The Capitalist's Dilemma - Clayton Christensen

One of the world's most influential business thinkers Professor Clayton Christensen of Harvard Business School visits the RSA to explain how countries and companies can become more successful innovators, and create new, robust sources of growth.
Speaker: Clayton M. Christensen, Kim B. Clark Professor of Business Administration at Harvard Business School and author of "The Innovator's Dilemma". Discussant: Tom Hulme, Design Director at IDEO in London and Managing Director of OpenIDEO and OIEngine - IDEO's open innovation enterprises.
Chaired by Rohan Silva, entrepreneur-in-residence at Index Ventures, and former senior policy adviser to the Prime Minister, 10 Downing Street.
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[@sandeepvk]

there is something soothing about the way he speaks

[@Hobbitstomper]

You know what's really wrong with our entire society? That a video like this gets 2'000 views in 2 days, and a Miley Cyrus video gets several million views in a few hours.

[@larrysmith2636]

The big fish eat the little fish. Thanks for the lesson. The light was on, no one was home.

[@ThomasDuffyvc]

solid thoughts and real business theory

[@michaelmcmedia]

The combine harvester made a lot of farmers redundant. That was great because it meant not everybody had to be a farmer and we wouldn't starve. The problem is that nowadays, instead of innovation and efficiency increasing living standards, it just means we can impose more austerity without starving. And for what? To pay off usurious national debts. If we had sound money, our biggest concern today would be whether or not Asimov's laws would cause our robot butlers to turn against us.

[@amrendra80]

Amazing theory! Looks very plausible!

[@stainglassfox]

I didn't say that. I said that they get new money, as in new to the system that you had mentioned in the previous post. The FED loans money to banks, which is one that that is can contribute to the monetary supply.

[@NumeroSystem]

The problem is what is described by the "concentric circles" economic distribution diagram. If you start with a few people in the center with all of the money getting that money distributed to the outer circles is a problem. If you distribute the money to all of the circles equally in the beginning and let the market run from there then the distribution problem goes away. An example of this model is NumeroSet..Net.

[@robpeters7185]

Excellent Discussion on Finance-driven #leadership. The #RelationshipCapital (RC) Metric is a sustainable #innovation

[@yunety322]

Thanks to the guy at Sprouts who told me about this video!

[@stainglassfox]

Money isn't a closed system. Banks get new money from the fed, and companies get foreign money through import/export. Either way, money doesn't matter as much if it's not creating value, which is what he was saying about how capital is really cheap, but isn't being invested in empowering innovations.

[@djfilipe]

I agree with the causal correlation on the Capitalist's dilemma theory. The rate with which companies substitute human labour by automated equipment and computers has been faster than the rate with which new jobs are created. Yet, I think that new jobs should not only be stimulated from empowering innovations, but from more mundane economic activities that have been increasingly become capital intensive. How many empowering innovations should emerge in order to create enough jobs for everyone if we go on in this cycle indefinitely? After all, if emerging innovations aren't created, investments will keep inevitably looping on the efficiency alternative. Should´t governments impose an special tax on efficiency operations to fund R&D initiatives with the potential to enable empowering innovations? I hope Clayton and his peers advance on this research and figure it all out for the next book "The Capitalist´s Solution". Cheers.

[@arpansez]

The main issue is that innovation in The US is happening more on the financial front than on labor intensive products, i.e. the manufacturing sector. If you notice, the largest firms in The US are now mainly financial instis, from the manufacturing giants from 15-20 years back. So, while they are innovating on how to generate new numbers, these numbers aren't exactly being invested into heavy engineering.

[@Gnomefro]

The only sense in which economies could be resource based is if there are so many resources available that nobody would ever care to trade. The moment trade is desired, the only way to do it is to trade perceived equal value between willing participants. That is the free market.

[@Khannea]

So what process in reality is worsening re-employability of people laid off? What mechanism in the world is making people increasingly redundant?

[@xander7ful]

I can give you two reasons we haven't hit that employment peak - NAFTA & GATT. People can't get jobs because they're overseas & they aren't coming back. And if the TPP or TPIP passes, the employment time gap will increase.

[@CurtWelch]

In that sense Shayhtfc, you could just call EVERY invention "sustaining". The transistor was just sustaining the vacuum tube systems. The computer was just sustaining the abacus. The wheel was just an upgrade to the foot. The printing press was just an upgrade to monks copying books. That's absurd shayhtfc. The IBM PC revolution was transformative in that it moved computers out of the data center, and onto the desk top. This opened up huge new markets like video games.

[@CurtWelch]

The smart phone was just as innovative as the PC in that it moved computing from the desk, to the pocket. Cell phones have been around and in common use since the 90's, but not until the smart phone, did we transform society into people who how spend most their time in public staring down at there phones. This has opened up massive new markets for portable, real time data applications that did not exist while the computer was on the desk.

[@fobusas]

At least we're among those 2000. Fun fact: Jobs took into heart Clayton Christensen's book The innovator's dilemma when drawing his strategy for Apple. In whose company you'd rather be?

[@Social_Mechanic]

I hear you brother!!!

[@SersonPerson]

Very intelligent video.

[@archirex84]

How can I invest capital in empowering innovations?

[@w1975b]

If everyone understood a resource based economy, they would also want it. It can't really be successful/functioning in a small area. Progress can be made toward it, but it wouldn't be a full resource based economy without access to all resources necessary for all aspects. The goals are to eliminate starvation, poverty, war, crime as much as possible worldwide and with our current level of technology we CAN do this, it's not science fiction or wishful thinking.

[@DavidByrne85]

Wow.

[@lauraw.7008]

to Stuart David; I agree with you about "machines and computers will inevitably take away more and more work from humans and it's about time we start structuring society to convert some of those gain into time for personal use",,,and Todd Draney -feeling cynical and fearful? - I hear the meme "rapidly growing crowd of human beings who do not want to work" a lot lately. I don't know anyone unemployed who doesn't want to work. I know plenty of people who work and want a living wage - but recognize that to keep their current low-paying job, they'd best just not be too vocal about the unfairness of bosses using the "supply and demand" model to decide how little they can get away with paying.

[@jpage5303]

Wouldn't that begin out of debt in the first place? my question is how do we make the transition from this plutocracy to a reliable safety net based on resources?

[@Jayremy89]

Great that somebody else gets it.

[@bohemian187]

It's not nonsense. Technological advancement itself is not enough "nnovation and is not the cause of economic crisis. Also it's an area where these days you can make large profits with relatively low invesment due to that your deliverable to the customer is a license. The problem lays in what is done with the profits, it's not put to use in MORE reaserch, more companies, more jobs. Instead it's re invested finance & cost reducction, not in real growth. In the long run this only creates poverty.

[@kit-ro]

I think he said it was because a large part of effiency innovation just came down to finding ways to pay less people at once. eg the walmart example.

[@fleetfoxboxtrot]

Nice

[@thecaveoawesomeness]

The Wii?? I'm sorry but one of the most innovative devices to ever show up on the face of our earth was the gameboy. It revolutionized what it meant to play games and have fun. It did it's job so well and it started a cascade of new handhelds.

[@Gnomefro]

The only way electric cars could be desirable is if you already had an abundance of electrical power, such that you didn't have to worry about energy efficiency at all. It's not impossible to get there, but we're light years away from that goal today and simply switching all cars over to electrical engines would lead to disastrous lack of electricity overall unless one built coal and nuclear plants to feed the monster.

[@CurtWelch]

Technology and automation, is maximising productivity, and maximising profit, but it's killing jobs and driving wages down. This has left consumers, with too little purchasing power to drive the economy. And without demand, business can't grow to fill the demand. As tech gets even better, more people will lose their jobs, and demand will suffer even more. Redistribution of wealth is the only solution here.

[@XBebopo]

The point may be that we're not innovating quickly enough. In the past, investment in innovation used to keep up with population growth, but now investment has gone down. While we are innovating, there's still a lot more sustaining going on, a lot more efficiency improvements going on. It's still entirely possible that Dr. Christensen is incorrect, of course.

[@DavidByrne85]

'since 1990'. :)

[@NewMutator]

What do you mean? You can absorb all current means-tested welfare programs into a UBI for starters, but you can also simply print money and, instead of disbursing it through loans from the banks, just give it to people directly. I think that's preferable to distributing welfare through poorly managed programs anyway, plus it frees up money from getting tied up in government cruft. To answer your second question: how else? You stimulate demand.

[@isellpillz]

So... introduce to tobin tax and invest this into high tech industries/projects... give specific tax breaks to provide an incentive for private companies to invest money into these job creating empowering innovations? I heard that NASA owns 1 in every 1000 patents, for state investment it doesn't necessarily have to be specific just blue sky projects.

[@sniperontheroof123]

The free market is resource based lol. We are all trading scarce resources - time, money, minerals, etc.

[@markkranich8110]

Great, understandable stuff. Now how to best apply it despite the Repubs and Dems?

[@mba2ceo]

FACT: When MONEY is a closed system ... innovation just takes MONEY away from existing products !!!

[@CurtWelch]

When I use the term "technology" I'm not just talking computers. I'm talking ALL TECHNOLOGY, from the wheel, to the printing press, to the business finance, to medicine. I'm talking all human invention. It's what causes GDP to grow exponentially every year, increasing around 3% per year, decade, after decade, after decade. And yes, human invention is the ONLY innovation there is, and it is the underlying cause of inequality which through wage reduction lowers demand and slows the economy.

[@SpykerSpeed]

We don't have a free market. We haven't had a free market yet.

[@Gnomefro]

You don't necessarily have to prosecute anyone either. The investors can handle that by ruining the future careers of the leaders who made them lose a bunch of money by running the company into the gutter.

[@narayoon611]

Am I the only one who have trouble with playing it??

[@NewMutator]

Take all the capital tied up in finance and invest it by redistributing it through a UBI program. Providing basic income allows aspiring entrepreneurs to take risks (by introducing a reliable safety net) and you've solved your "empowering innovation" problem. A UBI would see dramatic results in the tech sector. Inventors would be free to pursue their passions instead of expending massive efforts seeking investment capital that just isn't there. Problem solved bros!

[@Gnomefro]

That's not really true. Back in the late 80s, during the bank crisis in Scandinavia, the banks were nationalized and the losses were handed to the stock holders while private investors were protected. Later, as the economies stabilized, the governments sold the banks again at a profit. That's a productive way to allow banks to fail without having to deal with the social consequences of bankruptcy.

[@ThomasDuffyvc]

what is talking about is all the countries in the world are throwing money at businesses who are using the money to do efficiency innovations which brings no new jobs

[@joaolfcamacho]

Maybe, but to get there we need a long continuous transformation. It's too much in the future. We think we need a better capitalism until then.

[@lkuzmanov]

In other words (the obvious fact that he isn't stating) is that finance urgently needs to stop being the most profitable use of money around!

[@ff7pianist]

He doesn't care if you watch the video, so your comment is entirely pointless and childish. He doesn't need to cater to you because he has something that you (should) want. He has no incentive to making himself more approachable to you, but you have incentive to listen and understand him.

[@bohemian187]

It's a nice goal, but hard to accomplish. Capitalism is global and labor laws are national. Capital has no nationality, and efficiency drives jobs to where it's cheaper. It'd be nice to have better regulations which are globally accepted. But how can these regulations get agreed upon different countries and approved when lobbiest are everywhere. Don't forget that the worlds largest economies today are not Nations anymore, they are companies. For evidence just reasearch the national reserve bank.

[@ericcartmansh]

Water water everywhere not a drop to drink

[@Khannea]

That's like saying someone who suffers from cancer needs vitamins.

[@bohemian187]

I agree with the importance of redistribution, the dilema is how it's done. It's not about getting more money into the hands of who are not well off. It's about making sure everyone has an equal chance to acces the same level of eductaion, healthcare, funding. I'd like to see that.

[@hamsterg0d]

When you can sell goods at a lower cost it frees up customer purchasing power towards other ends creating jobs there. In a free market chronic unemployment is not a problem. Singapore has a 1.8% unemployment rate because there is no minimum wage and few regulatory hurdles to employment.

[@eichti85]

work.isInnovation = (work.type === work.TYPE_INVENT || work.TYPE_IMPROVEMENT || work.TYPE_ADAPTATION) && work.isNewTechnique;

[@XBebopo]

It's rather ironic, isn't it? Making profit is the point of a business, so they destroy jobs in the name of accumulating more capital. However, less jobs means less demand, which will eventually leave them with dropping profits. it's a self-destructive system.

[@mrblack859]

@stephensang2000

[@fobusas]

High end luxury electric cars are already a better proposition. Tesla is starting to make a dent. A few more years in battery tech development and it's game over for ICE.

[@BenjaminEAlexander]

This boils down to “policy drives the lack of inventions, and we need inventions for rapid economic growth (a functioning economy).” The first statement is remarkably debatable, and the second is pure nonsense, and the brief discussion at the end illuminates that. This is the kind of economic theorizing that at best produces a new form of obscurantist discourse about the only kinds of innovation currently happening: capital finding new ways to undermine labor. As an example of what I mean, Uber claimed to be an empowering innovation when it started, but obviously it’s just a way to undercut wages and outsource costs. This is the kind of half baked criticism of our economy that is easily absorbed into the system and used to hide its ongoing sins.

[@CraigTalbert]

Furst, :)

[@CurtWelch]

Ok, let me try again since you can't read. Whey I use the word "technology" I mean ALL INNOVATIONS and inventions of man, including your example of "soda packaging". OK? Simple enough? I explained this in the last message. What prevented you from understanding it? If the word "technology" is throwing you off, then let me help you. When I wrote "technology" above, just substitute "all human innovation". Now read my first message again while making that substitution, and see if that helps.

[@klam77]

So prius cannibalizes but Tesla don't.

[@shayhtfc]

Er, like Clayton said, a lot of the innovations you mentioned are "sustaining innovations" and essentially replace what came before them (@ 5:30). Yeah the iPhone is innovative, but its still just an upgrade from what came before.

[@bohemian187]

Ok, you don't know what you're saying, technology it's not the only innovation. For instance, the packaging of a soda can be innovative, there are different ways to innovate. If you fail to see that there's no point to continue this debate. And with your bias viewpoint, I doubt you understood the underline in what the speaker is presenting.

[@stephentsang2000]

So true so true~ I watched the whole of his another video on KZbin and found nothing inspiring at all.

[@petertomaras3318]

Ah, the dismal science. Unfortunately, the inviolable demand to show small quarterly gains in revenues and net incomes, and store gains over the previous month, trumps all long-term investment in innovation and future gains. Wall Street demands quarterly results to boost stock prices, thinking that this is all investors care about. It's like hobbling the horse.

[@mrblack859]

As I understand it, the innovations begin as inefficient devices which require more jobs. These innovations replace already efficient products that require fewer jobs to maintain, produce, etc. Jobs are not being created as much as they are being momentarily reanimated before the next big innovation.

[@mba2ceo]

U want innovation ? Pay all management with ONLY stock with a limited yearly sale restrictions !!! I bet over 90% of bankruptcies would be eliminated as a byproduct.

[@Joe0Cod]

useless eaters been? Most jobs people do seem useless to me i.e standing at a desk for hrs waiting for a customer call/purchase, emailing endless crap etc etc

[@AndrewSpencer69]

The subtitles are truly awful. Who on earth did them?

[@mba2ceo]

It is completely WRONG that the FED creates MONEY.

[@00midnightcat]

So, the problem is capital costs nothing? For Capitalism, this is YOU WIN, Game Over, thanks for playing. It's time to find a new purpose for business, like improving the human condition.

[@Maxid1]

Warren Buffet is all the dislikes...

[@stephentsang2000]

Removal of the useless eaters on this planet is the first priority in the future. Otherwise, resource based economy will be a scam.

[@nosapience]

As usual Clay is using the word innovation as a trendy word for everything, but talking about inventing or improving or adapting!

[@Gnomefro]

"It ensures the most ruthless and selfish people ie westerners get fat off the profits extorted from the 3rd world whilst keeping them oppressed and weak" Don't be silly. Sub Saharan Africa is currently the second fastest growing economic region after Asia. What has been holding Africa back has been wars, not capitalism. The wars have in fact prevented capitalism/investment and still does in some regions. When there is stability, cash will flow into regions with cheap labor.

[@CurtWelch]

There Is NO LACK of innovation. There Is NO LACK of investments in startups. The problem is simple. Facebook, employees ONLY 5000 people. The new innovations are automated and don't need 100,000 workers. The new innovations are increasing JOB KILLERS, not job creators. He's right that we are investing in job killing innovations (his loop at the bottom), but we are doing it because making a profit is the POINT OF BUSINESS; Creating jobs is NOT THE POINT OF BUSINESS.

[@bigdaddyd123ify]

What is disturbing is that there is a rapidly growing crowd of human beings who do not want to work, yet still expect to survive... by living off the work of others. A human being must consume to survive. Somebody has to work to produce the things for human beings to consume to survive. The people who want to be free from work yet still expect to survive are called externalities or social costs and they are a drag on the rest of the people who are willing to pull their own weight on this planet.

[@TOM-op2cp]

No. One cannot use a pre-industrial view and make sense of things. Also it's off topic. Most productivity comes from machines and inanimate energy. Many real-world jobs serve no actual function. Clay is right in his evaluation. but problematically the system isn't fixable, it has to be disrupted too.

[@igoronline]

Watch out, if you start talking about Marx's ideas you may soon be called an "M" word.

[@witcheater]

What I got out of this is that Clayton Christensen is shilling for the financial Oligarchy that has in place a system that is working well for them but not so well for 85+ percent of everyone else. VFL corporations do not want any competition, so in sitting on large amounts of capital, way less is available for innovative products that might/would make some older product of an VFL established company obsolete.

[@wakeupscreaming9883]

Can someone milk down what this guy is saying in 1 or 2 sentences max? I feel raped and violated having had just sat through 25 minutes and I still don't know what he's talking about.

[@ask412]

" ... violated having had just sat through 25 minutes and I still don't know what he's talking about." Sad, still probably sucked into the script of austerity, prudence, economic rationalisation. You need to do use some due diligence, with personal study about economics.

[@brianm5060]

A new product is created and eventually is refined. This process makes more money and creates stable companies. Companies used to use this money from new products to make more new things but now they only use the money to make old things more efficient. This is how our economy can recover without new jobs.

[@stephentsang2000]

This theory is flawed. When you play video games, you gave up playing physical toys. The factory workers who used to make toys will be laid off. Same for computers which replaced typists, and automobiles which replaced traditional carriages. "Empowering innovations" don't necessarily create jobs~!!!