Monday, June 16, 2014

The Bogosity of Disruption Theory

Writing in the New Yorker,  Jill Lepore devastates HBS professor Clayton Christensen's theory of disruptive innovation. It turns out his case studies were cherry picked, and even the prime cherries don't actually provide persuasive evidence for his theories. Lepore notes that a theory is best validated by its predictive capability, not its ability to fit patterns of carefully chosen past events.
The theory of disruption is meant to be predictive. On March 10, 2000, Christensen launched a $3.8-million Disruptive Growth Fund, which he managed with Neil Eisner, a broker in St. Louis. Christensen drew on his theory to select stocks. Less than a year later, the fund was quietly liquidated: during a stretch of time when the Nasdaq lost fifty per cent of its value, the Disruptive Growth Fund lost sixty-four per cent. In 2007, Christensen told Business Week that “the prediction of the theory would be that Apple won’t succeed with the iPhone,” adding, “History speaks pretty loudly on that.” In its first five years, the iPhone generated a hundred and fifty billion dollars of revenue. In the preface to the 2011 edition of “The Innovator’s Dilemma,” Christensen reports that, since the book’s publication, in 1997, “the theory of disruption continues to yield predictions that are quite accurate.” This is less because people have used his model to make accurate predictions about things that haven’t happened yet than because disruption has been sold as advice, and because much that happened between 1997 and 2011 looks, in retrospect, disruptive. Disruptive innovation can reliably be seen only after the fact. History speaks loudly, apparently, only when you can make it say what you want it to say. 
It's really a good read. I am sure there is another side to the story, but it is always fun to see a Harvard snake oil salesman debunked by another Harvard colleague.

I have a bit of a personal stake in this. Lepore spends some time on Christensen's book The Innovative University, written about Harvard and BYU-Idaho, which would seem to be an odd choice for a counterpoint to Harvard until you realize that Christensen's old boss, HBS dean Kim Clark, followed the diktat of the LDS church leader to become the head of that university. It is surely not coincidental that Christensen himself proclaims the importance of his LDS faith.

The Innovative University treats Excellence Without a Soul with some reverence, though as Lepore points out, the parallels between 17th century Harvard and today's BYU-Idaho (NOT the well known Utah university) are rather strained. Still, having read the manuscript, I agreed to blurb the book, in a rather restrained way, so I suppose I have to consider myself a sort of apologist for the disruption mania of which I am now acknowledging my skepticism. Mea culpa.

Computer Science would be so much easier if we could sell our theories by attaching our names to them and claiming they were revolutionary and explained everything that had happened and predicted everything that would. Happily, neither our science nor any other works that way, though sometimes my colleagues try. A fellow Harvard professor once said in a faculty discussion of a colleague elsewhere that "The unit of bogosity is the micro-Jones," except that "Jones" was not the actual name of the computer scientist whose millionth sub-part might have been used as the standard measure of bogus claims. Out of respect for all parties, I will not use the actual name. You probably wouldn't recognize it anyway.

I am glad that my colleague in the history department decided to do the painstaking research needed to establish the bogosity of my business school colleague. Isn't there a business school professor, here at Harvard or elsewhere, who might have done the job?

1 comment:

  1. That was an interesting read, but I'm not sure at the end Lepore is any more insightful than Christensen. Reminds me of the joke:

    Q: How many disruptive innovators does it take to change a lightbulb?

    A: I don't know, I haven't written the punchline yet.