Michael Porter and Clay Christensen offer opposing strategies for the future of Harvard Business School. Neither strategy is likely to succeed, argues Marty Neumeier. He proposes a third approach based on design.
The New York Times recently pitted strategy gurus Michael Porter and Clay Christian against each other on a thorny question: How should Harvard Business School handle both the threat and the opportunity of online disruption? Or, put another way, what’s to keep new distance-learning outfits such as Coursera and edX from repositioning Harvard as an overpriced dinosaur? In the article, “B-School, Disrupted,” business writer Jerry Useem uses the two strategists to highlight opposing views.
In one corner is Michael Porter, the Harvard professor who wrote the canonical works Competitive Strategy and Competitive Advantage. In the other corner is Clay Christensen, also a Harvard professor, author of the seminal books entitled The Innovator’s Dilemma and the Innovator’s Solution. Porter argues for evolution, not revolution, believing that the school should modernize around the edges while preserving the core. Christensen maintains that revolution is inevitable, arguing that the school should disrupt itself before its competitors do. Neither of these positions is surprising, given the theories on which both men have invested their time.
Harvard seems to have chosen a Porter-like strategy. It’s now building a program called HBX, conceived as a $1,500 “pre-MBA” online course to prepare students to speak “the language of business.” The beauty of this approach, say its proponents, is that it makes money without cannibalizing key profit centers, such as the MBA and executive education programs, which have brought in a quarter billion dollars per year.
HBX makes total sense on the surface: Replicate the case-study method—Harvard Business School’s secret sauce—using technology that can reach large numbers of students with fewer professors. Not only will the school make a profit with HBX, it can turn around and make another profit by feeding selected graduates into its $100,000 MBA program. On the apparent strength of this strategy, the school has made an investment in a sophisticated studio setup that mimics the tiered-style Harvard classroom.
According to the article, the HBX facility will place a computer screen—instead of a live student—in each of its 60 “seats”. A professor will then stand in the “pit” and orchestrate case-study discussions as if the students were physically together in the room. The past is thus preserved, and the future fended off.
What could go possibly wrong?
A lot, according to Christensen: “I think we’ve overshot the needs of the customer.” He believes it would be better to start cheap and simple—just get it out there and improve it on the fly. He also believes that any new online program needs a bit of separation from the mainstream Harvard experience, so its hands aren’t tied by old norms and the need to make immediate profits. Eventually, if the Christensen approach works, the new model would supplant the traditional brick-and-mortar model. This was the road not taken by Kodak, he says, when it continued to invest in film instead of building its future on digital.
My own view as an innovator is that neither approach will produce a lasting competitive advantage. Ironically, the reason for this can be traced to the very teaching model on which the school was founded: the case-study method.
Case-study education gets many things right. For example, it encourages students to look to the past for patterns that could shed light on a current situation. It asks future leaders to support their strategic and tactical decisions with factual evidence, not intuition alone. And it creates a rich basis for discussion, so that students and their professors can learn from each other in a fluid, interactive way.
But case-study education gets one thing wrong. It gives learners the impression that the answer to a current problem can be found in the past. Certainly, the past can inform many new situations. But if the goal is to innovate, as Harvard needs to do, the past can also be mute, or even misleading. It puts one-size-fits-all boundaries on a problem, thereby limiting its originality. It’s a bit like shopping for clothes on the ready-to-wear rack when what you really need is a custom-designed suit. Relying on precedent can lead to “best practice” thinking instead “new practice” thinking.
Given the need to innovate, Christensen’s advice—get new ideas out there cheaply and let them find their way—seems more practical than Porter’s top-down approach, in which a key concern of the new program is to reinforce the existing strategy.
To someone like me, a design thinker, both approaches seem incomplete.
The Porter solution appears to be an educated guess based on a faulty brief. The brief, formulated by the dean as guiding principles, included these three items:
- HBX should be economically self-sustaining (meaning that it should function as a profit center).
- It should not substitute for the MBA program (meaning it shouldn’t cannibalize existing revenue streams).
- It should replicate the school’s discussion-based learning model (meaning that it should reinforce its historical differentiator).
Any design thinker would immediately see the error: The brief jumps to conclusions. It’s based on untested assumptions, unquestioned beliefs, and creaky mental models.
Who says the program has to be self-sustaining? Why shouldn’t it substitute for the current (and possibly endangered) MBA program? Does it really have to replicate the case-study model? To a designer, the guiding principles in the brief are actually important decisions made without the benefit of critical thinking or new ideas. The designer—and therefore the innovation that comes from design—is effectively cut out of the process. In essence, the guidelines become the decision.
A design-minded leader might have framed the brief differently, perhaps as series of questions:
- What is the future of universities in the light of advancing technology?
- Where will the power shift—toward universities, students, instructors, or entirely new education models?
- How can we take a leading role in the future, given our reputation and assets?
- What steps should we take now to reach our future state?
By asking questions like these, design thinkers broaden the scope for innovation. They avoid imposing an ideological straight jacket on the innovation process.
From a designer’s standpoint, Porter’s advice seems like a first guess based on a belief system. A design team certainly might have proposed one or more ideas like HBX, but only as possibilities. It would have prototyped other possibilities, too, rejecting some and refining others, until the risk was brought to an acceptable level. Jumping to big conclusions is bad design, and so is jumping to small ones just to avoid risk. Designers have to develop a strong disbelief system.
Porter’s argument for building an integrated brand is that copycats would have to recreate the whole brand to compete with Harvard’s online program. “Any competitor wishing to imitate a strategy,” he says, “must replicate a whole system.” Yet copycats are rarely the biggest threat to leading brands. The real threat is more likely to come from purpose-built organizations, unencumbered by legacy beliefs, who correctly imagine the future of education. They wouldn’t bother replicating Harvard’s system. They would render it irrelevant.
This is where Christensen is strong. He knows that education is ripe for disruption, saying that “half of the United States’ universities could face bankruptcy in 15 years.” Necessarily, his approach is opposed to Porter’s.
Christensen would set up the program as an independent business unit, allowing it to learn from experience without the need for immediate profits or slavish brand alignment. The management team would experiment quickly and cheaply, gathering knowledge about what works and what doesn’t. With success, the new unit could be folded into the legacy brand, or even the other way around, as when Apple became the Macintosh brand, then the iPod brand, and later the iPhone brand.
He sees innovation as something that unfolds over time on the public stage: You put out a cheap product that serves an unmet need, get some traction with it, improve it, begin to raise the price, and meanwhile start looking for your next disruptive innovation. It’s a Darwinian, way-of-the-world model of competition. What it doesn’t acknowledge is the potential of design to speed up this evolution, all the while keeping hard-won learning—and embarassing mistakes—out of the public eye. Design can create disruptive innovation much faster and much more surely than a thousand monkeys with a thousand dry-erase markers. And it shouldn’t take a thousand years, or even a thousand days, with a talented team.
Okay, so how would a design team view Harvard’s challenge? First, it would reframe the brief. It would ask bigger questions, such as:
Where does the future of education look like?
What value will elite schools provide?
What will happen to professors when learning moves online?
How will the playing field change when certain professors become superstars?
What new pricing models should we consider?
How should a student’s education progress?
Which courses will be made obsolete by technology?
Which new courses are likely to emerge?
Should subjects determine learning, or should learning determine subjects?
In the future, what will it mean to “go” to school?
Then the designers would imagine a wide variety of futures. Based on these, they would knock together prototypes that posited a range of leadership roles for Harvard. The prototypes would be shared, discussed, analyzed, rated, improved, and tested. New prototypes would emerge. Finally, the ideas would resolve into a clear path forward for Harvard. Most of the guessing would occur in private, and most of the success would occur in public. Thus the Harvard brand would be shielded from unnecessary risk. Its value would increase in proportion to the confidence of its moves.
Certainly, guesswork is a key component of innovation. Even the case-study method relies on informed guesses. But for those who want control over the process, the guesses should be informed by design—not driven by beliefs, limited by fears, or lifted wholesale from stories or studies.
This does not lessen the valued contributions of Porter and Christensen. Both professors are lighthouse figures in the world of business strategy. The Times simply used them to illuminate an irony—that the leading school for business strategy can’t agree on its own strategy. But there’s a bigger point. Their shining contributions lead straight to the need for design—not just in products and services, but in business models, organizational culture, and yes—strategy.