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Scott D. Anthony, "Epic Disruptions: 11 Innovations That Shaped Our Modern World" (Harvard Business Review Press, 2025)
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C
Welcome.
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B
Welcome to the New Books Network.
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C
Welcome to the New Books Network. I'm Alfred Marcus, professor at the Carlson School of Management and host of this podcast, which sits at the intersection of strategy and ethics. My conversations explore how leaders, ideas and innovations shape the business and social worlds we live in today. I'm delighted to be joined by Scott D. Anthony to discuss his new book, Epic 11 Innovations that Shaped Our Modern World. The book takes us on a sweeping journey from gunpowder and the printing press to the iPhone, McDonald's and even Julia Child, highlighting how disruption repeatedly reshapes industries, societies and the way we live. So Scott, you've spent more than two decades immersed in innovation as a student of Clayton Christensen, as a leader at Innosight as an investor and now as an educator. Could you start by telling listeners a bit about your journey and what led you to write this book? Now you were a student and later a colleague of Clayton Christensen. How did his theory of disruptive innovation influence the way you framed this book? In what ways have you sought to extend or challenge his ideas?
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D
Well, Alfred, first of all, thank you for having me. I am thrilled to be discussing epic disruptions with you. You started out with something that gives me a lot of space to provide a lot of thought. So I'll try to keep myself contained in the beginning and give some branches for further exploration, but just the brief history. So 25 years ago I was a student at the Harvard Business School. I took a class that was a new class called Building and Sustaining a Successful Enterprise that was taught by Clayton Christensen. Clay was pretty well known but was not a total rock star yet. The class had never been taught before, so there were no student reviews. So I kind of took it on a whim more than anything else and I almost instantly fell in love. I found in his theory of disruptive innovation something that let me just see the through different lenses, I could understand my own history as a consultant before I went to business school. Cases that worked, cases that didn't work, I could understand even when I worked on my college newspaper and we had our first face to face encounter with the Internet, why we struggled to respond to it. It just let me see things more deeply. And for the last 25 years, I have been reasonably obsessed with disruptive innovation. You mentioned some of the things I've done. I have studied it, I have written about it, I've advised around it, I've invested grounded on the idea. Now I try to teach people about how to use disruptive innovation to thrive in today's very complex times. So that's kind of my connection to the basic idea. Why this book now? Well, I'll tell you the truth, this book was actually not my idea. So I pitched a very different book to my publisher, Kevin Evers at Harvard Business Review Press. Three years ago I made the decision to kind of hang up my consulting jersey and transition to teaching. The main class that I teach is called Leading Disruptive Change. I propose writing a book based on what I teach in that class. Kevin said, that sounds interesting, but we have a very different idea for you. In 2022, Harvard Business Review Press named disruption one of four ideas that had changed the world, along with emotional intelligence, shareholder value, scientific management. And they said, you are so closely tied to the IDE what about interrogating the idea of disruption through history? And at first I'm like, well, I have a different book I want to write, so I don't want to do that. But then I just kept thinking about it. I said, you know, there still are so many open questions about disruption. The world has changed since Clay first did his research. I've been exploring new frontiers with it. I've never done a history book before. Why not? And in the end, I am thrilled that Kevin nudged. Pushed me in a different direction as I learned so much from looking at the history of the 11 stories that are in the book. I know there was another part to your question about how disruptive innovation influenced my thinking and all that. I want to just pause there for a second so I don't go on for too long to see if you have any questions in response to what I just started with.
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C
Now that you're an economic historian, maybe you'll be a candidate for the Nobel Prize. Joel Mock here just won the Nobel Prize for his work in economic history. And it's sort of related to Clay's work, I think, but it's probably also distinguished from it. But can you tell? I think for the. For the listeners, can you describe and say what Clay's theory of disruptive innovation actually is and how you may have modified it, or how you're. How you're developing it and changing it?
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D
Great. So first, let me define disruption. Then let me tell you the theory of disruption. Then let me tell a little bit about some of the areas that I try to push in the book and beyond. So just what is a disruptive innovation? The way that I like to illustrate this is just trace my family history. So my father was born in 1947. In 1947, there was exactly one computer in the world. The computer is big. It's in a centralized location. My father would never see it. I was born in 1975. Now there are tens of thousands of computers in the world. Many of them are what are known as minicomputers. They're a lot smaller, they're a lot simpler, they're a lot more affordable, but still they're big and expensive and complicated and primarily being used for very important functions inside very big companies. My daughter Holly was born in 2007. Now, there are hundreds of millions of personal computers and desktop computers all around the world. And, of course, that was the year that Steve Jobs and Apple introduced the iPhone, bringing computing to our pockets, into our hands. Now there are billions of these devices around the world. This Is disruptive innovation. Taking things that were complicated and simple, making. I'm sorry, taking things that were complicated and expensive and making them simple and affordable. Changing market dynamics driving explosive growth. Clay's theory of disruptive innovation. What he found in his research is historically, when it came to battles of disruptive innovation, you would bet against the established incumbent market leader. So if you look at the successive generations of computing, you've got a leader in the mainframe business, you've got a different leader in the minicomputer business, you've got a different leader in the personal computing business. Very consistent with his theory, you would have people who would go and ride the wave of these new disruptive technologies and drive big changes in their markets. His model predicted the market leading incumbent would struggle in the face of disruptive change. Now how do you start to extend and play with that model? Well, the fourth generation, the smartphone Apple is an anomaly. Apple is a leading player in the personal computer market that also at the time had its MP3 players, the iPod, when it introduced the iPhone, it went against Clay's original research. It shows us that if smart leaders think, act and organize in the right way, they can turn disruption from a threat to an opportunity. So that's one thing. Understanding that disruption is something that can be a powerful force for incumbents to grow. The second thing is recognizing Clay's research focused on what I would call the rational part of the challenge of disruptive change. He said the fundamental problem is naturally companies will allocate resources to providing better products and services to their best customers. That's what has allowed them to succeed. Those investments have good return on investment calculations and so on. They prioritize those over investments in nascent technologies with unproven economics. Absolutely true. What I have come to learn through my own field work and research in a field called system psychodynamics and is there is an irrational side of it as well. We are humans and as humans we have biases and blind spots and neuroses. They make us very interesting. They also make what Clay called the innovator's dilemma an incredibly rich, incredibly complicated problem. Because we have to fight against things like the status quo bias where all things being equal, we would like things to remain exactly the same. Loss aversion, we get more benefits from avoiding losses than receiving gains and on and on. Groups have defense mechanisms that make it hard for them to see the things that threaten their identity. It is really difficult for companies to master these forces, but they can do it. So what I've been trying to do is say let's understand that disruption is a force that you can master and let's understand the rich complications of it that make it so deliciously hard for people to do so so that we can navigate disruptive change.
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C
Focus in a little bit then on like IBM. IBM is probably an example of a company that failed the innovators dilemma and really lost it in a way. And Apple is, I guess you're arguing, is kind of the opposite. But I mean, Apple sort of fell into the dustbin too for a period of time and had to come back. So I'm actually writing about combat stories about companies in a book that I'm doing. So what distinguishes it to. And I'm thinking right now in some ways, with the emergence of the cloud, we're really going back to centralization, which is where we started. It's a little bit of a circular question, but what are your comments on what I've just said?
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D
Well, the first thing I'd say, Alfred, is that one of the things that makes doing any kind of work in business with theory and models so interesting is humans are involved. So one point I make in the book is this is just not Newtonian physics. So there are patterns that you can see, there are observations you can make, but you cannot say that we can make things perfectly predictable because weird stuff happens. I think that's just an important thing to note. You look at IBM, it's a really fascinating case study because in fact, IBM was the pioneer of the mainframe market. It was competitive in the minicomputer market. It had a laptop business that you could argue about the economics of that business and the way it set it up. But it was a player in that business. It had no presence at all in the smartphone business. It was able to, along some dimensions, make some of the moves to cloud, but now really appears to be deeply stuck. So, you know, they had a period in the 80s and 90s where they were kind of stuck. Lou Gerstner comes in, they make the move to services. Ginny Vermetti comes, they make the move to the cloud. They're early in artificial intelligence, 10 years before anyone else. But they can't quite figure out how to commercialize it, arguably because it's more of a consumer play than a business play. That could be one, at least reason behind it. Apple has its moment in the darkness when Steve Jobs is kicked out and John Scully comes in. The light shines when Jobs comes back. Now it's an interesting moment. The iPhone is such a successful product that having anything that follows up on it is near impossible. The big question I have is what will really happen with Vision Pro, its mixed reality product? Will it be able to do something that is the fifth generation of computing technology? It's got new competitors it has to deal with. I would never bet against Apple. Its history shows that it can innovate and pioneer. But that is the big question for its future. So there's no simple answer to this. You've got different leaders at different times. You've got complex ecosystems in which these companies are operating. You've got the loss aversion we talked about before pressures from shareholders. It is a really hard game. It's really hard to write those comeback stories. I'm eagerly looking forward to your book because I'm sure you've got some fascinating.
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C
Examples in it and a copy too. What about, I guess other examples of companies that failed were Kodak and Xerox. They're classic companies who missed the innovators dilemma and didn't do well with them. Are there some examples you can think of of other companies besides Apple who did really well with regard to the innovator's dilemma?
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D
Well, you know, again, if you look for the anomalies so the things the theory didn't, predicted, didn't predict, did not didn't predict. It theory's the thing the theories didn't predict. You know, you look over the past 10 years, Apple's an anomaly, Microsoft is an anomaly. Microsoft was stalled and stuck and now has really pushed the frontier and succeeded. You can argue that meta Facebook is an anomaly because prior to people understanding disruptive innovation, you would predict that it would struggle with messaging and it would struggle with social imaging. And of course it bought WhatsApp, it bought Instagram and is a leader in both of those categories. So you have examples in tech then. If you look at things outside of tech, one of the interesting ones that I think is worth noting is Schneider Electric, which is not a traditional deep technology company. It's electrical utility and services company that has driven digitalization inside its existing businesses and driven some very unique growth through services and created a business that is growing very very robustly in the midst of significant disruptive forces. DBS Bank. I lived in Singapore for 12 years. DBS bank is a very similar service where of course a lot of disruptive forces going on in banking, very easy for people to play the stability card and just go and get GDP like growth. And DBS has gotten more digital type growth by really changing the essence of who it is as a company and Pioneering new services. Those examples show to me that really anyone could do this. If a boring utility company and a bank in a process obsessed country like Singapore can do it, anyone can. But as you said, you got plenty of examples of companies that have struggled. Eastman Kodak, Xerox and many others would be examples that Carrier.
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C
Do you know much about Carrier? I think it's also making a successful transition.
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D
No, that's a good one. I know the company, but I've not studied it at all. So that sounds like I should though.
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C
Okay, what about. I'll talk a couple more. What about Amazon versus Intel? Those are two companies that I actually deal with. So I think Amazon does overcome the innovator's dilemma constantly. And intel failed that test dramatically.
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D
Yeah, miserably. And Intel's a really sad example because you go and look at Clay's first book, the Innovator's Dilemma. Lucid, analytical and scary. Those were the words that Andy Grove, the legendary CEO of Intel used to describe the book. He got it. Andy Grove clearly got it and drove it in his company. The challenge for intel is I don't think Andy Grove was able to essentially implant his DNA into the company. So you have subsequent generations of leaders that go and optimize as opposed to go and invent. And the big question for Amazon will be, did Bezos, was he able to implant his DNA into the company? And I don't know. That will be. The open question is I think the way that Bezos ran the company is not dissimilar to the way Grove ran the company. Yes, we're going to be very disciplined and focused in operations. But as Bezos said at Amazon, we are going to be the best company in the world in which to fail. So we're going to pioneer, we're going to push, we're going to experiment, we're going to try different things. We're going to ground everything in the consumer. We're going to be the most consumer centric company in the world, et cetera. Great principles. The question will be, as you go to successive generation of leaders, are those truly embedded in the company culture or not? I don't know. That is the open question for Amazon though.
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C
Completely agree. And with Intel I can I kind of blame a little bit the post leadership was MBA trained as opposed to engineers. And I think that they were too afraid of Wall street and they couldn't explain what they were doing. And I think that that holds up for like some of the companies, like of course, like Eastman Kodak, my colleague have done research on that. And I think that's also the case because the Eastman Kodak basically had all the digital technology internally and it just. The Wall street scared it away from being at the forefront. Do you think our training of MBAs is a problem? You know, I think of somebody like McNerney who was at 3m and then he was at Boeing, and he sort of destroyed engineering cultures and both companies.
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D
Well, yeah, this is. We've gone right to the good stuff, haven't we? Since I now teach mba. Right.
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C
Me too.
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D
You know, so I, you know, I remember Clay would always say that's exactly how he explained Sony. He'd say, you know, when Akira Morito was running the company, you had people who really focused on product and beauty and elegance. And then the MBAs took over and the company just kind of lost its way. I think obviously that's a little simplistic. I do think some of the dominant logic that is taught in MBA programs about maximizing shareholder value is limited, myopic, and needs to be more expansive. My own personal view, and I think in reality, what you see, many CEOs, whether they are MBAs or engineers or lawyers or whatever, what they really are exhibiting is, I would say a defense mechanism against doing hard things is people will say, yes, shareholders won't let me. Or if they are running a family control company, they'll say, the family won't let me. Or if they're running a government linked company, the government won't let me. I lived for 12 years in Singapore. I've seen public, I've seen private, I've seen family, I've seen government. It's hard everywhere. You always can find someone else to blame. The real problem's in the mirror. Almost always. Almost always.
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E
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C
And fear. And fear of taking risk. I mean, I think that's a big part of it too. And Bezos was very. He was able to get Wall street to buy into his narrative. I mean, he basically said, we're not going to be profitable. We're going to rerun. We're going to run this company like a startup and you can invest in somebody else if you want. I'm going to be perfectly transparent about this. So I think that also plays a role, the ability to really be bold. And there's a new book that just came out about boldness out of Harvard.
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D
Yeah, Ranji Gilati's book.
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C
Yeah. I mean, you have to be bold. It's hard for anybody to be bold in those positions. And I think in creating a narrative that people will go along with you. What about, you know, disruption is an engine of progress, but it's also, you call it a buzz saw that fails even great companies. How do you reconcile disruption's promise with its darker side? Because it does put people out of work. For example, you know, you covered these 11 innovations and many of the innovations destroyed companies too. When I think about phones, you know, Nokia, it's just one of the victims of Apple's triumph. So how do we deal with that part of it and what's your thoughts about that?
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D
Well, I think the first thing is to recognize it. So admit your biases. I love disruption. I think disruption is a very powerful force for progress. I believe in it. One thing that I really learned from the research, I kind of knew some of it, but the research really reaffirmed and sharpened my view of it. Is for as much as I love disruption, it's also important to remember that disruption always casts a shadow. And that shadow can be as market dynamics change. One company wins, one company loses. It can be when a new disruption is introduced, it's messy and society doesn't know how to deal with it. It can be for the individual where they suffer from the status quo bias. They would like things to stay the way that they are. And it's kind of scary. I think about the chapter on the Model T. You know, in the 1920s, Henry Ford had achieved his vision, the car for the great multitudes. Sales were exploding. But there are lots of problems in cities in the United States because those cities were built not for cars, but for people and for horses. There was no technology, there were no norms, there were no regulations. And there were, sadly, people getting hurt and even dying to get through that portion, that messy middle of the disruptive change. There needed to be things like traffic lights that say you got to stop. There needed to be norms like when you make a turn, you have enough space for another car to turn. There had to be regulation, like having driver's license to have the right to drive a car. I think about this frequently as I think about, I would say, the mess that we are making societally with Artificial intelligence with a viewpoint that just letting technology work itself out is the best way to approach it. History says that's not correct. So I think about that a lot. We're not paying enough attention to AI shadow and I think that's creating a lot of risks.
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C
See, I wanted to bring up AI and you went right into it. So I'm really glad. I mean, I do think that you need complementary companies, you need an ecosystem for things to really develop and develop well and quickly. And if we think about electric vehicles, I think their progress has been retarded by the fact that we don't have enough charging stations. So that gives a lot of people insecurity about whether they can really drive these cars, given their range. And then if you think about AI, the big unknown seems to be can we generate enough electricity to power AI? And it doesn't always work that smoothly, I guess in these epic disruptions that we have. The complementary. Another one I guess would be autonomous vehicles. I mean, I think we're completely unprepared for autonomous vehicles. Are they going to share the road? Who's going to own them? How's the last?
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D
And add on top of that, I fully agree. Add on top of that, the number one source of employment in most states in the United States are long haul truck drivers.
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C
Yes.
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D
And where's the first place, if you're really trying to push autonomous vehicles, that you want to do it for economical purposes, you want it for long haul routes where a big portion of the price that you pay as a company is the driver in the car.
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C
Right.
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D
So what happens when, not if suddenly there are a lot fewer jobs for people who are not easy to retrain and redeploy in different places? It's not easy.
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C
Right, right, right. I think that's absolutely true with regard to trucking. I mean, trucking could really probably be managed like the even airplanes today, domestic flights. You probably could have a few air traffic controllers or traffic controllers of the large trucks on highways watching everything. I think even autonomous vehicles, as I understand it, you can't really just let them go. There has to be some controllers watching it. But that's a far different system than the systems that we have today in place. And not only the employment, but I think, I think it instills fear in people that these systems are working. I mean, even I'm going to go on a web and you can go, this is your rather than mine. But another one would be agriculture. At a certain point in time, it could be possible for somebody sitting in Manhattan to run the agricultural system. But it would destroy the whole mythos that we have about what farming is like in farm life in these small towns and so on. So there is a destructive side, I think, to disruptive innovation. I guess, even though you're an enthusiast and I'm a reluctant acceptor, it's exciting, disruptive.
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D
But I think the points you raised are critical. And I think the important thing is eyes wide open. Recognize that these exist. The Nobel Prize that was recently given out in economics. Part of the reason why they want it is because they said, okay, let's really understand creative destruction. Let's understand how that can change not just the way that companies function, but social orders too, which means we have to think about welfare for people who are displaced, et cetera, et cetera, et cetera. That's incredibly important for people to think about. So I am a technology optimist. I am a believer that disruption drives progress. But I am also a realist that recognizes there is human loss that comes along with it. And if we're not prepared to deal with it, that just creates different problems. So go in eyes wide open and look at the whole problem. One of the people that I really draw a lot of inspiration from is a futurist on the west coast, Bob Johanson, who has worked at the Institute for the Futures for more than 50 years. So he's been doing this for a long time. But he has this great metaphor about artificial intelligence that I really like. He said it's changing so fast. Putting in regulatory guardrails probably doesn't make sense because we just don't know. You said what we need are bounce ropes. So, you know, in a wrestling ring you've got firm stanchions that can't move. And then you've got flexible things that in fact you can use as part of the show or sport, depending on how you want to look at it. So that's what we need for AI, something that says here's the boundaries. But something that's got given it something that might be something you could actually use in some way. I think it's a really good metaphor, exactly what that looks like. I'm not a public policy expert, but I like the metaphor a lot.
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C
Yeah, I mean, for any technology to advance, there has to be a large element of predictability. So you can make long term investments. And yet the technology advances so rapidly that this predictability that you build in eliminates flexibility. So there's this great tension, I think, at play in these regimes. They're really regimes. Everything has to change and. And technology ends up changing everything. The political system and our political situation right now in the United States is it's been changed in a major way by technology. Maybe not for the better overall.
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D
Yeah, history, you know, long lens in history. We will see in the short run, it's hard to. Hard to disagree that it's been changed not for the better, but we will see.
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C
So do you want to talk about some of the. Some of your examples? Model. You talked about the model T, but Pampers. We talked a little bit about iPhones, Gutenberg's invention. Maybe in light of what we're saying now about both the promise and the potential pitfalls, can you. How are past obstacles like this overcome? Maybe go through some of your examples and talk about it.
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D
Yeah, I think the one that I'm reflecting on just as we through this conversation is Gutenberg is. I think it. It's from many hundreds of years ago, but I think has some powerful lessons for today. So the short version of the story. So in 1437, Gutenberg is working with a partner outside of what we call Strasbourg in Germany today. Not on the printing press. They're working on a completely different venture. The idea is to create a little trinket that has some foil, kind of like a mirror behind it. The belief was mirrors could capture the essence of another creature. There was a pilgrimage coming up in a couple years, so they were going to create these mirrors to capture the essence of the Holy Spirit. Well, unfortunately for them and the venture, but fortunately for the world, the plague broke out. So they had to go, in modern terms, pivot to something else. They're in Strasbourg. There's this guy, Conrad Saucebatch, that's got this innovative press. There's a good bell engraving industry. The pieces come together, they create the printing press. One of the early customers of the printing press, not so surprisingly, is the Catholic Church. It's got some clear problems to solve. It would take three years for a scribe to create a Bible. You would have these missiles that were used to run church services that would be different in different places. You can standardize them using a printing press. So at first, the Catholic Church is super excited about the printing press. Knowledge explodes when the printing press comes out. You can fit all the books in the world into a wagon. By 1500, there are hundreds of thousands, maybe even millions of books printed. By 1520 in Germany, a third of the books printed are by Martin Luther. Now the church isn't feeling so good about the innovation that it helped to spur, because not only could you copy Bibles more quickly, you could copy alternatives to what the Church was teaching more quickly. And you had, of course, the Reformation, the splintering of the Church, and all the things that we know through world history. The lesson in this is there is often a second and sometimes third order effect from some of these epic disruptions. So artificial intelligence as an example. Today, the consulting companies right now, people like McKinsey and Accenture are thrilled with artificial intelligence because their clients don't know what to do with it. They're paying them lots of money to adopt it. Will they be like the Catholic Church, where a generation from now they say, what have we done? We have enabled our clients to do things better than they could do with our advice. We've hollowed out our own capabilities as we've sought efficiency gains and gotten rid of young employees. I don't know. But the printing press tells us, watch out for those second order effects because they can drive changes beyond what you see from the first effect of the innovation.
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C
I think what you're saying is that in these disruptive innovations, there's a lot of serendipity accident. There's also a lot of different pieces that have to come together. And there's also a lot of unintended consequences that we're not aware of and we can't entirely predict. And sometimes immediate beneficiaries actually turn out to be the groups that suffer the most from these actually being implemented. Do you want to talk about some other. Well, go ahead.
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D
Yeah, you've nailed it. And the way that I summarize this in the book is I say disruption is predictably unpredictable. There are clear patterns. There's always a different trade off in performance. It always is going to start in a market that's a little bit outside of the mainstream. There's going to be a new business model that comes along with it. There's going to be a new ecosystem into which it will ultimately form. Those parts of the pattern are clear. It won't be a straight line to success. Exactly how, exactly where, exactly when, exactly who. That is different in every case. But you know, that notion that it's not a straight line. One of my other favorite stories in the book is one that most people don't see coming. It is Julia Child. People say, well, what is she doing in a book about epic disruptions? I say, well, if you go back to before Mastering the Art of French Cooking comes out in 1961, the book she wrote with Sim Quebec and Louisette Bertold, if you wanted to enjoy great French Cooking and you lived in a suburb of in the United States. What did you do? You might hope that the closest city to you had a good restaurant, or you might have to get on a plane and go to France. The cookbook and then all the shows that Julia Child did took what was complicated and expensive and made it simple and affordable. Expanding the market, changing dynamics, driving growth. Classic disruptive innovation. What I love about the story is part of the pattern is there always are setbacks on the way to success. And Julia Child shows that brilliantly. She did not come out of the womb a great cook. In fact, she only got the cooking bug when she was 36 years old. Prior to that, the joke around the house of her husband, Paul Child, when she came to visit was she couldn't successfully boil water. She trains herself, she works really hard and becomes a great chef. Mastering the art of French cooking is not a hey, one shot, we succeed deal. She and her co authors agreed to write the book in 1951. It was supposed to come out in 1954. It came out seven years later. It required two publisher shifts and one near death experience where after she thought she was done, the publisher said, this book cannot be published. This happens in every single story. Exactly how it plays out, you never know. But like anyone who suffers from good luck, Julia Child had friends. She had her friend Avis Devato, who knew publishers, knew Judy Jones and Alfred Knopp. She had divine inspiration, people that went and saw her at that moment and helped her get through. Classic hero's journey stuff. The monomyth is true for disruptive innovators as well.
- [35:27]
C
Yeah, it's this issue of persistence versus abandonment that plagues many of these disruptive innovations. And the other thing. So I'm going to propose a hypothetical for you. Like beyond meat or companies that are introducing non animal protein, it seems that that is kind of stuck right now and they're not doing that well. But is that just a temporary. Is there a way of like evaluating that to understand it better? Or are there some potentially disruptive innovations that just fall off the tree and we forget about them for certain?
- [36:10]
D
There are things. And in the book, in the conclusion of the book, I said, if you look at the case studies in the book, we can find an echo today of something that's got some disruptive potential. So gunpowder echoes in cleantech, the printing press echoes in artificial intelligence, Florence Nightingale and what she did for public health. Echoes in smart health, the model T echoes in autonomous vehicles, the transistor echoes in drones, McDonald's echoes in New food, things like beyond meat and beyond Julia Child. In a strange way, echoes in cryptocurrency and distributed ledger technologies. Happy to explain that more if you're interested, but the connection is there. Pampers in additive manufacturing, steel mini mills in robotics, and the Apple iPhone in mixed reality. All things that have disruptive potential, none of those are preordained Things can happen for any of them, specifically for lab grown meat, in my view. First you say, is there a consumer market need? Is there a problem to solve? Is there a job to be done? For sure, the world struggles with providing good calories for people in an economical way. As we deal with climate change as well, it's going to be really hard to produce the food that everybody needs. There is a problem to be solved for sure. The question will be, can you ultimately have technology that enables you to produce, distribute and ultimately make money from alternative proteins at scale? I do not know the technology well enough to know for sure, but that's the question you have to watch right now. The economics just don't work. Historically we learned that just like Jeff Goldblum said in the movie Jurassic park, he said, life finds a way, disruption finds a way. If there's a big enough opportunity out there, somebody cracks the code of it. Precision fermentation and some other things that happen in laboratories that go beyond my modest 10th grade understanding of biology. People tell me it's coming, we will see. That's the area to watch though.
- [38:06]
C
What about, I mean, societal need with regard to alternative proteins is certainly a driving factor. What about demography and aging of societies? Do you see that leading, forcing alternative new disruptive technologies on all of it? I mean, is it robotics or is it high levels of automation? Is that what's going to happen inevitably? I guess some of this is starting in Japan already, but you read my mind.
- [38:39]
D
So you always look to the extremes. If you ever want to understand things, look to the extremes. And Japan is the oldest country in the world. So what is the oldest country in the world doing? Robotics, combining it together with healthcare. And then you throw in some artificial intelligence as well. And what you're trying to do, if you have an aging population, is all else being equal, you would rather have somebody be in their own home versus a centralized location, a care facility, for a lot of reasons. So the more that you're able to make devices smart, the more that you're able to use robotics, the more that you're able to use automation, the more that in artificial intelligence as well, the more you can enable people to happily age in place. Every year that you keep somebody out of a nursing home or related facility is a huge savings for people who sponsor it and also a big increase in human welfare. So I think we're going to see a lot more of that in the decade ahead. I remember back when I was In Singapore probably 10 years ago, I was on some government committee that was thinking about this. And of course, Singapore gets there before anywhere else because they have a 50 year orientation. So they were planning for it already. What else?
- [39:50]
C
I mean, with regard to aging, do you see any other disruptive technologies on the horizon besides robots? And I guess digital health could be a big. There's a lot of things going on, I guess if a person falls and immediately they alert the emergency services. If a person falls. Are there other things in that area?
- [40:14]
D
Yeah, you know, the other thing I would say is a broad trend. So, Florence Nightingale. What is Florence Nightingale doing in the book? She was the lady with the lamp. Well, Florence Nightingale, in my view, was a triple disruptor of healthcare. So let me tell you the short version of her story and then bring it to modern days. So disruption one. So Florence Nightingale, born in 1820 in Florence, Italy, of course, in the 1830s, she gets a call, she says, from God to go into a life of service as a nurse. Her parents are not happy about this call. Nursing at the time is a lower class profession. She's from an upper class family, she's persistent. They relent. She becomes a nurse in the 1850s. She goes to the Scutari Hospital during the Crimean War to go with a brigade of nurses to help serve in the Crimean Conflict. She goes there and she encounters something abhorrent. There's open sewage, there's foul air, there's no light. And it turns out the worst place to be in the war is not on the battlefield, it's in the hospital. Because the conditions are so bad, she sends a telegraph to London. A team of people come in, they clean up the hospital. All of a sudden, infectious diseases go way down. She goes back to London, she meets with the Queen. The Queen forms a royal commission to look into the condition in hospitals. She then works with Florence Nightingale with a statistician named William Farr. They go and gather the data, they crunch the numbers and come up with these amazing, compelling visuals. One is called a polar area chart that shows the power of proper hygiene. The visual is described by a historian as interocular. Once it hits you between your eyes, you can't unsee it. A few years after the publication of this visual. There are a whole set of new public health standards that are introduced. All things we take for granted today, like the treatment and removal of sewage, making sure that you remove refuse from streets, making sure there's clean light, clean air, et cetera. Life expectancies, which had been flat for centuries, suddenly begin to increase. She then writes books that train people how to do nursing, creates teaching hospitals. So through images and words and teaching, she's pushing a persistent message. Of course we need to treat people when they get sick, but if we follow the right procedures, we have the right hygiene, we can prevent the worst things from happening, that is disruption in healthcare, moving from treatment to prevention, allowing lesser trained professionals to do more. So the big thing you can see with aging is as we understand the human genome in more depth, as we have smart connected devices that allow us to have deep understanding of things, as we understand how to tie nutrition and wellness together more closely, there can be some dramatic changes that aren't about what happens when you age, it's what you do when you are decades before that, so that the process looks very different. It's more prevention and wellness than it is ultimate treatment. I think we're already seeing big changes here, and I think we're going to see a huge amount more in the years to come.
- [43:16]
C
Individualistic medicine, not homogenous medicine.
- [43:20]
D
And people have been talking about this for probably 40 years and the technology wasn't there. But it is getting awfully close. Still not quite there. But you throw again, artificial intelligence into the mix. I just have my simple Fitbit. But you start doing more of this stuff, you start to do more of it. And I remember I was with the chief technology officer of a company that sells very delicious treats among its other food products. And they said, look, if you look for early warning signs of change, you take GLP1 inhibitors, Ozempic and so on. You take smart connected devices. And if you sell a lot of treats, you have to think now about how your food portfolio has to be different because people are just going to think differently about things.
- [44:04]
C
Right? Right. Like companies, even right now, like Pepsi, I think, and many of the other packaged good companies are really suffering because people apparently are getting the message for one reason or another. Also, they're rebelling against the high prices that these companies charge for their, for their products. What about legacy companies? You know, this classic tension between exploiting what you're good at now and exploring. When I teach strategy, it's the main thing I talk about exploiting what you're good at now and Exploring for new business opportunities, how you have functioned as a consultant. How do you help companies deal with that dilemma?
- [44:51]
D
Well, the title, that's a hard one. It is, it is a hard one. I remember my colleague, former colleague and co author of a book called Dual Transformation, Clark Gilbert said the challenge that you're talking about when you're a legacy company dealing with disruptive change, trying to simultaneously exploit and explore it is the hardest challenge a leader will ever face. And when Gilbert said that, he spoke from firsthand experience because he had been the CEO of a media company, he had been the president of a university. The argument that we make in Dual Transformation is essentially the title of the book. If you are facing disruptive change, you have to transform a fundamental change in form or substance. And it's not a one shot deal. The dual in the title says you got to do both of those things. We said Transformation A essentially is doing exploit differently. So you say, okay, you've got to think about how you're going to run today's business differently because there are disruptive forces at work. Transformation B in the book is doing explore at scale. How are you really going to go and find and then scale your new big growth businesses? And the book had a range of case examples of companies that had done just that. That's the idea, of course, doing it, as we all know, it's easy to say explore, exploit, exploit. Bain would talk about two engine growth. We talk about dual transformation. Transformation A, Transformation B. It is devilishly difficult to actually do because the natural systems and structures inside your business are all optimized around today better, tomorrow, different just feels really foreign. But the book and the research around it shows with the right type of management and the right structural setup, you can in fact do it. It's not easy. I remember back at Innisight our research studies found about 5%. Anytime we did any kind of sample, we'd find about 5% of companies that actually had successfully done it. I did a few weeks ago. I went back to all the companies that we had highlighted at Innisight in research reports from 2017 to 2020 and said, okay, these are the ones that were the champions. How many of them were able to repeat and become dynasties and how many of them were one hit wonders? It was about half the sample. About half the sample had continued its performance. And I thought so because you know, regression to mean you would assume it would be lower than that. So you know, and Schneider Electric, which we talked about before, was an example and DBBS was an example and Amazon and Microsoft and a few others.
- [47:17]
C
I mean, I think there's a lot of internal politics that can stifle the new the explore part of the businesses because the exploit part of the businesses generally have all the power. They have the people. The whole business has been set up for them. I think that's kind of what happened with Xerox and the whole office of the future, which became computers and microcomputers and so on. They had it all internally, but the politics were such that they couldn't recognize it. The people in the west coast were just distant from the people in the east coast who were running the company. So what do you what kind of advice would you give about this issue of internal structuring and politics with regard to the exploit explore dilemma.
- [48:05]
D
Well, I hope we have another couple hours. Yeah, I know it is a challenging one. So you know, first recognize it exists. The language that I use for this, it's in chapter 10 of the book where I talk about what made it so hard for the integrated steel mills like Bethlehem Steel to respond to the steel mini mills. What I describe is, yes, there is the logical resource allocation process that we talked about before. But I said Bethlehem Steele, like every organization, has ghosts that it has to deal with. It has historical traumas it hasn't gotten over. It has invisible patterns that will naturally prioritize today better. And it has fears of change. Those fears might be politically related. I'm running a big business and I'd like to continue to run a big business. So if something else becomes a big business, I then am scared I'm no longer important in the organization. Or it might be the very identity of the organization. I really see this inside automobile companies today. They are mechanical engineers at their heart. Electrical engineers or computer scientists are just not who they are. So you've got some really deep identity issues you have to deal with. So that's number one. You have to recognize that the barrier that you face is really deep seated and then the leader has got to be all over it. Howard Yu, in his research that he did with Clay Christensen about leaders responded to disruptive change, said the leader has to do a deep dive, has to really go and own it. Clark Gilbert's experience doing this a couple times shows it. Again, I'm not necessarily a believer in the great person theory or whatever. I recognize there are systems and all that, but at the same time you cannot help noticing that the role of the leader, the singular role of the leader is Microsoft. A redemption story Without Satya Nadella it's really hard to imagine it.
- [49:54]
C
Right, right. I think he played a huge role in its reemergence. There are companies like. But sometimes it doesn't always work. Like, one of the companies that I've studied is Monsanto, and they really. And you were talking about the difference in disciplinary background. It was basically chemical engineers, but then they went into bioeng and it was a whole different set of expertise that was at the foundation of the company. And it got thrown around and got involved in controversies that I think they didn't anticipate. And then there's the automobiles themselves, companies themselves, which I've also looked at a little bit in my research, actually a lot in my research. And their efforts to go electric, which now are being shoved back in their face and they're facing huge losses because of that, because of the political climate. So I guess it just comes back to this question about persistence and over time. I'm sleeping a lot of that right now. But I want to get your comments. But my colleague Andy Vanzan, who passed away recently, did a lot of work on innovation and he did this. One of his pieces that I'm very familiar with is the cochlear implants, which is an operation to restore hearing. And it took like 50 years. And the people who originally were involved in this effort, the companies were completely gone by then. It was controlled by somebody completely different. I guess what I'm saying is I think that there are some forces, even, let's say the alternative to animal protein. I mean, ultimately there will be a breakthrough, but it may take 50 years rather than 10 minutes if there's a lot of time between them. What are your thoughts about that? The setbacks. How do companies deal with setbacks? Because there will be inevitable setbacks, and setbacks can be very ugly for an individual company, even though the technology itself will continue to develop.
- [52:04]
D
No, for sure. And what you're talking about here is just. It's incredibly important. Incredibly important. So I'll tell a story that I thought was a fun tracer in the book. When I started doing the work on the iPhone, I'm like, why am I including the iPhone? What else could there possibly be to learn about the iPhone? And I learned some new things, which was good. And one thing I had a lot of fun looking at was the history of Gorilla Glass, which of course is the screen on the iPhone. And you probably know this, but most people don't. So Gorilla Glass traces back to a 1952 experiment by Don Stooke, and it was an accidental experiment. So he set the kiln to 900 degrees centigrade. He thought he had sent it to 600 degrees centigrade, and he thought he was going to get just this awful mess. But it turned out he discovered something that the world had never seen before, this silicon lithecate composite. They turned it into Corningware in the kitchen, and then they started working to make it transparent so they could use it as glass. They could not find a commercial application for it because they couldn't make it thin. It was 14 times stronger than glass, but it was thick. So they said, well, what about windshields in cars problem? It's so strong that when they ran the experiments with crash test dummies, a human skull would not withstand impact with it. So they shelved the product. In 1971, Project Chemcore, it was called. It was $300 million of investment in today's terms. Obviously, though, they kept working on it, because as the mobile phone emerges and as Motorola introduces its Razer flip phone, they go and say, hey, we've got now this pretty thin thing that we could put on your mobile phone. Steve Jobs hears about this in 2007, goes to visit Wendell Weeks, the CEO of Corning in Corning, New York, and says, I want to replace the plastic screen that I had on my phone with this gorilla glass. I want to do it in six months. I want to do it at scale. Wendell Weeks said, well, we could do it, but not then and not at scale. And Steve Jobs, being Steve Jobs, didn't blink and said, yes, you can. You will do it. And of course they did. The lesson in this story is it was 55 years for Chemcor to turn into a success. How did it succeed? Well, Corning kept the lights on it made sure that at the very least, people were aware about it. People are still working on the fundamental science. They're saying, look, this is a problem that is worth solving. So we're going to keep progressing it. Even if we can't find the market, even if we can't find the right buyer for it, we know it's a problem worth solving. And problems worth solving, you keep progressing. When Apple launched its iPhone in 2007, I ask people, how old was the iPhone? How old is it? And people say, well, it's 2025. It's 18 years old. I said, go back further. They'll say, well, development probably started a few years earlier. Sometimes people will say, well, there was that Apple Newton in the mid-1990s, which was a big flop, but a lot of the technologies ended up being useful. And you can go back to Marconi if you want to go way back in history to talk about the origins of the iPhone. But you see in this, there is this persistence, people continuing to work, science continuing to progress. And yes, it might not be the companies today that ultimately win with lab grown meat and so on. It might be subsequent generations, but the technology is going to continue progressing. That, I think is almost undoubtedly true.
- [55:19]
C
Yeah, I love the Corning example because I've followed the company for a long time and the ups and downs of Corning are just. But they persist as a technology company, and today they're doing great because they're one of the backbones of AI to give you a stock tip, they've done really well recently.
- [55:39]
D
But the thing I love about Corning is they think in decades. They really do. It's a rare company that has a span that thinks like that. And I don't think I'll get in trouble saying this because it's now long enough in the past, but it's. CEO Wendell Weeks came to an Insight event probably about a decade ago. You mentioned before this idea that innovation is risky. He said something that really reframed my view of risk. He said, well, is innovation really risky? He said, okay, if I go and innovate and I go and invest in it, what's the best and worst possible outcome? Best possible outcome, new platform, huge growth. Worst possible outcome, I write off the investment that I make. If I don't invest in innovation, best and worst outcomes. Best outcome, nothing. Status quo. Worst outcome, I bankrupt the company because I missed a big technological inflection. So he said, what's the risk? The risk isn't innovating. The risk, he said, is to not innovate. And I think it's a rare CEO that doesn't just say that, but actually acts like he believes that.
- [56:40]
C
Yes. Yes. It's like Pascal's belief in God, in a way. Make a weird analogy.
- [56:48]
D
Yeah. I like it. I like it. It's the same reason why there have been studies about people being polite to AI systems. Because they think if Skynet takes the world over, then the fact that you said please and thank you to ChatGPT will put you on the good list. Why not? Right.
- [57:04]
C
Right. So I guess what about some of the ethical. We want to bring this to an end pretty soon. And then two things I want to ask. The ethical implications of disruptive innovation and. And people's even capacity to deal with it in a psychological level and in the broader societal implications. Do you have any wisdom to share about that part of it?
- [57:29]
D
Yeah, I think, Alfred, it goes back to what we were talking about before, this idea that disruption casts a shadow. And I think one of the mistakes that we have made as a society is we have trusted technology too much, I think. I'm a parent of four children. I'm a big fan of John Haidt's book the Anxious Generation, that shows the kind of toxic combination of ubiquitous smartphones and social media networks with almost no controls on them. So the idea that, hey, it's all going to be fine. It will not all be fine. So we have to recognize that disruption casts a shadow. And if we don't involve ourselves in the right way, whether that's through government or through active parenting or whatever, I think we need a lot of support as we navigate through today's disruptive times. There's a lot going on. You know, I. In the book, I referenced this 1620 work by Sir Francis Bacon, Nova Organum, where he said, in human history, there have been three things. Three things that changed the appearance and state of the entire world. That was the compass, printing press, and gunpowder. Today we've got autonomous vehicles, artificial intelligence, augmented reality, additive manufacturing. I've gotten to four, and I've not left the letter A. And these are all things where you could legitimately say the world after is going to look different than the world before, and our institutions are just not keeping pace with it. And there's one view that says, hey, it'll all work itself out. I do not agree with that view. I think we need to have more activist approaches to deal with the downsides of disruption or we will regret it.
- [59:00]
C
We have to be on top of it in a very serious way.
- [59:03]
D
As educators, as parents, as you know, I think we need to be teaching our students about it. I think we need to be telling our kids about it. I think we need to get involved civically. I mean, all of those things.
- [59:14]
C
So what are you working on now?
- [59:17]
D
I'm working on the book that I wanted to write, which is this idea of how do you really lead disruptive change? And the idea basically is we are in a world that is surrounded by a dense fog. And in fog, the natural human tendency is to slow down. We've got exponentially advancing technologies. We've got lines between industries, blurring expectations of consumers, colleagues, whatever, shifting the data are all over the place, and we feel like we want to freeze, and we got to go fast. So how do we actually do that? How do we lead through moments like this that's where my research, teaching and future writing is focused.
- [59:53]
C
So provide like one or two insights to help us do this.
- [59:59]
D
So the number one thing that I tell my students the number one thing and there's lots of subtleties and nuances so I'm overly simplifying it, but you will feel like you are facing either or constraints that will feel polarizing or will feel or will feel paralyzing and explore Exploit is a classic one that Van Van and many others have researched. You need to figure out how to make those at least both ands and probably more thans. And the way that you have to do that as a leader is to fight what you perceive to be a paradoxical problem with paradoxical practices. So I teach them to act when the data tells them not to. I teach them to lead by letting go. I teach them to destroy in order to create. I teach them to listen to the voice that isn't speaking and a range of other things.
- [60:51]
C
We could go into all of those, but I don't know if we have the time but so I really wish you luck with your work and I will love to see it when you are ready to share it. So Scott, thank you very much for joining me today and for this fascinating discussion of epic disruptions. This is a day when AOL AWS itself is causing me a great disruption because it canvases down for our listeners. My name is Alfred Marcus and you've been listening to the New Books Network. My podcast explores the cusp between strategy and ethics, highlighting authors whose work deepen our understanding of innovation, leadership, and society. I hope you'll join me for future conversations. If you have any comments, you can always email me at amarcus umn. Edu and I would love to hear from any of my listeners as we continue to explore Books that Matter. Thank you very much Scott.
- [61:52]
D
Thank you. This is great discussion.