Beauty At Work

Disruptive Innovations with Scott D. Anthony - S4E8 (Part 1 of 2)

• Brandon Vaidyanathan

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Scott D. Anthony is a globally recognized expert on navigating disruptive change and a passionate optimist about humanity’s capacity to adapt in a constantly evolving world. He is a Clinical Professor of Strategy at Dartmouth’s Tuck School of Business, where he teaches courses on leading disruptive change, horizon scanning, and AI-enabled decision-making.

Scott’s work builds on more than two decades of field research and close mentorship under Clayton Christensen, spent over 20 years at Innosight, and is the author of several influential books, including his latest, Epic Disruptions.


In this first part of our conversation, we discuss:

  1. The meaning of innovation: something different that creates value
  2. How the meaning of “innovation” shifted from something dangerous to something sacred
  3. Scott’s first encounter with Clayton Christensen
  4. Clay Christensen’s regret over how the term “disruption” has been misused
  5. The four big questions Scott poses about innovation
  6. What Gutenberg’s printing press reveals about collective creativity and unintended consequences
  7. The predictable and unpredictable nature of innovation
  8. Lessons from a failed medical tourism venture on testing real demand


To learn more about Scott’s work, you can find him at: 

https://tuck.dartmouth.edu/faculty/faculty-directory/scott-d-anthony

https://www.innosight.com/ 


Books and resources mentioned:


This season of the podcast is sponsored by Templeton Religion Trust.


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(preview)

Scott: Is innovation a universal good? Look, I’m a believer. I’m a proselytizer. I go and spread the gospel of disruption. I really do think it makes the world a better place. The research has made me more humble, that there is another side to it. The shadow that we talked about is a very real thing, and there are good reasons to have things that can buffer and catch some of that shadow. So I go in now, eyes wide open, that yes, disruption remains a powerful force for democratization, development, and progress—and it comes at a cost.

(intro)

Brandon: I'm Brandon Vaidyanathan, and this is Beauty at Work—the podcast that seeks to expand our understanding of beauty: what it is, how it works, and why it matters for the work we do. This season of the podcast is sponsored by Templeton Religion Trust and is focused on the beauty and burdens of innovation.

There’s a category of innovations that are considered disruptive—not in the sense of necessarily being destructive, but rather, these are cases where a product or service emerges in simple applications at the bottom of the market that eventually rises to displace established competitors.

In this episode, we'll explore the beauty and burdens of disruptive innovation, how breakthroughs expand the possible, and the shadows that they cast. My guest today is Scott D. Anthony, a globally-recognized expert on navigating disruptive change. Scott is a clinical professor of strategy at Dartmouth Tuck School of Business. His research and teaching build on more than two decades of field work and mentorship under Clayton Christensen. He spent over 20 years at Innosight, including six as global managing partner, helping leaders around the world confront disruption. Named multiple times by Thinkers50 as one of the world's most influential management thinkers, Scott has advised organizations in nearly 30 countries and served on public and private boards. He holds degrees from Dartmouth, Harvard Business School, and INSEAD. Scott’s new book, Epic Disruptions, tells the story of 11 innovations that shaped the modern world and the paradoxes they reveal.

In our conversation, we unpack Clay Christensen's theory of disruptive innovation, the four big questions that Scott poses about innovation, and case studies from Gutenberg to Julia Child that show why breakthroughs are both collective and serendipitous. We'll also discuss the shadow side of innovation that Scott thinks we need to do a much better job of taking seriously.

Let's get started.

(interview)

Brandon: All right, Scott. Thank you so much for joining us in the podcast. It's great to see you, and I'm delighted that you can be a guest on the show.

Scott: Brandon, I'm really looking forward to the conversation. Thanks for having me.

Brandon: Yeah, great. Scott, I've been really enjoying your latest book, Epic Disruptions, which I highly recommend. Super engaging read. I mean, I love your sort of really easy-to-access synthesis of a lot of theory and history. There've been a lot of really great case studies here—some of which I'm familiar with, others that are new—and a lot of dad jokes. You have a running commentary in the footnotes. I think you have a really great humorous style of engagement and also very personable. It's a wonderful book.

Scott: Thank you. I have not heard someone say the footnotes are running dad jokes, but I think my kids would definitely associate with that. I will tell them that tonight. They'll appreciate it.

Brandon: Yeah. I mean, yeah, they would accuse me of similar things if I made similar comments, you know. Good. Well, let's talk a little bit about beauty, just to get started. I'd asked you to perhaps think of an example of beauty from your younger days that lingers with you till today. What comes to your mind?

Scott: You know, the first thing that comes to mind when I think about beauty and childhood, it was October 1991. I was in Memorial Stadium in Baltimore, Maryland. It was the last game the Baltimore Orioles were to play in that stadium. We got season tickets in 1984—which, if you're a baseball fan, is the year after the Orioles won the World Series. But I did get to go to one of the games of the World Series in 1983. Thanks, mom and dad. But you know, we had been there 60 games a year—'84, '85, '86, et cetera. The team was not a very good team that year, but the last day was pageantry. It was a beautiful early fall day. The sun was shining. I can still hear the fans chanting. We want Mike to bring in Mike Flanagan to get the last out of the game. It's just one of these moments where you can kind of feel the glare of the sun as you think about it. I love baseball. I love being outside. It's just a beautiful memory.

Brandon: Wow. What about that in particular was moving? What has made that stay in your mind, do you think? What qualities of that experience?

Scott: You know, I think a lot of the things that stick with me are those moments where there is—I can't remember the exact term for it—the collective effervescence. I think that's close to it, right?

Brandon: Oh, yes. Durkheim. That's right. Yeah, that's right.

Scott: Right. So you have 50,000 people who are cheering in one voice who are feeling, to some degree, the same feeling. I think in our world today where there's so much artificiality, the reality when you're there and things are imperfect. The Orioles lost that game. They didn't win that game. It wasn't a triumphant victory, but we're all there united to see something. And after the game, they rolled out a red carpet. Everyone's out in tuxedos, and they say goodbye to the old. Of course, you're then saying hello to the new. So it's the collective experience and the transition, I guess, that really sticks with me. The weather was really beautiful too, so that helped.

Brandon: Sure, sure, sure. It seems like a combination of a lot of factors aligning. And so even though your team loses, there's still that kind of harmony of different elements there. In many ways, that does seem to resonate with some of the criteria for successful innovations. But let's talk about what innovation means, how do you define it, and what does that word mean to you? How did it move from being a term that was pejorative and suspect to now a kind of universal criterion of worth?

Scott: Well, the Nobel Prize was recently awarded to three economists who did research specifically on this, that said we had this move that happened in the 18th century where, prior to that, innovation might not even have existed as a word in many languages—and if it was used, it was a bad thing.

So you asked for a definition. My definition is pretty simple. It's something different that creates value. You can break that into two parts. Something different is intentionally vague, because that gives space for big things. Hypersonic planes and world-saving medications and so on, and the day-to-day things that make life better, both are forms of innovation. Creates value separates innovation from inputs—things like invention and creativity, which are essential ingredients, of course. But until you translate that into something that solves a problem that matters for someone and therefore creates value, in my mind, you have not innovated.

Now, why was this a bad thing? One of the best finds in the historical research for my book was a 1548 proclamation by King Edward VI, or his team of handlers since he was 10 at the time. It was a proclamation against "Those That Doeth Innovate." And you ask, why would the king want to ban innovation? Well, it's pretty simple. Innovation is something different. It questions and challenges the status quo. Who or what is the status quo in 1548? It's the king, or it's God. So if you're questioning the status quo, you're questioning power structures, that's bad. It takes the scientific revolution, the enlightenment, the industrial revolution, to say, "Hey, actually, some really good things happen when we ask questions," like huge increases in life expectancy and wealth and all the things we take for granted today. So that's my thoughts on innovation.

Brandon: It makes sense if really—again, from the lens of beauty—if maintaining order and seeing the existing order, even social order, as reflective of something eternal, of something divine, pointing to something beyond. That becomes really a sacred thing to uphold. Any kind of challenge to that order is going to be perceived as ugly, distasteful, not too much problematic and worth imprisoning and killing people over, right? And so it really is fascinating to see how our general proclivity for this sort of change has changed over time.

I'll have more questions to ask you about what gets lost in our focus on innovation. But let's talk about disruption. Your work builds on the work of Clay Christensen. Tell us a little bit about how you encountered him. What was it like working with him, and how did he come up with this idea of disruptive innovation?

Scott: Well, let me answer that in order. The encounter, the first encounter was 25 years ago. I was a second-year student at the Harvard Business School. I had kind of thoughtlessly signed up for a class called Building and Sustaining a Successful Enterprise. It was a new class. There were no reviews, so you couldn't judge based on that. The professor was this guy, Clay Christensen, who had written a book. Of course, lots of Harvard professors had written a book, but the description sounded kind of interesting. I took the class, and from day one of that class, I was hooked, because the research that he had done—summarized in his 1997 book, The Innovator's Dilemma—was just captivating. That research showed that there was a certain type of innovation that he called a 'disruptive innovation' that did something really unique. It took things that were complicated and expensive, made them simple and affordable, changed market dynamics and drove explosive growth.

The thing he found is, if you look historically, if you were going to place a bet, when the battle is about disruptive innovation, you bet against the established market leader. Even though they have the resources, they've got the capabilities, they've got the money, there's just something about disruptive innovation that made it really hard for incumbents to grab hold of them. And I saw, when I read The Innovator's Dilemma, when I saw Clay's research, I saw my own life through different lenses. I was the managing editor of my college newspaper the year the Netscape browser came out. We struggled with it because it was a classic disruptive change in our space. I understood my classes in different ways. Clay gave me, and countless other people, a new lens at which to look at the world.

Brandon: Then you worked for his company for a bit, Innosight, for a number of years. Could you say a little bit about what your work entailed there?

Scott: Yeah, that's correct. So I graduated from the Harvard Business School in 2001. I spent two years then as Clay's research assistant. We wrote a book together, my first book, called Seeing What's Next. Then in 2003, I joined this fledgling consulting company that he had formed with my former colleague, Mark Johnson, called Innosight. The focus at Innosight really is: take research by Clay and other like-minded academics and help executives confront the challenges of disruptive change. Take what historically was a threat and turn it into an opportunity.

I was based in the U.S. from 2003 to 2010. I moved out to Singapore that year. I was in Singapore with Innosight for a dozen years, ran Innosight for six of those years. We sold the company in 2017. It now has a different owner. It still exists as a subsidiary. I moved back to the U.S. in 2022, and that's when I transitioned from consulting to teaching, where I now teach at the Tuck School of Business at Dartmouth College.

Brandon: Great. So tell us a little bit about what disruptive innovation meant for Clay. I think you mentioned in the book that he sort of regretted using the term 'disruption.' Say a bit more about that.

Scott: It was the phrase itself. He was, to a degree, was a victim of one's own success. The idea really blew up. So when I was a student at the Harvard Business School, Clay ended up getting on the cover of Fortune Magazine with Andy Grove from Intel. It said Intel's Big Thinker on the cover. Clay was 6'8", and Andy Grove was more than a foot shorter than that. So it was a pretty iconic picture and a tongue-in-cheek headline. But you know, Intel was a company that took the ideas in Clay's book and used it to defend against threats and create new growth opportunities. And that's what Clay really was trying to do with his research. He was saying, "Look, there's a pattern out there. If we understand the pattern, we can use it to our advantage." That's what his life work was—really trying to distill patterns, turn them into frameworks, models, tools, theories, use metaphors and stories to communicate them to people, and help them see what they would otherwise miss. That was what turned into my life's work as well—really helping people see what would otherwise be invisible.

The underlying view is that you have agency as a business leader. You are not powerless against these forces. You think and act in the right way, you can seize opportunities. You can drive growth that otherwise would allude you. In fact, if you look, over the past decade, what is the big anomaly to Clay's research, the incumbents are winning. People like Apple and Facebook and Amazon and Google are grabbing hold of disruptive change and driving growth with it.

Now back to the question about the regret. The challenge that Clay had is, he had a very specific meaning in mind when he used the word disruption—innovation that takes complicated, expensive things, makes them simple and affordable, hard for incumbents to grapple with, because they don't naturally allocate resources towards them. But disruption means other things to other people. You crack open the dictionary, you see other things ascribed to the word. People just put the disruption sticker on everything. The more popular it got, the more people said, "I'm disruptive. I'm doing this. I'm doing that." Sometimes it was dictionary disruption. Sometimes it was Christensen's style disruption. The difference actually matters, and it would drive Clay more than a little bonkers because people would misuse his research.

Brandon: There's been obviously a lot of debate and critique of the concept, right? I remember Jill Lepores' New Yorker article. I mean, a number of points there, but even certainly, one of those is that the business community seems to have run wild with this concept of disruption. Everyone is trying to disrupt everything—disruptions in higher education. There have been a lot of negative consequences to that sort of approach. What do you make of those critiques? Have you found any merit to any of them?

Scott: I'd say two things. Number one, I think like Clay. Clay had a sign in his office that said: "Anomalies Wanted." He was a good social scientist. You want things that run counter to your model, because that's how you make the model stronger and how you learn. So good critique is very valuable. I just read a book, The Innovation Delusion. It came out a few years ago. It made a very similar point. It said, the problem is, when we get so excited about the new, we forget the importance of doing old things well. So in that book, they talked about the importance of maintenance and making sure that our roads still function, that our bridges hold up, that our software systems don't go down. That's work that can sometimes get lost if we get too much into a cult of anything—disruption, innovation, whatever.

So I think good critique, very valuable. And for sure, I see examples where companies forget, organizations forget, this is not either-or. This is not either we run today, or we create tomorrow; either we sustain, or we disrupt. It really has to be a both-and. And if you're not doing both of those things, you're going to get your organization into trouble. So I think it's really valuable that people remind us of that. Now, you know, sometimes people have an ax to grind, and they might go a little bit too far. But that's the nature of the world, isn't it?

Brandon: Yeah, great. Well, let's jump into your book. You've outlined four key questions which generate some paradoxical answers, right? So you ask: who is it that innovates? Is it random? Is it accelerating? Is it always good? Can you walk us through perhaps one of your examples and answer these questions for us? What are the responses that you've come up with to these questions?

Scott: You know, I think the printing press example in chapter two allows us to answer, I think, all four of the questions. We'll see how we do. But you know, the very short story of the printing press. 1434, Gutenberg moves to Strasbourg not to create the printing press. 1437, he creates a venture to do something very different—to create mirrors that would capture the Holy Spirit during a planned pilgrimage. The pilgrimage gets called off because of an outbreak of the plague. Bad for the mirror venture, good for humanity—because ultimately, the team with Gutenberg on it creates the printing press. So that's the beginning part of the story.

So what does it teach us about those four questions? Who does it? I say it's a collectively individualistic activity. Gutenberg, of course, is the hero in the story. But there's no story unless there's his partner who works with him—unless Konrad Saspach brings the printing press, unless Johann Fust gives the funding, unless Nicholas of Cusa provides the first commercial opportunity. There's a lot of people involved in it. That's important to remember.

Is it predictable? One of the things that I observed consistently through the story is, yes, there are clear patterns. So why did Gutenberg come up with the printing press? Strasbourg was a great location. It was a trade route. There is a bell industry there, so people are engraving on the bells. It's a wine-growing region, so there are presses. The basic pattern, magic happens at intersections. That runs through all the stories. There's never a straight line to success though. So you don't know exactly how it's going to work, but you certainly can look for those patterns.

The fourth question gets really well illustrated by Gutenberg. Is it a universal good? There are, of course, a lot of good things that happen with the printing press, but one very persistent finding in my research is that disruption always casts a shadow. What was it for the printing press? Well, Nicholas of Cusa, the Catholic Church, is an early customer. Makes sense, right? They want to standardize the missiles that you use for religious ceremonies. It takes three years to hand-inscribe a Bible. They're super thrilled when they can do that faster. However, they're less thrilled when it also allows Martin Luther to spread his different views of religion a lot faster. The second order effects sometimes lead people to say, "What have I done?" So you also have all sorts of things that happen because knowledge spreads—many of them good, some of them bad.

The third thing about the pace of innovation doesn't fully get answered in the Gutenberg story, but I can make a connection. Not an overnight success. So the printing press in 1440, you've got the basic pieces there. The first Bible rolls out in 1454, 14 years later. It's really five or six decades before you really feel the impact. So it's like a 70-year story. The timelines have compressed today, but it's not like things happen overnight. As one very simple example, OpenAI introduces the first version of ChatGPT commercially in 2022. It quickly gets to 100 million consumers in the 56th year of artificial intelligence, as artificial intelligence research began in 1956 at a conference in Dartmouth College. So 70 years to have the full impact of the printing press, 56 years before we feel it deeply individually with artificial intelligence. It's not a massive acceleration, is it? So anyway, those are some of the answers I came up with. It still requires lots of persistence and patience over sometimes very long periods of time.

Brandon: Yeah, to me, those are really important insights there. One of the questions I had, I suppose, reading the printing press story was how deliberative is the pursuit of disruption. I mean, it seemed like Gutenberg was in many ways intentional about wanting to disrupt things. Perhaps he had ambition and a desire to change things. But do a lot of disruptive innovations require some intentionality, or do some of these just happen serendipitously? What is the role of intention, agency versus things that kind of — you do have the sort of question about randomness, but there are a lot of innovations that do seem to be unintentional. I'm just curious to know how you make sense of that.

Scott: It's a great question, and this gets back to the predictably unpredictable nature of innovation. Certainly, you have people who will say, "I've got a strategic intent," that, "I want to take this hill, take this market, introduce this technology." Even in that, there's a lot of serendipity, surprises, things that you didn't expect.

As a simple example of this, in 1951, Julia Child teams up with Simone Beck and Louisette Bertholle to create a cookbook of French recipes for American chefs. They think they're going to publish the book in three years. It ends up taking them 10 years. They have to switch publishers twice. They have a near-death experience where their publisher, at the last minute, rejects them. So that's a twist in the story. What happens next? Well, Julia Child has a friend, Avis DeVoto, who knows someone named Judy Jones, who's looking specifically for books that have a French-American connection. It feels like luck. But as always, luck is the residue of design, because Julia Child had a network that enabled her to do that. So this mix between there being kind of the lightning strike, how tense the lightning bolt on the cover of the book, and my customized lightning cufflinks that I'm wearing today — they just came a couple weeks ago. So this is a—

Brandon: You've got merch. That's good.

Scott: I've got a t-shirt too. I did not wear the t-shirt today, but yeah. But anyway, this notion that both of those things are there. I think one of the things that's really important, if you're an innovator and you want to do it, it's not that you're going to have a perfect plan and everything is going to go smoothly. That's just not the way it works. You have to expect the unexpected. You have to expect weird things are going to happen and pounce on them when they do.

Brandon: Right. Yeah, one of the challenges, I suppose, in reading the Julia Child chapter, the thing that comes to mind is, how do you know what it is that people are going to, what problem they're going to be willing to pay to solve? It probably wasn't clear to a lot of people at the time that American women were hungering for a book on French cooking. I think you have a footnote about a story about medical tourism, where you learn that people just lie. This is no end of marketing research surveys asking customers what they want to buy and how much they pay for it and how much of that is of any value. So how do you really know, in terms of if you're trying to innovate, what it is that's actually going to meet a real problem for people?

Scott: First of all, I have to say I really do appreciate you calling out a footnote because I don't always get that, so I appreciate. Even though it's a slightly painful one, the failed medical tourism business. But you know, that was a very good learning experience. So let me just say a little bit about that, and then use it as an answer to the question.

Innosight was, is primarily a strategy consulting company. It works with large organizations, gives them advice about their toughest strategic and innovation challenges. There was a period of time where Innosight also had a venture building and venture capital arm. One of the ventures that Innosight tried to build was this business called Choice Med. Here's the basic origin story. If you look at the statistics between the United States and Singapore, you see something really interesting. The U.S. spends one in every $5 of GDP on health care. In Singapore, it's $1 out of every 20. Singapore spends a lot less, but health outcomes are much better in Singapore than they are in the U.S. So healthcare is really affordable, and they get great outcomes. So the idea is pretty simple—medical tourism. Get people who are going to undergo elective procedures in the US, have them fly to Singapore, have the procedure done for a fraction of the cost, have them recuperate in a six-star resort, and have them go back home.

So when Innosight was doing research for the idea, it did the thing you do. Talked to customers and everyone's like, "Yeah, great. I would love to do it." Talked to people who worked at insurance companies, we'll absolutely sign up. So then, Innosight began running little get togethers in Florida where there was a lot of target customers—knee and hip replacements, and so on—with leaflets, advertising the service. Nobody showed up. Once people were faced with the real opportunity to get on a plane and fly 9,000 miles to a place that few had heard of and almost none could identify on a map, the stated interest very quickly disappeared.

So how do you know that you're targeting a real problem? Well, what I advise—this is in my book The First Mile from 2014. You listen to what people say, but more critically, you watch what they do. If they are already spending time or money trying to solve a problem and they're frustrated, that's a good sign. You then try to, as quickly as possible, do what Innosight did, which is put people in a real environment to say, alright. Put your money, put your time where your mouth is. Demonstrate that this actually matters to you. If they demonstrate by purchasing something, that's good. If they do it more than once, you're feeling better. If they're telling their friends about it, okay, you really have hit a nerve. So that's the basic idea of how you can really know for sure. You only know when you know. You look for the signals beforehand, and you try to demonstrate through action that those signals actually mean something.

Brandon: Thank you. That's really—

Scott: Choice Med lasted for about one year before it was folded. And you know, the thing I will say in hindsight is, not too much money was burnt with these lessons. We got good stories that we could then use to advise our clients to not do the same thing that we did.

(outro)

Brandon: Alright, everybody, that's a good place to pause our conversation. In part two, we'll move from history to practice. We'll look at how leaders can better recognize disruption and deal with the ghosts that keep organizations from changing. We'll look at the secret to McDonald's success, what Clay Christensen got wrong about the iPhone, and how to reckon with the burdens of innovation without losing sight of its promise.

See you next time.