PDF Summary:How Will You Measure Your Life?, by Clayton M. Christensen

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How Theories Work

When making decisions, people often try to predict what will happen based on as much data as they can gather; however, data only tells you what happened in the past. Letting it drive decisions is like driving a car by looking in the rearview mirror; you can’t see where you’re going.

Alternatively, you can base decisions on experience, but often, you don’t have time to learn on the job—for instance, to go through a couple of divorces to learn about relationships, or a couple of kids to master parenting.

In contrast, theories are more helpful in making decisions because they tell you what will happen without you having to experience it first. Good theories take the form of “if … then” statements (for example, if you don’t align your resources with your strategy, then your strategy will fail). You can see what actions cause what outcomes and why, then make a wise decision.

For example, developing a theory of lift was the key to humans learning to fly. Prior to this, people failed to fly because they didn’t understand causation. Since creatures with wings and feathers could fly (a correlation), early inventors tried building similar wings and...

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Resources: Finally, to implement your strategy you need an understanding of how to support it with your resources. You’ll have to decide among many demands—people often devote their time to whatever seems most urgent or what delivers the most-immediate rewards, but this gets them off track. You must use your resources in ways consistent with your intentions.

With the right strategy, you don’t have to settle—you can find true happiness in your career. This chapter will focus on the first step of creating a career strategy: determining priorities.

Theories of Motivation

To set the right priorities, you need to understand the theories of motivation. When you feel unhappy and stuck in your career or life, it’s usually because what you’re doing isn’t what really motivates you. Whether you’re motivated (or not) at work affects how you interact with your boss and colleagues, as well as whether you’re happy.

Many people think incentives are the key to being satisfied at work, and they opt for jobs on the basis of the incentives they offer. Similarly, companies offer incentives in hopes of getting employees to do what they want them to. Both employees and employers are...

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Honda’s experience introducing motorcycles into the U.S. illustrates in more detail how problems and unanticipated opportunities can change strategy.

Honda Succeeds by Changing Gears

In the 1960s, Honda introduced a motorcycle into the U.S. market in an effort to compete with Harley-Davidsons and European imports. But Honda’s bike had expensive mechanical problems (which U.S. dealers lacked the capacity to fix), and it didn’t sell. However, Honda initially stuck to its plan of trying to sell the motorcycle.

Meanwhile, they had shipped some smaller bikes called Super Cubs to the Los Angeles area; these bikes were popular in Japan as vehicles for making deliveries in crowded streets. Honda employees in the U.S. used them the same way at work, but also took them into the hills on weekends for off-road adventures.

This sparked wider interest and demand for the Super Cub as a recreational “dirt bike,” so Honda began importing and selling more of the bikes. Its sales mitigated Honda’s losses on the larger bike, and the company eventually realized selling the Super Cub to a new niche customer—the off-road biker—was a better strategy than selling a large motorcycle.

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3) Employees act independently of company strategy.

• Example: In the 1990s, when Apple forced out Steve Jobs, it ran into problems with its next-generation operating system, Copland, because not everyone was on the same page. Without Jobs enforcing discipline and focus on the project, engineers devoted their energies to other ideas they were more interested in working on, even though management kept stressing Copland’s importance. Eventually, the company scrapped the project. When Jobs returned in 1997, he got everyone allocating their resources in a way that aligned with Apple’s priorities, which were:
  • Make the best products in the world.
  • Change how people think about using technology.
  • Provide a great user experience.

Applying the Theory

Resource allocation works the same way in your life and career as it does in companies. Your personal resources include your energy, time, talent, and wealth. You apply them to various enterprises in your life: your relationship with your spouse, parenting, relationships with others, succeeding in your career, health and personal interests, and contributing to your community.

All of these...

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• In contrast, bad money is money that comes from investors who demand short-term growth over long-term sustainability. (Prioritizing growth over profit is bad because it's more expensive to fund a large company and large companies are harder to change.) When impatient or bad investors drive the company’s strategy, the business often fails.

Here are two examples of how good and bad capital affect companies:

• When Honda entered the U.S. market, it followed the good-money theory. It waited patiently for growth while it figured out its profit model of switching from its initial strategy of competing with Harley-Davidson to creating and filling a market niche for dirt bikes. Pursuing immediate growth by pouring more money into the failing big motorcycles would have been driving strategy with bad money.
• In contrast, bad money sank a company called Iridium, which sold mobile phones connected by a network of satellites enabling people to call each other from anywhere. Early investors poured in bad money, seeking big growth before the company had figured out how to be sustainable for the long term. But there were problems with the early phones and system, and the company...

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• A fast-food chain that wanted to sell more milkshakes identified the job its customers were buying milkshakes to do. It turned out that milkshakes served as a convenient, portable, and satisfying breakfast that people could consume on their commute to work without spilling in their car. So the company came up with ways to do this job better—by making its milkshakes more filling (adding chunks of fruit) and convenient (providing a larger straw).
• A toy company developed 12-minute card games that appealed to parents who wanted a quick game they could play with kids in the evening and wrap up before bedtime. Other available games didn’t do this job for parents because it took too long to finish them.

Applying the Theory

Applying the jobs-to-be-done mindset can help you improve your personal and professional life. In each situation, strive to understand the job you’re being “hired” to do, and then do it well. Thinking of your marriage from this perspective can be transformative.

It will take practice; most people can't articulate the jobs they’re trying to do, let alone the jobs they and their spouse are hiring each other to do for them.

Understanding what...

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Deciding When to Outsource

In applying the theory of capabilities to determine when outsourcing makes sense, a company must do two things:

1) Understand that your suppliers’ capabilities can and will change; to get a sense of how they might change, watch what your suppliers are striving or aspiring to do in the future.

2) Understand what capabilities your company will need to succeed in the future. Always keep these capabilities in-house; otherwise, you’re giving away your future.

Understanding the value of capabilities differentiates a good CEO from a poor one. Here are two examples of outsourcing gone awry:

• Dell: Dell was a highly successful U.S. computer manufacturer in the 1990s. It saved money, for which it was applauded by Wall Street, by outsourcing the manufacture of components to the Taiwanese company Asus. It started with circuits, then motherboards, then continued until Asus was putting together Dell computers in their entirety. Once Dell had outsourced all its major capabilities to Asus, the Taiwanese company used what it learned to launch its own computer brand.
• U.S. semiconductor manufacturing: American companies outsourced basic...

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Applying the Theory

You can build your career the same way by “signing up” for important experiences, instead of looking for jobs with pay and prestige or a fast track to promotion. Determine which experiences you’re likely to need in the future and master those “courses” before you need them.

Similarly, parents should determine what experiences their children will need to be successful as they grow, and create those experiences. Help them learn important lessons early in life.

Encourage children to aim high and keep trying if they fail. Also, resist the temptation to solve children’s problems for them—don’t bail them out by helping with or doing a project they left until the last minute. Otherwise, you’re teaching them to take shortcuts and expect others to save you. Let them learn from the consequences of their mistakes.

Often it’s easier to do things for kids—for instance, to plan their scout camping trip—but when you let children do it themselves, they learn about planning, organization, and teamwork. If a child doesn’t learn what you’re trying to teach from one experience, try something else. Preparing children for the future is one of the more important...

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Many companies proactively create a culture, writing it down and talking about it frequently. For example, Netflix posts key elements of its culture online, including:

• Not having a vacation policy: Employees may take off as much time as they want as long as they’re doing great work and meeting their responsibilities.
• Expecting all employees to be outstanding performers; those with merely “adequate” work will be let go.
• Giving employees “freedom and responsibility,” rather than operating on a command and control model.

According to Schein of MIT, a company can create a culture by following these steps:

• Identify a recurring problem.
• Assign a group to figure out how to solve it (and have them keep trying until they come up with a good solution).
• Every time this problem comes up, assign this team to solve it so that the process becomes instinctive; this way of doing things becomes the group’s culture.

If leaders define a culture but don’t embody or enforce it, the company will evolve a different culture based on the priorities and processes that have worked and become embedded.

For example, the energy company Enron had a “vision and values”...

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Whether a business decision hinges on marginal costs or marginal revenue, it can result in bigger long-term costs or problems. Here are two examples of marginal thinking that led to worse consequences later:

• Opting against marginal profits: In the late 1990s, the DVD movie rental company Blockbuster chose not to expand into online rentals and compete with upstart Nexflix, because the potential additional revenue from online rental was small compared to its current revenue from DVD rental (36% versus 66%). While this decision made financial sense in the short term, it ultimately sank Blockbuster—which filed for bankruptcy in 2011—when online rental completely replaced renting DVDs from physical stores.
• Opting for small marginal costs: A company may choose to expand on what it’s already doing because it’s cheaper (the marginal cost is small) instead of investing a lot more money in a completely new line of business that will grow the company in the long term. U.S. Steel chose this route: They increased production in existing facilities with excess capacity instead of investing in new, cheaper processes that a competitor, Nucor Steel, was using. Nucor ended...

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• Someone who is guided by God

Commitment

Deep commitment to the above values guides Christensen’s daily priorities—what he chooses to do and not do.

Metrics

This metric is the yardstick you’ll use to measure your life. Christensen decided to measure or assess his life by the number of people he helps to grow and become better people. This metric leads him to constantly look for ways to help others.

Figuring out your purpose in life gives you a framework for making sense of every other decision and circumstance. The theories and knowledge presented in this book can help guide your career, relationships, and ethics, but your purpose is your North Star.

(Shortform note: For more on defining your own and your company’s purpose, read our summary of Start With Why, by Simon Sinek, here.)