Clay’s bibliography forms the foundation of our Harvard Business School course, Building and Sustaining a Successful Enterprise (BSSE). Those who have taken our class over the years will be deeply familiar with its foundational texts The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail and The Innovator's Solution: Creating and Sustaining Successful Growth, as well as potentially with more recent titles such as How Will You Measure Your Life? and Competing Against Luck. For those looking to review the theories core to the course and to our work at The Forum, these books are certainly the place to start.
But for those who want to go several levels deeper in engaging with BSSE theories and thinking, we can recommend some additional resources. Here are 5 influential texts we recently revisited, which have informed BSSE and helped to shape how we teach it over the years. If you’re still reading this, we think you’ll enjoy these books, too.
Managing the Resource Allocation Process: A Study of Corporate Planning and Investment
By J. L. Bower
We re-read Professor Joe Bower’s classic study, first published in 1970, to prepare for an upcoming podcast with Clay and Joe, Clay’s mentor and longtime friend (look out for the episode in late February). For those who don’t know the history here, Joe explains in the introduction to the book that, as a young faculty member, he was suspicious that the description of the capital budgeting process that we taught here at HBS--an orderly world of hurdle rates and cost of capital--bore very little resemblance to what went on in the “real world.” So he ventured out to that world to discover for himself, parking himself in a Fortune 50 company he called “National Products” (he has never revealed the real company name) to see how capital budgeting really worked. What he learned has become orthodoxy for generations of BSSE students: how important it is to understand the priorities embedded in the firm’s profit formula; how little control the people running the company actually have over big decisions; how a series of capital budgeting decisions actually constitute a firm’s “strategy,” regardless of what’s in the strategy documents.
We tell our students in BSSE that “understanding the forces that actually drive resource allocation can make you a very powerful person.” This is the book to go back to if you desire that power.
The Idea Factory: Bell Labs and the Great Age of American Innovation
By Jon Gertner
A few years ago, the Forum team took a field trip to the MIT Museum because we wanted to see what Jon Gertner described as “the most important master’s thesis ever written.” Claude Shannon’s 1938 thesis essentially invented the field we now call information theory and, in so doing, laid the intellectual groundwork for virtually all of the technological marvels that have come after. Arriving at the museum, we were told that the thesis was stored away, and so we couldn’t see it. Oh, well...
To get a sense of Shannon, as well as the outsize role that Bell Labs played in developing the tools and technologies we now take for granted, Gertner’s book is a pretty good place to start. We came to it because we have been obsessed by the question: “How important is it to the development of new enabling technologies that places like Bell Labs exist?” Shannon’s story caught our attention because his work was practically a demonstration of the importance of domain-crossing to innovation--he learned how to apply his academic insights when he was working in a private lab on government-sponsored research. We continue to be fascinated by the special place that “idea factories” like Bell Labs have held in our industrial history, and in how to ensure that we don’t lose their special contribution in an economy that is increasingly focused on mere efficiency.
The End of Average: How We Succeed in a World That Values Sameness
By Todd Rose
Top-down methods of analysis that rely on the “average” member of a group - such as the practice of segmenting one’s customer base according to demographic data - have become so standard in business today that they are hardly questioned, especially in the realms of marketing and product design. But as we teach in BSSE, these tools are ill-suited to understanding causal mechanisms, including why customers buy the things they buy. Todd Rose explains the mathematical flaws at the heart of the dominant, “averagarian” school of thinking, and illustrates how designing for the average customer can result in products that are fit for exactly no one.
Once a high school dropout, Rose is now a professor at the Harvard Graduate School of Education and his book contains many parallels to the theory of schools of experience. But perhaps even more powerfully, his arguments in favor of bottoms-up approaches that preserve individuality serve as a practical guide for anyone conducting jobs-to-be-done research, and as a reminder of the circumstances in which n=1 can contain more insight than n=100.
By Alfred P. Sloan Jr.
Sometimes it is clear even to us that the BSSE course deserves its reputation for “classic” cases. Case in point: About three years ago, we added a case to the course on the rivalry between Ford and GM, focusing not on the race to develop autonomous vehicle technology, but rather on the early twentieth-century competition between Ford’s Model T and GM’s subsequent responses. We review this historic rivalry because it frames a very rewarding discussion of the twin tendencies toward exploration and exploitation--and also because it is just such a significant chapter in the history of innovation.
This book is rewarding for those students of business who want to learn more about the company in which so much of what we now assume as the furniture of modern business was invented: the organization chart, divisional R&D, financial controls, risk management--heck, even the concept of “a product line.” We were pleased--but not surprised--to learn from Chet Huber, a General Motors veteran who now teaches with us, that Dr. Sloan’s book was required reading for the GM management team, and that his insights still provided a guide to strategy that gave managers across GM a connection to the founding genius of the company.
Corning and the Craft of Innovation
By Margaret B. W. Graham and Alec T. Shuldiner
The CEO of Corning, Wendell Weeks (MBA 1987), describes innovation as an “act of passion,” a passion that has been baked into the DNA of Corning across its over 150 years of existence. In the Foreword to the book, Jamie Houghton writes that “when I was growing up, I was taught that investing in R&D is like a ‘religion.’ It was something that you did on faith, in good times and in bad, whether you could see the immediate fruits of it or whether you couldn’t.” As George Will would comment, “Well.”
The distance we have strayed from this degree of commitment to investment to create new markets and new technologies has disturbed Clay and all of us at the Forum for some years now, and so it is a welcome tonic to go back to this book and immerse ourselves in how a company “keeps the faith” for timeframes that can be measured in centuries. From its fabrication of the glass capsule for Thomas Edison’s first light bulbs through the bet-the-company development of fiber optic cable and the more recent development of Gorilla Glass for the iPhone, Corning has stuck to a remarkably stable and robust formula for keeping innovation at the forefront of its culture and activity. All of our alumni who are similarly seeking to build and sustain enterprises for the long haul will find deep study of Corning’s practices and culture to be rewarding.