Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: clayton christensen

  • How disruptive is AI really going to be?

    AI is going to be very disruptive, right? At this point, I think it is pretty clear to most that the answer is yes, almost regardless of what industry you’re in. But is it going to be really disruptive? Like disruptive in the Clayton Christensen sense of the word. (Christensen is known for coining the term “disruptive innovation“, which he contrasted against “sustaining innovation.”)

    This is a good question, and I like how Ben Thompson thought about it in his newsletter this morning:

    I tend to believe that disruptive innovations are actually quite rare, but when they come, they are basically impossible for the incumbent company to respond to: their business models, shareholders, and most important customers make it impossible for management to respond. If that is true, though, then an incumbent responding is in fact evidence that an innovation is actually not disruptive, but sustaining.

    The point he is making is that given that the big tech companies (and of course everyone else) are all now responding to AI by incorporating it into their businesses, it, by definition, must not be a disruptive innovation. It’s a sustaining one. This doesn’t mean that AI won’t have significant impacts on our economy; it just means that maybe it won’t put a company like Alphabet out of business.

    I thought this was an interesting way of looking at things because it is a reminder that “disruptive innovations” often start out at the bottom of the market. They start in a way that can feel innocuous to incumbents; that is, until they move upmarket. But this is not at all how AI feels. As soon as you play around with ChatGPT you immediately think to yourself, “holy shit, this thing can do my job.”

    That is obviously something very meaningful. But is it going to shake up the big tech world order? I don’t know, if you follow Christensen’s definition, crypto sounds like the more disruptive innovation.

  • Meatspace vs. metaverse — what is the best way to flex?

    With every passing year, the Matrix feels less and less like science fiction. With the continued rise of the metaverse — Zuckerberg is betting all of Facebook on it — we are increasingly living our lives between two worlds: one is offline and one is online. What this will ultimately mean (for us and for our cities) is of course up for debate. But what is clear is that the traditional trappings of real life have quickly made their way online into the metaverse. Arthur Hayes recently penned this fantastic article about the future of the world (it’s the metaverse) and the role of art (including NFT art). In it, he makes the argument that to “flex” is integral to the human experience. Here’s what he means by that:

    As social beings, the sole purpose of many activities and purchases is to publicly display how much energy you can waste. The nightclub economy is extremely a propos to this concept. Individuals walk into a dark room, listen to loud music (art), dance (a waste of energy akin to a mating call), and pay exorbitant amounts of money to drink liquid. Everyone gets dressed up real nice in articles of clothing that serve no useful purpose other than to demonstrate that the wearer spent a lot of money to display their social status to the rest of the clubbers present.

    People go to clubs to flex. In the words of the late Clayton Christensen, that is the “job” to be done.

    Why this matters is that many of us are now doing the same kind of things online. Buying a CryptoPunk (an OG NFT) for a large sum of money and posting it as your social media profile pic is a flex. Is this rational or irrational behaviour? Whatever your answer, it is akin to paying several hundred dollars for a t-shirt from some cool streetwear brand. The real job to be done is not that you desperately need a t-shirt to cover your upper torso. It is the signalling that goes along with owning something scarce and valuable. One of the things that is so special about NFT-permissioned stuff is that there’s now a simple way to prove and enforce all of these things: ownership, scarcity, and so on.

    What’s equally fascinating to me is how offline and online will end up interacting with each other. (Arthur refers to our offline world as the meatspace. I don’t know if he coined the term, but I’m going to rolling with it for the purposes of this post.) If people end up preferring to flex online instead of offline (and I’m sure many already do), what does that do to our meatspace(s)? And what does it do to our cities and how we build? I have no doubt that these questions are coming.

    Photo by Richard Horvath on Unsplash

  • The “jobs” of co-living

    Earlier this week I wrote about the age groups that are most likely to live in an urban neighborhood in the United States. It was people in their 20s and, to a lesser extent, baby boomers. The data I was relying on used population density to measure urbanity.

    Interestingly enough, the demand for co-living seems to mirror this. (Feel free to disagree.) From what I’ve been told, the fastest growing co-living segments are young people recently out of school and retirees. Intuitively this makes sense to me.

    If we think back to teachings of Clayton Christensen (another recent post), we “hire” products and services because we have “jobs” that need to be done. In the case of a McDonald’s milkshake that job might be a breakfast that’s appropriate for a long and boring commute.

    In the case of co-living, and in urban neighborhoods in general, one of those jobs has got to be social connections. (Again, feel free to disagree.) We do also know that single person households are increasing in many cities. Are these phenomenons related? How big could co-living get?

    Note: This post was written on my phone on a flight, which is why there are no links or images.

  • The “job” of a McDonald’s milkshake

    Management guru Clayton M. Christensen died this week. Sadly, he was only 67 (leukaemia). A professor at Harvard Business School, Christensen was best known for probably two things: His work on disruptive innovation and his teachings on how to live a more fulfilling life. If you’ve read anything on innovation and disruption, I am sure you’ve come across the work of Christensen. He had a way of explaining things by reframing them. Here is a short video about the “job” of a McDonald’s milkshake. And here is another one where he explains the cycle of disruptive innovations, sustaining innovations, and efficiency innovations. Both videos are worth watching.

  • Innovating amongst the haters

    Whether you’re developing a building, planning transit, starting a company or just trying to do something different, there will always be haters. But pessimists don’t change the world—optimists do.

    I came across a great post last night by venture capitalist Ben Horowitz. It’s called, “Can-Do vs. Can’t Do Culture.” And I think you’d be well served to keep a copy of it on file and read it before every single meeting where you’ll be asked to provide input on something new.

    He’s specifically talking about a growing and discouraging trend of naysaying in the tech community, but the lessons apply more broadly to innovation as a whole.

    I love these lines:

    “The trouble with innovation is that truly innovative ideas often look like bad ideas at the time. That’s why they are innovative — until now, nobody ever figured out that they were good ideas.”

    “From a psychological standpoint, in order to achieve a great breakthrough, you must be able to suspend disbelief indefinitely. The technology startup world is where brilliant people come to imagine the impossible.”

    But the best part of Horowitz’s post is an excerpt from an internal Western Union report (then the largest telegraph provider in the US) recommending that the company not purchase Alexander Graham Bell’s invention (the telephone) and patents for $100,000.

    The Telephone purports to transmit the speaking voice over telegraph wires. We found that the voice is very weak and indistinct, and grows even weaker when long wires are used between the transmitter and receiver. Technically, we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.

    Messer Hubbard and Bell want to install one of their “telephone devices” in every city. The idea is idiotic on the face of it. Furthermore, why would any person want to use this ungainly and impractical device when he can send a messenger to the telegraph office and have a clear written message sent to any large city in the United States?

    The electricians of our company have developed all the significant improvements in the telegraph art to date, and we see no reason why a group of outsiders, with extravagant and impractical ideas, should be entertained, when they have not the slightest idea of the true problems involved. Mr. G.G. Hubbard’s fanciful predictions, while they sound rosy, are based on wild-eyed imagination and lack of understanding of the technical and economic facts of the situation, and a posture of ignoring the obvious limitations of his device, which is hardly more than a toy …

    In view of these facts, we feel that Mr. G.G. Hubbard’s request for $100,000 of the sale of this patent is utterly unreasonable, since this device is inherently of no use to us. We do not recommend its purchase.

    It’s a classic example of The Innovator’s Dilemma (a book written by management guru and HBS professor Clayton Christensen). Many firms see their businesses disrupted because they blindly stick to the innovation that made them successful in the first place—ignoring what’s coming up on the horizon.

    In the case of Western Union, they could not imagine “telephone devices” in every city. The idea was pure lunacy to them. Of course to us today, they look like myopic fools. We now not only have telephone devices in every city, but a full fledged computer in every pocket. Imagine that.

    Which is why I think it’s important to remember that the way to drive the world forward is—to use Horowitz’s terminology—through hope and curiosity. Suspend disbelief. Think big. Dare to be crazy. Because you’re only crazy until you’re proven to be a genius.