37 pages • 1 hour read
How Will You Measure Your Life?
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Christensen argues that most people do not start off with the aspiration of doing unethical things. Instead, a series of small, unethical decisions eventually leads to the normalization of unethical values. These decision makers only consider the cost of their behavior in the present. Christensen uses the case study of video rental giant Blockbuster to explain marginal cost thinking. Blockbuster was so successful that it did not consider the start-up Netflix, which used a different model for video rental, as a threat. Rather than adapting its own strategy and investing in Netflix’s increasingly popular model, Blockbuster remained true to its own model. Eventually, the company declared bankruptcy—which Christensen attributes to its marginal thinking, to assuming the current model would remain productive. He also studies US Steel and its competitor, Nucor. When it became evident that Nucor’s strategy of depending on mini-mills for cheap steel production was advantageous, US Steel did not follow suit. They relied on their current mills instead of adapting. When executives consider whether or not to invest in something new, they contend with paying the full cost of this something or leveraging what they already have to keep costs marginal.
As a case study of how marginal cost thinking can lead to trouble, Christensen describes the story of Plus, gain access to 8,650+ more expert-written Study Guides. Including features:
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