of direct reports. He managed through them, rather than working shoulder by shoulder with them. When we compared the candidates’ résumés, Candidate A won hands-down. He had the “right stuff”—the adjectives about him just blew Candidate B out of the water. But that didn’t make him right for us.”
• “Had we looked for the past-tense verbs on their résumés, however, Candidate B would have won hands-down—because the résumé would have shown that he had taken the right courses in the schools of experience—including a field graduate seminar called “Scaling up process technology from the lab, through pilot scale, and then full scale.” He had wrestled with problems that the rest of us did not even know we were going to face. Or, in other words, he had the right processes to do the job. In expressing a preference for the more polished candidate, we biased ourselves toward resources over the processes. It is what I described in the previous chapter as something parents do, and it’s an easy mistake to make. Even big companies get this wrong all the time.”

Sending Your Kids to the Right School

“The challenges your children face serve an important purpose: they will help them hone and develop the capabilities necessary to succeed throughout their lives. Coping with a difficult teacher, failing at a sport, learning to navigate the complex social structure of cliques in school—all those things become “courses” in the school of experience. We know that people who fail in their jobs often do so not because they are inherently incapable of succeeding, but because their experiences have not prepared them for the challenges of that job—in other words, they’ve taken the wrong “courses.” The natural tendency of many parents is to focus entirely on building your child’s résumé: good grades, sports successes, and so on. It would be a mistake, however, to neglect the courses your children need to equip them for the future. Once you have that figured out, work backward: find the right experiences to help them build the skills they’ll need to succeed. It’s one of the greatest gifts you can give them.”

The Invisible Hand Inside Your Family

“Most of us have—or had—an idyllic image of what our families would be like. The children will be well-behaved, they’ll adore and respect us, we’ll enjoy spending time together, and they’ll make us proud when they are off in the world without us by their side. And yet, as any experienced parent will tell you, wishing for that kind of family and actually having that kind of family are two very different things. One of the most powerful tools to enable us to close the gap between the family we want and the family we get is culture. We need to understand how it works and be prepared to put in the hard yards to influence how it is shaped.”

When the Chariot Goes Over the Hill

• “As parents, we share a common worry: one day, our children are going to be faced with a tough decision … and we are not going to be there to make sure they do the right thing.”
• “All we can do is hope that somehow we’ve raised them well enough that they come to the right conclusion by themselves. But here’s the question: how do we make sure that happens?”
• “Enterprises and families are very similar in this respect. Just like your parents wanted you to make good decisions, business leaders want to ensure that midlevel managers and employees everywhere in the company make the right choices every day without requiring constant supervision. This is nothing new: as far back as ancient Rome, emperors would send an associate off to govern a newly conquered territory thousands of miles away. As the emperors watched the chariot go over the hill—knowing full well they would not see their associate again for years—they needed to know that their understudy’s priorities were consistent with their own, and that he would use proven, accepted methods to solve problems. Culture was the only way to make sure this happened.”

How Does Culture Form in a Company?

• “Culture. It is a word we hear so much of on a day-to-day basis, and many of us associate it with different things. In the case of a company, it’s common to describe culture as the visible elements of a working environment: casual Fridays, free sodas in the cafeteria, or whether you can bring your dog into the office. But as MIT’s Edgar Schein—one of the world’s leading scholars on organizational culture—explains, those things don’t define a culture. They’re just artifacts of it.”
• “Culture is far more than general office tone or guidelines. Schein defined culture, and how it is formed, in these terms: Culture is a way of working together toward common goals that have been followed so frequently and so successfully that people don’t even think about trying to do things another way. If a culture has formed, people will autonomously do what they need to do to be successful.”

This Is the Way Our Family Behaves

• “The parallels between a business and a family should be clear. Just like a manager who wants to count on employees using the right priorities to solve problems, parents want to set those priorities, too, so that family members will solve problems and confront dilemmas instinctively, whether or not the parents are there guiding or observing. Kids won’t have to stop and think about what Mom or Dad wants them to do—they’ll just go about it because their family culture has dictated, “This is the way our family behaves.”
• “A culture can be built consciously or evolve inadvertently. If you want your family to have a culture with a clear set of priorities for everyone to follow, then those priorities need to be proactively designed into the culture—which can be built through the steps noted above. It needs to be shaped the way that you want it to be in your family, and you have to think about this early on.”
• “Make no mistake: a culture happens, whether you want it to or not. The only question is how hard you are going to try to influence it.”
• “In thinking about this, it might be helpful to remember the process by which strategy is defined. There are deliberate plans, and emergent problems and opportunities. These compete against one another in the resource allocation process, to determine which receive our highest priorities of time, energy, and talent. I observed that in my case, my profession emerged. My deliberate plan, to become editor of the Wall Street Journal, was swept to the side as other opportunities emerged—including my present profession as a teacher. However, I am grateful that I have not allowed the kind of person that I wanted to become to be left to chance. That was a very deliberate decision.”
• “You should approach the creation of the culture for your family in similar terms. The professional pursuits and interests of your children need to emerge—and, in all probability, will be very different one from another. The culture of your family ought to welcome such diversity. But I recommend that, for the foundational dimensions of your family culture, there be uniformity. Getting this right will prove to be a source of happiness and pride for each of you.”

“All parents aspire to raise the kind of children that they know will make the right choices—even when they themselves are not there to supervise. One of the most effective ways to do that is to build the right family culture. It becomes the informal but powerful set of guidelines about how your family behaves”

“As people work together to solve challenges repeatedly, norms begin to form. The same is true in your family: when you first run up against a problem or need to get something done together, you’ll need to find a solution.”

“It’s not just about controlling bad behavior; it’s about celebrating the good. What does your family value? Is it creativity? Hard work? Entrepreneurship? Generosity? Humility? What do the kids know they have to do that will get their parents to say, “Well done”?”

“This is what is so powerful about culture. It’s like an autopilot. What is critical to understand is that for it to be an effective force, you have to properly program the autopilot—you have to build the culture that you want in your family. If you do not consciously build it and reinforce it from the earliest stages of your family life, a culture will still form—but it will form in ways you may not like. Allowing your children to get away with lazy or disrespectful behavior a few times will begin the process of making it your family’s culture. So will telling them that you’re proud of them when they work hard to solve a problem. Although it’s difficult for a parent to always be consistent and remember to give your children positive feedback when they do something right, it’s in these everyday interactions that your culture is being set. And once that happens, it’s almost impossible to change.”

Section 3: Staying Out of Jail

“The safest road to Hell is the gradual one—the gentle slope, soft underfoot, without sudden turnings, without milestones, without signposts.”—C. S. Lewis

Just This Once …

“Most of us think that the important ethical decisions in our lives will be delivered with a blinking red neon sign: CAUTION: IMPORTANT DECISION AHEAD. Never mind how busy we are or what the consequences might be. Almost everyone is confident that in those moments of truth, he or she will do the right thing. After all, how many people do you know who believe they do not have integrity?”

“The problem is, life seldom works that way. It comes with no warning signs. Instead, most of us will face a series of small, everyday decisions that rarely seem like they have high stakes attached. But over time, they can play out far more dramatically.”

“It happens exactly the same way in companies. No company deliberately sets out to let itself be overtaken by its competitors. Rather, they are seemingly innocuous decisions that were made years before that led them down that path. This chapter will explain how that process happens so you can avoid falling into the most beguiling trap of all.”

The Trap of Marginal Thinking

• The second last chapter goes into the details of Blockbuster demise and Netflix’s rise.
• “Blockbuster followed a principle that is taught in every fundamental course in finance and economics: that in evaluating alternative investments, we should ignore sunk and fixed costs (costs that have already been incurred), and instead base decisions on the marginal costs and marginal revenues (the new costs and revenues) that each alternative entails.
• “But it’s a dangerous way of thinking. Almost always, such analysis shows that the marginal costs are lower, and marginal profits are higher, than the full cost. This doctrine biases companies to leverage what they have put in place to succeed in the past, instead of guiding them to create the capabilities they’ll need in the future. If we knew the future would be exactly the same as the past, that approach would be fine. But if the future’s different—and it almost always is—then it’s the wrong thing to do.”
• “Marginal thinking made Blockbuster believe that the alternative to not pursuing the postal DVD market was to happily continue doing what it was doing before, at 66 percent margins and billions of dollars in revenue. But the real alternative to not going after Netflix was, in fact, bankruptcy. The right way to look at this new market was not to think, “How can we protect our existing business?” Instead, Blockbuster should have been thinking: “If we didn’t have an existing business, how could we best build a new one? What would be the best way for us to serve our customers?” Blockbuster couldn’t bring itself to do it, so Netflix did instead. And when Blockbuster declared bankruptcy in 2010, the existing business that it had been so eager to preserve by using a marginal strategy was lost anyway.”
• “This is almost always how it plays out. Because failure is often at the end of a path of marginal thinking, we end up paying for the full cost of our decisions, not the marginal costs, whether we like it or not.”

You End Up Paying the Full Price Anyway

“As Henry Ford once put it, “If you need a machine and don’t buy it, then you will ultimately find that you have paid for it and don’t have it.” Thinking on a marginal basis can be very, very dangerous.”

An Unending Stream of Extenuating Circumstances

• “This marginal-cost argument applies the same way in choosing right and wrong: it addresses the third question I discuss with my students, of how to live a life of integrity—and stay out of jail. The marginal cost of doing something “just this once” always seems to be negligible, but the full cost will typically be much higher. Yet unconsciously, we will naturally employ the marginal-cost doctrine in our personal lives. A voice in our head says, “Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, just this once, it’s okay.” And the voice in our head seems to be right; the price of doing something wrong “just this once” usually appears alluringly low. It suckers you in, and you don’t see where that path is ultimately headed or the full cost that the choice entails.”
• “Recent years have offered plenty of examples of people who were extremely well-respected by their colleagues and peers falling from grace because they made this mistake. The political arena is littered with examples of people at the top of their game getting caught doing something that would never have crossed their minds when they first decided they wanted to server their country. Insider-trading scandals have rocked nearly every generation of Wall Street titans. Scores of athletes, who had been worshipped by youngsters all over the world, have been caught abusing steroids or exhibiting scandalous personal behavior, sometimes losing their entire careers as a result. Olympic champions have been stripped of their titles, their medals returned. Reporters for major national newspapers have been caught outrageously fabricating details in articles, amid high expectations and deadline pressures to get great stories.”
• “All of those people surely began their careers with a true passion for what they were doing. No rising young athlete imagines that he or she will need to find ways to cheat to stay on top. Athletes believe they can work hard enough to earn their success. But then they are faced with that first opportunity to try something that might help them get an edge. Just this once … “
• “In hindsight, it all started with one small step: a relatively small error. That is the peril of marginal thinking, of doing something just this once, of only applying your rules most of the time. You can’t.”
• “The costs of taking the high road are always clear like that. But the costs of taking the low road—don’t seem that bad at the start.”
• “Decide what you stand for. And then stand for it all the time.”

“When a company is faced with making an investment in future innovation, it usually crunches the numbers to decide what to do from the perspective of its existing operations. Based on how those numbers play out, it may decide to forgo the investment if the marginal upside is not worth the marginal cost of undertaking the investment. But there’s a big mistake buried in that thinking.

And that’s the trap of marginal thinking. You can see the immediate costs of investing, but it’s really hard to accurately see the costs of not investing. When you decide that the upside of investing in the new product isn’t substantial enough while you still have a perfectly acceptable existing product, you aren’t taking into account a future in which somebody else brings the new product to market. You’re assuming everything else—specifically, the money you make on the old product—will continue forever exactly as it has up until now. A company may not see any consequences of that decision for some time. It might not get “caught” in the short term if a competitor doesn’t get ahead. But the company that makes all its decisions through this marginal-costs lens will, eventually, pay the price. So often this is what causes successful companies to keep from investing in their future and, ultimately, to fail.

The same is true of people, too.

The only way to avoid the consequences of uncomfortable moral concessions in your life is to never start making them in the first place. When the first step down that path presents itself, turn around and walk the other way.”

The Most Important Thing You’ll Ever Learn

• “As I have gone through life as a father, a husband, an executive, an entrepreneur, a citizen, and an academic, the knowledge of purpose that I have derived has been critical. Without it, how could I ever have known to put the important things first?”
• “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 competence, disruptive innovation, the four Ps, the five forces, and other key business theories we teach at Harvard.”
• “What’s true for them is true for you, too. If you take the time to figure out your purpose in life, I promise that you will look back on it as the most important thing you will have ever learned.”

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Videos About This Book That I Liked

Clay Christensen talks on “How will you measure your life” – what companies, parents and individuals need to be doing if they must be where they desire to be.

Clay Christensen at TEDxBoston