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First published in the US by HarperBusiness, an imprint of HarperCollinsPublishers 2012

This edition published by Thorsons 2019

FIRST EDITION

© Clayton M. Christensen, James Allworth, and Karen Dillon 2012

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Source ISBN: 9780008316426

Ebook Edition © April 2019 ISBN: 9780007449163

Version 2019-04-03

Dedication

To our families

Contents

Title Page

Copyright

Dedication

Prologue

1 Just Because You Have Feathers …

Section I

Finding Happiness in Your Career

2 What Makes Us Tick

3 The Balance of Calculation and Serendipity

4 Your Strategy Is Not What You Say It Is

Section II

Finding Happiness in Your Relationships

5 The Ticking Clock

6 What Job Did You Hire That Milkshake For?

7 Sailing Your Kids on Theseus’s Ship

8 The Schools of Experience

9 The Invisible Hand Inside Your Family

Section III

Staying Out of Jail

10 Just This Once …

Epilogue

Acknowledgments

About the Authors

Also by Clayton M. Christensen

Credits

About the Publisher

PROLOGUE

ON THE LAST day of the course that I teach at Harvard Business School, I typically start by telling my students what I observed among my own business school classmates after we graduated. Just like every other school, our reunions every five years provided a series of fascinating snapshots. The school is superb at luring back its alumni for these events, which are key fund-raisers; the red carpet gets rolled out with an array of high-profile speakers and events. My own fifth-year reunion was no exception and we had a big turnout. Looking around, everyone seemed so polished and prosperous—we couldn’t help but feel that we really were part of something special.

We clearly had much to celebrate. My classmates seemed to be doing extremely well; they had great jobs, some were working in exotic locations, and most had managed to marry spouses much better-looking than they were. Their lives seemed destined to be fantastic on every level.

But by our tenth reunion, things that we had never expected became increasingly common. A number of my classmates whom I had been looking forward to seeing didn’t come back, and I had no idea why. Gradually, by calling them or asking other friends, I put the pieces together. Among my classmates were executives at renowned consulting and finance firms like McKinsey & Co. and Goldman Sachs; others were on their way to top spots in Fortune 500 companies; some were already successful entrepreneurs, and a few were earning enormous, life-changing amounts of money.

Despite such professional accomplishments, however, many of them were clearly unhappy.

Behind the facade of professional success, there were many who did not enjoy what they were doing for a living. There were, also, numerous stories of divorces or unhappy marriages. I remember one classmate who hadn’t talked to his children in years, who was now living on the opposite coast from them. Another was on her third marriage since we’d graduated.

My classmates were not only some of the brightest people I’ve known, but some of the most decent people, too. 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 sensed that they felt embarrassed to explain to their friends the contrast in the trajectories of their personal and professional lives.

At the time, I assumed it was a blip; a kind of midlife crisis. But at our twenty-five-and thirty-year reunions, the problems were worse. One of our classmates—Jeffrey Skilling—had landed in jail for his role in the Enron scandal.

The Jeffrey Skilling I knew of from our years at HBS was a good man. He was smart, he worked hard, he loved his family. He had been one of the youngest partners in McKinsey & Co.’s history and later went on to earn more than $100 million in a single year as Enron’s CEO. But simultaneously, his private life was not as successful: his first marriage ended in divorce. I certainly didn’t recognize the finance shark depicted in the media as he became increasingly prominent. And yet when his entire career unraveled with his conviction on multiple federal felony charges relating to Enron’s financial collapse, it not only shocked me that he had gone wrong, but how spectacularly he had done so. Something had clearly sent him off in the wrong direction.

Personal dissatisfaction, family failures, professional struggles, even criminal behavior—these problems weren’t limited to my classmates at HBS. I saw the same thing happen to my classmates in the years after we completed our studies as Rhodes Scholars at Oxford University. To be given that opportunity, my classmates had to have demonstrated extraordinary academic excellence; superior performance in extracurricular activities such as sports, politics, or writing; and significant contributions to their communities. These were well-rounded, accomplished people who clearly had much to offer the world.

But as the years went by, some of my thirty-two Rhodes classmates also experienced similar disappointments. One played a prominent role in a major insider trading scandal, as recounted in the book Den of Thieves. Another ended up in jail because of a sexual relationship with a teenager who had worked on his political campaign. He was married with three children at the time. One who I thought was destined for greatness in his professional and family spheres has struggled in both—including more than one divorce.

I know for sure that none of these people graduated with a deliberate strategy to get divorced or lose touch with their children—much less to end up in jail. Yet this is the exact strategy that too many ended up implementing.

I don’t want to mislead you. Alongside these disappointments, there are many of my classmates who have led exemplary personal lives; they have truly been an inspiration to me. But our lives are not over, and the lives of our children are just now unfolding. Understanding what causes the problems that trapped some of my classmates is important not just for those who have come off the path that they had planned to follow but for those whose lives are still on the right path—as well as those whose journeys are just beginning. We all are vulnerable to the forces and decisions that have derailed too many.

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.

I have engaged my students in the quest as well. 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.

I participate in these discussions with more history than my students do, but I follow the same rules. 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. Because I’ve been present in these discussions over many years, I’ve learned more about these issues than any one group of my students ever has. To even the score with them, however, I have shared stories about how these theories have played out in my life.

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.

IN THE SPRING of 2010, I was asked to speak not just to the students in my own class but to the entire graduating student body. But that’s not the only way things were a little different that day. Standing at the podium with little hair as the result of chemotherapy, I explained that I had been diagnosed with follicular lymphoma, a cancer similar to that which had killed my father. 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. Sharing my thoughts that day with the students about to make their own way in the world was a remarkable experience.

James Allworth, who was in my class that semester and in the audience that day, and Karen Dillon, who heard about my remarks in her position as editor of the Harvard Business Review, were both extremely moved by the topic. I later asked them to help me convey to a broader audience the feeling people had that day in Burden Hall on the Harvard Business School campus.

We are from three different generations and have completely different beliefs informing our lives. James is a recent business school graduate, who assures me that he is an atheist. I’m a father and grandfather with a deeply held faith, far into my third professional career. Karen, the mother of two daughters, is two decades into a career as an editor. She says her beliefs and career fall someplace between us.

But the three of us are united in the goal of helping you understand the theories we share in this book because we believe they can sharpen the acuity with which you can examine and improve your life. We’ve written in the first person, my voice, because it’s how I talk to my students—and my own children—about this thinking. But James and Karen have truly been coauthors in deed.

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?”

CHAPTER ONE
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 learned about the power of this approach in 1997, before I published my first book, The Innovator’s Dilemma. I got a call from Andy Grove, then the chairman of Intel. He had heard of one of my early academic papers about disruptive innovation, and asked me to come to Santa Clara to explain my research and tell him and his top team what it implied for Intel. A young professor, I excitedly flew to Silicon Valley and showed up at the appointed time, only to have Andy say, “Look, stuff has happened. We have only ten minutes for you. Tell us what your research means for Intel, so we can get on with things.”

I responded, “Andy, I can’t, because I know very little about Intel. The only thing I can do is to explain the theory first; then we can look at the company through the lens that the theory offers.” I then showed him a diagram of my theory of disruption. I explained that disruption happens when a competitor enters a market with a low-priced product or service that most established industry players view as inferior. But the new competitor uses technology and its business model to continually improve its offering until it is good enough to satisfy what customers need. Ten minutes into my explanation, Andy interrupted impatiently: “Look, I’ve got your model. Just tell us what it means for Intel.”

I said, “Andy, I still can’t. I need to describe how this process worked its way through a very different industry, so you can visualize how it works.” I told the story of the steel-mill industry, in which Nucor and other steel mini-mills disrupted the integrated steel-mill giants. The mini-mills began by attacking at the lowest end of the market—steel reinforcing bar, or rebar—and then step by step moved up toward the high end, to make sheet steel—eventually driving all but one of the traditional steel mills into bankruptcy.

When I finished the mini-mill story, Andy said, “I get it. What it means for Intel is …” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the lower-priced Celeron processor.

I’ve thought about that exchange a million times since. If I had tried to tell Andy Grove what he should think about the microprocessor business, he would have eviscerated my argument. He’s forgotten more than I will ever know about his business.

But instead of telling him what to think, I taught him how to think. He then reached a bold decision about what to do, on his own.

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

That meeting with Andy changed the way I answer questions. 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. To illustrate, about a year after meeting with Andy Grove, I received a call from William Cohen, then–secretary of defense in the Clinton administration. He told me he’d read The Innovator’s Dilemma. “Could you come to Washington and talk to me and my staff about your research?” he asked. To me, this was a once-in-a-lifetime opportunity.

When Secretary Cohen had said “my staff,” somehow I had imagined second lieutenants and college interns. But when I walked into the secretary’s conference room, the Joint Chiefs of Staff were in the front row, followed by the secretaries of the Army, Navy, and Air Force, and then each of the secretaries’ under-, deputy, and assistant secretaries. I was stunned. He said that this was the first time he had convened all of his direct reports in one room.

Secretary Cohen simply asked me to present my research. So using the exact same PowerPoint slides I had used with Andy Grove, I started explaining the theory of disruption. As soon as I had explained how the mini-mills had undermined the traditional steel industry by starting with rebar at the bottom, General Hugh Shelton, then the chairman of the Joint Chiefs of Staff, stopped me. “You have no idea why we are interested in this, do you?” he queried. Then he gestured to the mini-mill chart. “You see the sheet steel products at the top of the market?” he asked. “That was the Soviets, and they’re not the enemy anymore.” Then he pointed to the bottom of the market—rebar—and said, “The rebar of our world is local policing actions and terrorism.” Just as the mini-mills had attacked the massive integrated mills at the bottom of the market and then moved up, he worried aloud, “Everything about the way we do our jobs is focused on the high end of the problem—what the USSR used to be.”

Once I understood why I was there, we were able to discuss what the result of fighting terrorism from within the existing departments would be, versus setting up a completely new organization. The Joint Chiefs later decided to go down the route of forming a new entity, the Joint Forces Command, in Norfolk, Virginia. For more than a decade, this command served as a “transformation laboratory” for the United States military to develop and deploy strategies to combat terrorism around the world.

On the surface, competition in the computer chip market and the proliferation of global terrorism could not seem like more different problems to tackle. But they are fundamentally the same problem, just in different contexts. Good theory can help us categorize, explain, and, most important, predict.

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 rear-view 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.

Consider, for example, the history of mankind’s attempts to fly. Early researchers observed strong correlations between being able to fly and having feathers and wings. Stories of men attempting to fly by strapping on wings date back hundreds of years. They were replicating what they believed allowed birds to soar: wings and feathers.

Possessing these attributes had a high correlation—a connection between two things—with the ability to fly, but when humans attempted to follow what they believed were “best practices” of the most successful fliers by strapping on wings, then jumping off cathedrals and flapping hard … they failed. The mistake was that although feathers and wings were correlated with flying, the would-be aviators did not understand the fundamental causal mechanism—what actually causes something to happen—that enabled certain creatures to fly.

The real breakthrough in human flight didn’t come from crafting better wings or using more feathers. It was brought about by Dutch-Swiss mathematician Daniel Bernoulli and his book Hydrodynamica, a study of fluid mechanics. In 1738, he outlined what was to become known as Bernoulli’s principle, a theory that, when applied to flight, explained the concept of lift. We had gone from correlation (wings and feathers) to causality (lift). Modern flight can be traced directly back to the development and adoption of this theory.

But even the breakthrough understanding of the cause of flight still wasn’t enough to make flight perfectly reliable. When an airplane crashed, researchers then had to ask, “What was it about the circumstances of that particular attempt to fly that led to failure? Wind? Fog? The angle of the aircraft?” Researchers could then define what rules pilots needed to follow in order to succeed in each different circumstance. That’s a hallmark of good theory: it dispenses its advice in “if-then” statements.

The Power of Theory in Our Lives

How do fundamental theories relate to finding happiness in life?

The appeal of easy answers—of strapping on wings and feathers—is incredibly alluring. Whether these answers come from writers who are hawking guaranteed steps for making millions, or the four things you have to do to be happy in marriage, we want to believe they will work. But so much of what’s become popular thinking isn’t grounded in anything more than a series of anecdotes. 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. There can be multiple theories that provide insight. For example, though Bernoulli’s thinking was a significant breakthrough, it took other work—such as understanding gravity and resistance—to fully explain flight.

Each chapter of this book highlights a theory as it might apply to a particular challenge. But just as was true in understanding flight, problems in our lives don’t always map neatly to theories on a one-to-one basis. The way I’ve paired the challenges and theories in the subsequent chapters is based on how my students and I have discussed them in class. I invite you, as you journey through the book, to go back to theories in earlier chapters, just as my students do, and explore the problems through the perspective of multiple theories, too.

These theories are powerful tools. I have applied many of them in my own life; others I wish I’d had available to me when I was younger, struggling with a problem. You’ll see that without theory, we’re at sea without a sextant. If we can’t see beyond what’s close by, we’re relying on chance—on the currents of life—to guide us. Good theory helps people steer to good decisions—not just in business, but in life, too.

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 I

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

WHEN YOU WERE ten years old and someone asked you what you wanted to be when you grew up, anything seemed possible. Astronaut. Archaeologist. Fireman. Baseball player. The first female president of the United States. Your answers then were guided simply by what you thought would make you really happy. There were no limits.

There are a determined few who never lose sight of aspiring to do something that’s truly meaningful to them. But for many of us, as the years go by, we allow our dreams to be peeled away. We pick our jobs for the wrong reasons and then we settle for them. We begin to accept that it’s not realistic to do something we truly love for a living.

Too many of us who start down the path of compromise will never make it back. Considering the fact that you’ll likely spend more of your waking hours at your job than in any other part of your life, it’s a compromise that will always eat away at you.

But you need not resign yourself to this fate.

I had been out of college and in the working world for years before I figured out that I could make it back to school to teach and develop a generation of wonderful young people. For a long time, I had no idea that this might be possible. Now there’s nothing I would rather be doing. Every day I think of how fortunate I am.

I want you to be able to experience that feeling—to wake up every morning thinking how lucky you are to be doing what you’re doing. Together, in the next chapters, we’re going to build a strategy for you to do exactly that.

A strategy? At a basic level, a strategy is what you want to achieve and how you will get there. In the business world, this is the result of multiple influences: what a company’s priorities are, how a company responds to opportunities and threats along the way, and how a company allocates its precious resources. These things all continuously combine, to create and evolve a strategy.

You don’t need to think about this for more than a minute, however, before you realize that this same strategy-making process is at work in every one of us as well. We have intentions for our careers. Against those intentions, opportunities and threats emerge that we haven’t anticipated. And how we allocate our resources—our time, talent, and energies—is how we determine the actual strategy of our lives. Occasionally, the actual strategy maps quite closely with what we intended. But often what we actually end up doing is very different from what we set out to do.

The art of managing this, however, is not to simply stomp out anything that was not a part of the original plan. Among those threats and opportunities that we didn’t anticipate, there are almost always better options than were contained in our original plans. The strategist in us needs to figure out what these better things are, and then manage our resources in order to nourish them.

The following chapters are all designed to help you leverage these concepts in answering the question “How can I find happiness in my career?”

The starting point for our journey is a discussion of priorities. These are, in effect, your core decision-making criteria: what’s most important to you in your career? The problem is that what we think matters most in our jobs often does not align with what will really make us happy. Even worse, we don’t notice that gap until it’s too late. To help you avoid this mistake, I want to discuss the best research we have on what truly motivates people.

Following this, I will outline how best to balance our plans to find something that we truly love doing with the opportunities and challenges that we never expected to arise in our lives. While some people will argue that you should always have the next five years of your life planned out, others have followed a strategy of just seeing what has come along and will tell you that it’s worked well for them. There’s a time and a place for both approaches. Drawing on our research, I will explain what the best circumstances are to be deliberate, to have that plan; and when it’s best to be emergent—to be open to the unexpected.

The final element is execution. The only way a strategy can get implemented is if we dedicate resources to it. Good intentions are not enough—you’re not implementing the strategy that you intend if you don’t spend your time, your money, and your talent in a way that is consistent with your intentions. In your life, there are going to be constant demands for your time and attention. How are you going to decide which of those demands gets resources? The trap many people fall into is to allocate their time to whoever screams loudest, and their talent to whatever offers them the fastest reward. That’s a dangerous way to build a strategy.

All of these factors—priorities, balancing plans with opportunities, and allocating your resources—combine to create your strategy. The process is continuous: even as your strategy begins to take shape, you’ll learn new things, and new problems and opportunities will always emerge. They’ll feed back in; the cycle is continuous.

If you can understand and manage this strategy process, you’ll have the best shot at getting it right—of having a career that you will truly love.

Even if you don’t end up getting to be an astronaut.

CHAPTER TWO
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.

The Importance of Getting Motivation Right

When I was running CPS Technologies, a company that I founded with several MIT professors early in my career, I had an epiphany of sorts about what motivates us. One summer Saturday, we had a company picnic for our employees’ families in a park near our laboratories. There was nothing fancy about it, but it was a welcome opportunity to get a three-dimensional perspective of our colleagues’ lives.

I walked to the periphery of the group after everyone had arrived, just to figure out who belonged to whom. Out of the corner of my eye, I saw Diana, one of our scientists, and her husband, playing with their two children. Diana had a key position in the lab: she was an analytical chemist. Her job was to help the other scientists use our company’s specialized equipment so that they could know what elements were present in the compounds they created or with which they were working. By definition, waiting until the results came back from the tests Diana ran occasionally frustrated some of the twenty or so scientists on the team—each of whom needed his or her test run as the highest priority. But it frustrated Diana even more. She wanted to help everyone, but as a start-up we couldn’t buy unlimited equipment. So there were a limited number of machines and only ten hours in Diana’s workday. As a result, her days were often filled with turf battles.

But that’s not what I saw at that moment. Instead, I was impressed by the love Diana and her husband clearly shared with their two children. Seeing her there, I began to gain a perspective of Diana in the full context of her life. She wasn’t just a scientist. She was a mother and a wife, whose mood, whose happiness, and whose sense of self-worth had a huge impact on her family. I began to think about what it must be like in her house in the morning, as she said good-bye to her family on her way to work.

Then I saw Diana in my mind’s eye as she came home to her family ten hours later, on a day that had gone badly. She felt underappreciated, frustrated, and demeaned; she learned little that was new. In that moment I felt like I saw how her day at work negatively affected the way she interacted in the evening with her husband and their young children.

This vision in my mind then fast-forwarded to the end of another day. On the one hand, she was so engaged by the experiment she was doing that she wanted to stay at work; but on the other, she was so looking forward to spending time with her husband and children that she clearly wanted to be at home. On that day, I saw her driving home with greater self-esteem—feeling that she had learned a lot, having been recognized in a positive way for achieving valuable things, and played a significant role in the success of some important initiatives for several scientists and for the company. I felt like I could see her go into her home at the end of that day with a replenished reservoir of esteem that profoundly affected her interaction with her husband and those two lovely children. And I also knew how she’d feel going into work the next day—motivated and energized.

It was a profound lesson.

Do Incentives Make the World Go Round?

Six years later, as a new professor, I was standing at the front of a Harvard classroom teaching Technology and Operations Management, a required first-year course for all of our MBA students. In the discussion that day about the case study on a big materials company, a student recommended a way to resolve a conflict with one of their most critical customers. She suggested the company assign a key engineer, Bruce Stevens, to this project—in addition to his other responsibilities. I questioned her: “Asking Bruce to do this makes sense in isolation. But getting Bruce to actually make this his highest priority, on top of an overflowing plate of other responsibilities—isn’t that going to be hard?”

“Just give him an incentive,” was her reply.

“Wow—that sure is a simple answer. What kind of incentive do you have in mind?” I asked.

“Just give him a bonus if he gets it done on time,” she responded.

“The problem,” I said, “is that he has other responsibilities on other projects as well. If he focuses on this as his top priority, he’s going to fall behind on those other projects. So then what are you going to do—give him another financial incentive to motivate him to work harder on all the other projects?” I pointed to a statement in the case about Bruce. He was clearly a driven man, who routinely worked seventy-hour weeks.

When the student said that’s exactly what she would do, I pushed her harder. “All the other employees will see that you are giving Bruce a bonus. Aren’t they going to demand that you treat them similarly? And where does this all lead? Do you feel like paying them specifically for every assignment—moving to a piecemeal system?” I pointed out that in the case the typical engineers in this company were working very hard every day without incentives. “They seem to love their work, don’t they?” I asked.

Another student then added, “I don’t think you can pay Bruce an incentive—it’s against the policy of the company. Pay-for-performance bonuses are typically only given to general managers in business units, not to engineers, because it is at the managerial level where revenues and costs come together. Below that, employees have responsibility only for a piece of the puzzle, so incentives can throw things out of balance.”

“Oh,” I said. “Let me understand what you’re saying. In this company, a lot of the senior executives used to be engineers. During that period of their lives, they seemed to be motivated by the work itself. They didn’t need incentives—right? So then what happened? When they became executives, did they morph into other beings—types of people that needed financial incentives to work hard? Is that what you are telling me?”

As the discussion in the class continued that day, I sensed a broadening rift between my world and that of some of my students. In their world, it seemed that incentives made the world go round. And in mine—well, I had worked with Diana and her colleagues.

How could we see something so fundamental in such different ways?

A Better Theory of Motivation

The answer lies in a deep chasm about how the concepts of incentives and motivation relate to each other. There are two broad camps on this question.

Back in 1976, two economists, Michael Jensen and William Meckling, published a paper that has been committed to memory by those in the first camp. The paper, which has been one of the most widely cited of the past three decades, focused on a problem known as agency theory, or incentive theory: why don’t managers always behave in a way that is in the best interest of shareholders? The root cause, as Jensen and Meckling saw it, is that people work in accordance with how you pay them. The takeaway was that you have to align the interests of executives with the interests of shareholders. That way, if the stock goes up, executives are compensated better, and it makes both shareholders and executives happy. Although Jensen and Meckling didn’t specifically argue for huge pay packages, their thinking about what causes executives to focus on some things and not others is financial incentives. Indeed, the drive toward top performance has been widely used as an argument for skyrocketing compensation under the guise of “aligning incentives.”

It is not just my students who have become believers in this theory. Many managers have adopted Jensen and Meckling’s underlying thinking—believing that when you need to convince others that they should do one thing and not another, you just need to pay them to do what you want them to do, when you want them to do it. It’s easy, it’s measurable; in essence, you are able to simply delegate management to a formula. Even parents can default to thinking that external rewards are the most effective way to motivate the behavior they want from their children—for example, offering their children a financial reward as an incentive for every A on a report card.

One of the best ways to probe whether you can trust the advice that a theory is offering you is to look for anomalies—something that the theory cannot explain. Remember our story about birds, feathers, and flight? The early aviators might have seen some warning signs in their rudimentary analysis of flight had they examined what their beliefs or theories could not explain. Ostriches have wings and feathers but can’t fly. Bats have wings but no feathers, and they are great fliers. And flying squirrels have neither wings nor feathers … and they get by.

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.

Frederick Herzberg, probably one of the most incisive writers on the topic of motivation theory, published a breakthrough article in the Harvard Business Review, focusing on exactly this. He was writing for a business audience, but what he discovered about motivation applies equally to us all.

Herzberg notes the common assumption that job satisfaction is one big continuous spectrum—starting with very happy on one end and reaching all the way down to absolutely miserable on the other—is not actually the way the mind works. Instead, satisfaction and dissatisfaction are separate, independent measures. This means, for example, that it’s possible to love your job and hate it at the same time.

Let me explain. This theory distinguishes between two different types of factors: hygiene factors and motivation factors.

On one side of the equation, there are the elements of work that, if not done right, will cause us to be dissatisfied. These are called hygiene factors. Hygiene factors are things like status, compensation, job security, work conditions, company policies, and supervisory practices. It matters, for example, that you don’t have a manager who manipulates you for his own purposes—or who doesn’t hold you accountable for things over which you don’t have responsibility. Bad hygiene causes dissatisfaction. You have to address and fix bad hygiene to ensure that you are not dissatisfied in your work.

Interestingly, Herzberg asserts that compensation is a hygiene factor, not a motivator. As Owen Robbins, a successful CFO and the board member who chaired our compensation committee at CPS Technologies, once counseled me, “Compensation is a death trap. The most you can hope for (as CEO) is to be able to post a list of every employee’s name and salary on the bulletin board, and hear every employee say, ‘I sure wish I were paid more, but darn it, this list is fair.’ Clayton, you might feel like it is easy to manage this company by giving incentives or rewards to people. But if anyone believes that he is working harder but is being paid less than another person, it would be like transplanting cancer into this company.” Compensation is a hygiene factor. You need to get it right. But all you can aspire to is that employees will not be mad at each other and the company because of compensation.

This is an important insight from Herzberg’s research: if you instantly improve the hygiene factors of your job, you’re not going to suddenly love it. At best, you just won’t hate it anymore. The opposite of job dissatisfaction isn’t job satisfaction, but rather an absence of job dissatisfaction. They’re not the same thing at all. It is important to address hygiene factors such as a safe and comfortable working environment, relationship with managers and colleagues, enough money to look after your family—if you don’t have these things, you’ll experience dissatisfaction with your work. But these alone won’t do anything to make you love your job—they will just stop you from hating it.

The Balance of Motivators and Hygiene Factors

So, what are the things that will truly, deeply satisfy us, the factors that will cause us to love our jobs? These are what Herzberg’s research calls motivators. Motivation factors include challenging work, recognition, responsibility, and personal growth. Feelings 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.

Hopefully, you’ve had experiences in your life that have satisfied Herzberg’s motivators. If you have, you’ll recognize the difference between that and an experience that merely provides hygiene factors. It might have been a job that emphasized doing work that was truly meaningful to you, that was interesting and challenging, that allowed you to grow professionally, or that provided opportunities to increase your responsibility. Those are the factors that will motivate you—to cause you to love what you’re doing. It’s what I hope my students hold out for, because I know it can make the difference between dreading or being excited to go to work every day.

The lens of Herzberg’s theory gave me real insight into the choices that some of my classmates made in their careers after we graduated. While many of them did find themselves in careers that were highly motivating, my sense was that an unsettling number did not. How is it that people who seem to have the world at their feet end up making deliberate choices that leave them feeling unfulfilled?

Herzberg’s work sheds some light on this. Many of my peers had chosen careers using hygiene factors as the primary criteria; income was often the most important of these. On the surface, they had lots of good reasons to do exactly that. Many people view their education as an investment. You give up good years of your working life, years you would otherwise be making a salary. Compounding that is often the need to take out big loans to finance your time at school, sometimes while supporting young families—as I did. You know exactly how much debt you’ll have the minute you graduate.

Yet it was not lost on me that many of my classmates had initially come to school for very different reasons. They’d written their entrance essays on their hopes for using their education to tackle some of the world’s most vexing social problems or their dreams of becoming entrepreneurs and creating their own businesses.

Periodically, as we were all considering our postgraduation plans, we’d try to keep ourselves honest, challenging each other: “What about doing something important, or something you really love? Isn’t that why you came here?” “Don’t worry,” came back the answer. “This is just for a couple of years. I’ll pay off my loans, get myself in a good financial position, then I’ll go chase my real dreams.”

It was not an unreasonable argument. The pressures we all face—providing for our families, meeting our own expectations and those of our parents and friends, and, for some of us, keeping up with our neighbors—are tough. In the case of my classmates (and many graduating classes since), this manifested itself in taking jobs as bankers, fund managers, consultants, and plenty of other well-regarded positions. For some people, it was a choice of passion—they genuinely loved what they did and those jobs worked out well for them. But for others, it was a choice based on getting a good financial return on their expensive degree.

By taking these jobs, they managed to pay back their student loans. Then they got their mortgages under control and their families in comfortable financial positions. But somehow that early pledge to return to their real passion after a couple of years kept getting deferred. “Just one more year …” or “I’m not sure what else I would do now.” All the while, their incomes continued to swell.

It wasn’t too long, however, before some of them privately admitted that they had actually begun to resent the jobs they’d taken—for what they now realized were the wrong reasons. Worse still, they found themselves stuck. They’d managed to expand their lifestyle to fit the salaries they were bringing in, and it was really difficult to wind that back. They’d made choices early on because of the hygiene factors, not true motivators, and they couldn’t find their way out of that trap.

The point isn’t that money is the root cause of professional unhappiness. It’s not. The problems start occurring when it becomes the priority over all else, when hygiene factors are satisfied but the quest remains only to make more money. Even those engaged in careers that seem to specifically focus on money, like salespeople and traders, are subject to these rules of motivation—it’s just that in these professions, money acts as a highly accurate yardstick of success. Traders, for example, feel success and are motivated by being able to predict what is going to happen in the world and then making bets based on those predictions. Being right is almost directly correlated with making money; it is the confirmation that they are doing their jobs well, the measure they use to compete on. Similarly, salespeople feel success by being able to convince customers that the product or service they’re selling will help those customers in their lives. Again, money directly correlates with success—a sale. It’s an indicator for how well they’re doing their jobs. It’s not that some of us are fundamentally different beasts—we might find different things meaningful or enjoyable—but the theory still works the same way for everyone. If you get motivators at work, Herzberg’s theory suggests, you’re going to love your job—even if you’re not making piles of money. You’re going to be motivated.

Motivation Matters in Places You Might Not Expect

When you really understand what motivates people, it becomes illuminating in all kinds of situations—not just in people’s careers. My two oldest children taught me an important dimension of Herzberg’s theory on motivation. When we bought our first house, I saw a place in the backyard that would be perfect for building a kids’ playhouse. Matthew and Ann were the perfect ages for this kind of activity, and we threw our hearts into this project. We spent weeks selecting the lumber, picking the shingles for the house, working our way up through the platform, the sides, the roof. I’d get the nails most of the way in and let them deliver the finishing blows. It took longer that way, of course, figuring out whose turn it was for every stroke of the hammer and cut of the saw. It was fun, however, to see their feelings of pride. When their friends came to play, the first thing my children would do was take them into the backyard and show them the progress. And when I came home, their first question was when could we get back to work.

But after it was finished, I rarely saw the children in it. The truth was that having the house wasn’t what really motivated them. It was the building of it, and how they felt about their own contribution, that they found satisfying. I had thought the destination was what was important, but it turned out it was the journey.

It is hard to overestimate the power of these motivators—the feelings of accomplishment and of learning, of being a key player on a team that is achieving something meaningful. I shudder to think that I almost bought a kit from which I could have quickly assembled the playhouse myself.

If You Find a Job You Love …

The theory of motivation—along with its description of the roles that incentives and hygiene factors will play—has given me better understanding of how people become successful and happy in their careers. I used to think that if you cared for other people, you need to study sociology or something like it. But when I compared what I imagined was happening in Diana’s home after the different days in our labs, I concluded, if you want to help other people, be a manager. If done well, management is among the most noble of professions. You are in a position where you have eight or ten hours every day from every person who works for you. You have the opportunity to frame each person’s work so that, at the end of every day, your employees will go home feeling like Diana felt on her good day: living a life filled with motivators. I realized that if the theory of motivation applies to me, then I need to be sure that those who work for me have the motivators, too.

The second realization I had is that the pursuit of money can, at best, mitigate the frustrations in your career—yet the siren song of riches has confused and confounded some of the best in our society. In order to really find happiness, you need to continue looking for opportunities that you believe are meaningful, in which you will be able to learn new things, to succeed, and be given more and more responsibility to shoulder. There’s an old saying: find a job that you love and you’ll never work a day in your life. People who truly love what they do and who think their work is meaningful have a distinct advantage when they arrive at work every day. They throw their best effort into their jobs, and it makes them very good at what they do.

This, in turn, can mean they get paid well; careers that are filled with motivators are often correlated with financial rewards. But sometimes the reverse is true, too—financial rewards can be present without the motivators. In my assessment, it is frightfully easy for us to lose our sense of the difference between what brings money and what causes happiness. You must be careful not to confuse correlation with causality in assessing the happiness we can find in different jobs.

Thankfully, however, these motivators are stable across professions and over time—giving us a sense of “true north” against which we can recalibrate the trajectories of our careers. We should always remember that beyond a certain point, hygiene factors such as money, status, compensation, and job security are much more a by-product of being happy with a job rather than the cause of it. Realizing this frees us to focus on the things that really matter.

For many of us, one of the easiest mistakes to make is to focus on trying to over-satisfy the tangible trappings of professional success in the mistaken belief that those things will make us happy. Better salaries. A more prestigious title. A nicer office. They are, after all, what our friends and family see as signs that we have “made it” professionally. But as soon as you find yourself focusing on the tangible aspects of your job, you are at risk of becoming like some of my classmates, chasing a mirage. The next pay raise, you think, will be the one that finally makes you happy. It’s a hopeless quest.

The theory of motivation suggests you need to ask yourself a different set of questions than most of us are used to asking. Is this work meaningful to me? Is this job going to give me a chance to develop? Am I going to learn new things? Will I have an opportunity for recognition and achievement? Am I going to be given responsibility? These are the things that will truly motivate you. Once you get this right, the more measurable aspects of your job will fade in importance.

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