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[Music] thank you president samuelson i love my students but it's very clear as i sat here and felt you come into the room that i don't feel the same spirit coming from my students at harvard that i feel from you and i i congratulate you on your goodness because i can feel it hardly a day goes by in my life without my becoming aware of some way in which byu shaped me and i half of my heart will be here wherever i go the rest of my life um it's a great institution i have to do a lot of writing as a part of my job and i never write a paper or a book without thinking of dr charles tate who taught me my english 316 technical writing course and i went into that course thinking i was a pretty good writer took my first assignment spent a couple of hours on it dr tate gave me a c minus i was incensed the next assignment we had one a week i was going to show dr tate that i knew what good writing was and i worked four hours on that assignment and he gave me a c the next one i was really going to show him how i could write spent six hours on it he gave me a c plus and we went through this excruciating i'm going to show this man process and the very last assignment he gave me a valve which is the kind of valve on the outside of your house that you hook the hose up to and the assignment was i had in words to describe that valve so accurately that somebody could draw a perfect picture of that valve without ever having to look at anything else i spent all night and dr tate gave me a b-plus and then mercifully he gave me an a for the semester and i asked him how could you have done this to me and he said i just had a feeling that you could become a good writer and i wanted to push you and dr tate just epitomizes for me what byu can do for its students it can take fairly mediocre input and cockiness and punish it punish it mercilessly but with love and out the other side comes something that's a bit better and then dr tate just took a seat in my cheering section and the rest of my life when i've been been afraid to take another step forward there was dr tate saying you could do it and i am so grateful to him and to the other faculty members and administrators who were so good to me during my time here i'd like to talk a bit about some of the research that i've been doing at our school um and let me let me play place it in context of where the original puzzle came from that led to this thinking and it really was just from living in the boston area in the 1980s and watching the massive computer company digital equipment corporation collapse the reason why digital's demise was such a puzzle to me is that through the 1970s and 80s digital was one of the most successful and widely admired of all of the companies in the world economy and when you read articles in the business press about why they had been so successful the success was always attributed to the capabilities of the management team they were very good and then about 1988 the company just fell off the cliff and began to unravel very quickly and when you then read explanations in the business press about why they had failed so badly it was always attributed to the ineptitude of the management team and it was the very same managers in charge of the company on the up and down sides of their hill and for a while the way i framed the question is gosh how could good managers get that stupid that fast and that really is the common explanation people have accepted for this as well as most companies their failures is that somehow a management team that had its act together at one point lost it at another the reason that never quite could hold water for me is that every mini computer company in the world collapsed in unison it wasn't just digital it was data general prime wang laboratories next door few lit packard and you might have expected them to get together and collude on pricing possibly but to collude to collapse was a bit of a stretch but there had to be something more fundamental that caused the whole population of companies in an industry to to disappear in unison and it turned out that the very counter-intuitive conclusion that resulted from this stream of thinking was that it was actually good management that caused them to fail and in fact two of the paradigms of good management that we teach at our school and at the marriott school and others that you should always listen to your best customers and focus your investments where the profitability is most attractive these paradigms of good management so the seeds of every company's ultimate demise so what i would like to do is is maybe in two-thirds of the time we have together talk a bit about what some of these findings mean in general i'd like to then apply them to as a as a set of theoretical lenses to give a view of why america's health industry is in such a mess today and what might be done to resolve it and then in the last few minutes uh some of i'd like to apply some of the insights from this research about to some of the challenges that we face as a growing and worldwide church and and then we'll love to take questions and answers from you in the next session this is the model on the chart above me that helped me understand this mechanism of why it is that good management can kill a successful company i'll plot on the vertical axis the performance or of the products or services that the company offers over time and there are three elements of this model the first one is represented by this dotted red line and what that suggests is that in every market there is a trajectory of improvement that the customers in the industry in the market are able to utilize over time and a good way to visualize this is every year the car companies introduce new and improved engines to us and yet we can't use all the improvement that they make available under the hood because you got things like speed limits and traffic cops to put a crimp on how much of the engine's performance you can use now to keep the diagram simple i'll depict this ability to utilize improvement as this single line representing the median customer in a market but if you can remember what we really mean is there is a whole series of parallel lines there so at the high end of every market they're very demanding customers that are never satisfied with the best that's available and at the low end of every market fairly unsophisticated customers that can be over satisfied with very little but that's the first element of the model is that there is an ability to utilize improvement the second element is represented by that more steeply sloping blue line that suggested in every market there's a distinctly different trajectory of improvement that the innovators make available as generation after generation they introduce new and improved products the most important finding about this is that this trajectory of technological progress almost always outstrips the ability of customers to utilize it and so it means at that point where the two lines intersect a company could be making products or services that are squarely positioned on what customers in the mainstream of a market are able to use but as they pursue more profitable customers who will pay higher prices for better products in the more demanding tiers of the market they're quite prone to overshoot what the original set of customers is able to use at a later point in time and a good way to visualize that is if you go back on the very left-hand side of the diagram in the mid-1980s when we were first learning how to use personal computers to do word processing on them it was not unusual for us to have to stop our fingers to let the intel 286 chip inside catch up to us because it wasn't good enough for the application in which we were using it but as intel has pursued more profitable customers who will pay higher prices for faster chips at a 3 gigahertz pentium 4 processor they have way overshot what customers in mainstream business and personal applications are ever able to utilize now at the same time there's still a few freaks at the high end of the market that aren't yet satisfied with the fastest chips intel can make so that's the second element of the model is that the trajectory of technological progress almost always outstrips the ability of customers to utilize it now the third piece of the model which was for me the toughest one to get my brain around was what finally helped me understand this paradox of how good management can cause companies to fail as prior to this there had been a paradigm of sorts accepted amongst consultants and academics to explain why companies stumble and it essentially was well once a company gets big and successful it just gets risk-averse and bureaucratic and slow and they lose their ability to do breakthrough innovations and it turns out that that doesn't hold up to the data at all but there is a very different way to cut the situations companies find themselves in that does help you predict when would you expect the leaders in an industry to be right on top of the new innovation and when you would you expect the leaders to get killed there's one kind of an innovation that i called sustaining innovations and a sustaining innovation might be simple incremental performance improvements or dramatic leap leapfrog innovations that take you beyond all of the competitors it turns out that it doesn't matter technologically whether it's simple or complicated in almost every instance the incumbent leaders in an industry are the ones who end up on top of the industry when the technology at issue when its purpose is to make a better product that can be sold for higher profit margins to their best customers again it doesn't matter technologically how difficult it is if it appears to be profitable and attractive to the leaders in an industry they figure out a way to get it done but every once in a while there's another kind of an innovation that comes into an industry and i call this one a disruptive technology and i called it disruptive not because it was one of those breakthrough leapfrog sustaining innovations but rather the disruptive innovation brought to the market something that was worse than the products that historically were available but they were simpler less expensive and enabled a whole new population of people to do things that historically had lacked the money or skill to do and i called it disruptive because it disrupted and redefined rather than sustained the trajectory of improvement and in each of those cases the entrant company always won and oddly they were technologically simple innovations now let me bring this back to my original puzzle digital equipment corporation because that is a an industry that's familiar to some of you if you we were able to bring into this room and line up the sequence of many computers that digital equipment put into its market into the market and peel the covers off and actually look at the technological improvements that were required to make good mini computers better digital didn't skip a beat anything that helped them make a better product that they could sell for higher margins to their best customers they figured out a way to get it done those of you who are students here just wouldn't have a memory of this but those of you with a little bit of adult gray hair do you remember how crummy those early personal computers were in the late 70s and early 80s in fact apple sold its initial product the apple ii was a toy to children these really couldn't do anything that was sophisticated in any way not a single one of digital equipment's customers could use a personal computer in those early years because they weren't good enough to be used in the applications for computing that existed in the late 70s and early 80s and what that meant is the more carefully digital listened to its customers and tried to reflect the customers unmet needs in the properties of their next generation products they got no signal from their customers that the personal computer mattered because they couldn't use it and yet it could take root in simple undemanding applications with simple undemanding customers and then because the trajectory of technological progress outstrips the ability of customers to use it what was at one point a toy intersected with the needs of the mainstream customers at a later point in time and it wasn't just digital it was the whole population of companies that got blown out of the water in unison now one of the corporations that has used this way of thinking a lot in the last few years to try to plan their own corporate and product strategy has been intel because as i mentioned they've gone from a position of chips that weren't anywhere near fast enough for simple applications to these screamingly fast miracles that nobody can use and they were coming into the low end of the microprocessor market in the late 1980s much cheaper simpler processors that were sold in computers priced under a thousand us dollars at the time and these low low-end processors made by the taiwanese and by amd and and cyrux were just killing intel at the low end in fact their share dropped from 90 to 30 percent in 18 months and this helped them see my gosh if we lose the low end today we may lose the mainstream of the market tomorrow and this is actually a serious thing and so i had a chance to go out and spend a lot of time with their senior management and i remember being in a meeting with their chairman andy grove and i was going through this mechanism and he had a very puzzled look on his face and as bright as he is i couldn't imagine he didn't get this but then you could see the kind of the teacher's dream and the light bulb turned on and he raised his hand but he said i see what's wrong with your idea clay and he went up and i had a chart like this on the screen and he crossed out the word technology and he said i think if you frame this as a technological problem you're going to mislead the world and unfortunately the innovator's dilemma the book i wrote had just been published and i couldn't swap the word but he he said if i if i have your concept it would be more accurate to characterize it as trivial technology that disrupts the business model of the leader and that's what makes it so hard to deal with and he then went on to give his view of digital equipment's demise and he said you know in the first place this wasn't a technology problem digital's engineers could design personal computers with their eyes shut but they had a business model and the mini computer was fairly expensive and complicated and that meant it had to be sold direct to the customer and the selling process involved a lot of training and support and service and you just had to have costs like that in the business in order to play in that game and given that kind of a cost structure digital had to make gross profit margins of about forty five percent and the average price of their machine was somewhere around two hundred and fifty thousand dollars and they had to have make forty five percent just to cover the overhead cost that was inherent in that kind of business that they were in now in that environment as in every company's environment people are walking into senior management all the time with proposals to make new products some of the proposals that digital's management was entertaining entailed making a better mini computer than they had ever made before one that would be so good that they could start to reach up into the tiers of the market where historically people had had to buy even bigger mainframe computers if you go back and look at their business plans those machines could be sold for five hundred thousand dollars apiece and they promised sixty percent gross margins so at the time same time digital's managers are trying to decide whether they should invest in those kinds of products other people were walking into management with proposals to make personal computers because in their view that's where the future was and if you go back and look at those business plans they typically forecast earning 40 margins and these machines could only be sold for 2 000 apiece and the margins were headed down to 20 very quickly and so andy stepped back and he said so really you're saying the decision the managers had to make was should we invest our money to make a better product that our best customers could use that would improve our profit margins or should we use our money to make worse products that none of our customers could use that would wreck our profit margins what should we do and i'm really quick and so i said andy if i were you i think i'd go into academia about now because then you just have to talk about the problem and then i realized that this very same thing is happening to the leading business schools all over the country as well as our mba programs have become so expensive and and corporate education is coming at us from the bottom but it is a dilemma and almost all of the time these two paradigms of good management that we should listen to our customers and focus our investments where the margins are most attractive provide very good guidance in moving up that performance curve and then every once in a while when one of these disruptions come into an industry those paradigms of good management paralyze rational managers and make it impossible for them and that's the point at which new companies are born i tried to just list on this slide a few of the several hundred companies whose stock we wish we had owned over the past 20 years and almost every company that has been a growth story in the past started out at the low end of the market and disrupted the prior leaders for example for those of you from idaho or southern california who drove your lexuses here to byu may not remember that where toyota started was rusty little models called the corona in the mid 1950s and the term made in japan was something that they tried to disguise and then little by little toyota moved its way up market and just nailed the american and european car makers i remember when my i grew up in salt lake city and my dad worked in the zcmi department store there and i remember when kmart moved to town and they came in at the low end of the business didn't sell high quality merchandise but simple hard goods that sold themselves and very quickly zcmi and all the department stores got out of hardware and paint you know kitchen utensils and sporting goods and toys and they became retailers of higher end products clothing and cosmetics and home furnishings and then the discount department stores have moved that market and underneath them have come even meaner discounters called best buy and circuit city and toys r us and so on yesterday a lot of yesterday's growth companies are now on the brink of extinction um i got japan listed there at the top i had a former student who went back to japan and became a senior officer in their ministry of international trade and industry and the poor guy got sentenced to write a plan for the resurrection of japan's economy about four years ago and as many of you know their economy just grew robustly through the 60s 70s and 80s and then in the 90s it's just been in a stagnant swamp and there seems to be no escape and my student called me after a couple of years working on this project and he said i actually think there is no hope for japan and so he came back and we spent a couple of days talking about it and what we realized is that every one of the industries that constituted a fundamental engine of japan's economic growth had been disruptive so sony as i'll talk about in a minute came into the low end of a market with crummy made in japan transistor radios and now they make the highest quality consumer electronics in the world toyota did that in cars honda did it in motorcycles and then cars cannon did it to xerox coming in with crummy low-end tabletop photocopiers and they killed xerox nihon steel and nihon kokon did it in the steel industry coming in with the worst quality steel in the world and now they make the best quality steel in the world and just like the american companies when they end up on top of the industry selling the best possible products to the most demanding customers in the world it's very difficult for them to move down to do cheap and simple things again because they don't make sense to them and in our economy when that happens folks just leave and pick up venture capital and start new waves of disruptive growth in japan they don't have labor market mobility or venture capital infrastructure and so they're really stuck and there is no way for them to generate a new wave of growth because there are truly micro economic routes to japan's macroeconomic malaise and the microeconomic roots are that their companies are well managed you can also look around you and see the next wave of disruptive growth next time you take an airplane trip just look out on the tarmac at the regional jets made by a brazilian company called embraer and boeing and airbus are locked into this upmarket race to oblivion trying to make 500 seats supersonic transcontinental aircraft and neither of them can abandon that race but there's no growth up there meanwhile at the bottom of the market ambraer comes in with these regional jets that would seat only 30 people and then 50 people and then 70 people and now 106 people and their backlog is three times last year's orders booming market at the bottom and an evaporating market at the top and some other companies on there that you may recognize as being disruptive to some of today's leaders as well now i want to just talk a little bit about how it is that disruption transforms the quality of our lives and apply this then to the health care industry and i i want to do it through a couple of non-health care examples if you go back in history when the transistor first emerged it was a disruptive technology relative to the vacuum tube because it couldn't handle the power that was required to be used in the market that existed in the 1950s which was big table top radios and floor standing tvs one of the vacuum tube companies took a license to the transistor and then they carried the transistor into their own laboratories and framed it as a technological problem in other words the transistor wasn't yet good enough to be used in the market and in today's dollars as a group these vacuum tube manufacturers these are venerable capable institutions like rca they probably invested about three billion dollars trying to make the transistor good enough that it could be used in the market and while they were working on the technology over there in the disruptive side the first application for the transistor was a germanium transistor hearing aid deployed in 1952 and that was an application that valued it for the very attributes that made it useless in the mainstream market low power consumption small and rugged then in 1955 sony introduced the its first pocket radio and those of you with a lot of gray hair do you remember how crummy those radios were static laced wouldn't hold the tune tinny sound but sony sold them to a population of consumers who historically couldn't even own a radio we call these people today teenagers and it allowed the teenage teenagers to do something that historically they had never been able to do before which is listen to rock and roll out of the earshot of their parents and a booming new market emerged and essentially what sony was doing was competing against non-consumption they brought to the market something that was so simple and inexpensive that a whole new population of people now had the money and the skill to afford and use this product and they were delighted to have a crummy product because the alternative was nothing at all and then in 1959 sony introduced the first portable black and white tv again competing against non-consumption people whose apartments were too small or whose bank book was too small to afford one of those big floor-standing tvs and a booming new market emerged there in the green space amongst former non-consumers in the blue space the vacuum tube companies like rca their customer base was totally unaffected because these were parents and the parents had sony tried to sell their crummy little radio to the parents the parents would have been disgusted with the crummy product rather than delighted with one then by the mid-1960s these disruptive solid state electronics products became good enough that now you could start to build big products with them and within three years all of the vacuum tube companies were obliterated and it wasn't because they didn't see the technology coming but another element in disruptive success is these markets take root amongst unattractive customers who historically couldn't even afford the product that used to be available or today next time you go to comp usa or a computer superstore go to the voice recognition technology cell shelf this is a potentially disruptive technology and pick up a box that's there called the ibm via voice now don't buy it just pick it up and look at it there will be a picture of the customer on the box this customer is a an administrative assistant who they've they visualize sitting in front of her computer speaking with a headset on rather than typing and doing her word processing and think about the value proposition that ibm is making to this customer look i understand you type 80 words a minute i understand you're 99 accurate i understand that if you need to capitalize a word you just press shift and you go on i don't want you to do that anymore i want you to learn to speak into this headset in a very slow and distinct and consistent manner in complete sentences if you must capitalize a word pause speak the command capitalize pause speak the word you must capitalize pause again speak the command uncapitalize pause again this is only 70 percent accurate we promise it will be better this is not good news to this customer and the only way ibm could persuade that customer to accept voice recognition technology is if somehow voice recognition technology was better than the alternative which is word processing and this is a very difficult technological challenge that ibm has set for itself comparable in scope to what rca set for itself with the transistor and ibm probably has invested 700 million dollars trying to make voice recognition technology good enough that people would choose to use it instead of word processing if you look at where it's taking off it's in simple toy robots that recognize stop go and turn right brief phrases like press or say one probably the next application will be chat rooms because teenagers don't ever spell check anyway they don't capitalize they would rather speak than type and probably the next application was people who have those little wireless blackberry wireless email devices when you see these stubby fingered executives in airline terminals trying to peck out a wireless email message on those tiny little keys that are one quarter the diameter of their finger if they had an embedded voice recognition algorithm inside their blackberry so that they could speak their email while they're waiting in the ticket line rather than pecking it out they would be delighted with something that was 70 percent accurate if the same company tried to sell the same technology into the desktop they'd be disappointed with the crummy technology so it may be that voice recognition technology someday becomes better than word processing but the path between here and there ought not be a straight line but rather all of these technologies take root in simple undemanding applications and then they improve at such a rapid rate that that ultimately they intersect with the mainstream market and it's because the leaders in the industry focus on the largest and most obvious markets rather than smaller markets where there's non-consumption that's why they fail now i want to just bring this very briefly to the health care industry disruptive innovations enable a larger population of less skilled less wealthy people to do things in a more convenient lower cost setting which historically could only be done by specialists in less convenient settings disruption has been one of the fundamental causal mechanisms through which our our lives have improved i think about computers when i got out of graduate school if i needed to compute i had to take my punch cards to the corporate mainframe center and give it to the phd computer scientist who ran the job for me it was so inex inconvenient and so expensive that we didn't compute very much and then when the personal computer came out it enabled the unwashed masses like me to begin to do simple things in the convenient context of our homes and offices and then as the computer and the associated software got more and more capable i as a representative of the unwashed masses didn't become trained as a computer scientist but the technology enabled me to do things that historically had required a phd in a mainframe computer and as a result of that we consume infinitely more computing today because the industry got disrupted almost always disruptive innovations have been ignored or opposed by the leading institutions for perfectly rational reasons angioplasty is another one i put up there until the early 1980s if you had coronary artery disease you had to go under the knife of a very skilled cardiac surgeon who did bypass surgery on you and then in the early 80s some people invented this balloon angioplasty technique and this allowed a larger population of physicians with much less training we call them cardiologists to now begin to interventionally treat cardiovascular disease because they could then thread this little catheter up into the heart and blow the balloon up and it was crummy technology the most serious patients couldn't be treated by angioplasty and most patients prior to angioplasty just went untreated because you had to be almost dead in order to justify drastic cardiac bypass surgery and about half of all patients who underwent balloon angioplasty suffered a re-stenosis or a reclosure of their arteries but little by little those cardiologists got more and more clever and the technology got better and better and they could work their way into to occluded arteries that historically had been unaccessible and then they could thread stents up into those arteries and prop them open so that they wouldn't reclose and because that industry has been disrupted many more caregivers can now interventionally treat cardiovascular disease many more patients can receive cardiovascular treatment and the only ones that are worse off are the heart surgeons because now angioplasty is so good that the incidence of open heart surgery is on the decline but society is better off because that element of the health care industry got disrupted i was on the board of one of the major boston harvard medical school teaching hospitals for a number of years and we did a study that showed that about 70 percent of the patients in the hospital today would have been in the intensive care unit 30 years ago and 70 percent of the patients in the intensive care unit today would have been dead 30 years ago the hospitals had just become extraordinarily capable of dealing with very difficult problems but in the consequence of adding all of that cost and capability they'd actually overshot the amount of care that most people with straightforward disorders were able to utilize and so we have now disrupting the hospitals we're able to do an outpatient facilities what historically you had to go into a hospital to do and doctors do in their offices things that historically had to be done in an outpatient setting or able now to do in a home things that historically needed to be done in an office and the way we're approaching reform to the health care industry is we're going to the hospitals and we're saying you guys you know you cost so much you need to become efficient and inexpensive again this will never happen it's like asking a mainframe computer company to be a cost-effective manufacturer of personal computers rather what we need to do is we need to bring more technology into the home and enable them to do in that setting things that historically could only be done in a doctor's office and bring technology that allows things to be done in doctor's offices that historically had to be done in institutions and so on and the same thing goes with the professionals in the industry our specialists have become so capable of doing the most extraordinary things at the high end of their markets and yet to ask them to somehow become inexpensive it just will never work and instead what we need is technologies that will allow individuals to reliably do for themselves things that nurses had to do and bring technology that enables nurses to to do things that historically a family practice doctor could do and allow now family physicians to do things that historically specialists could do and this is what disruptive technology does it's a focus of technological development development that makes it foolproof and idiot simple for people who had less training to do progressively more sophisticated things and wherever you see an industry that has been transformed in this way it's because it has been disrupted now i'd like to just i'm going to skip over this one to just the final point one of the things that happens to successful companies when they get so successful is they become very large and now small new innovative opportunities don't make a difference to them you know a 40 million dollar revenue company can look at a 10 million dollar market and my goodness that represents a 25 growth opportunity a 40 billion dollar company can look at a 10 million dollar market and it just seems insignificant one of the bigger bittersweet rewards of success is that as companies become bigger and more successful they actually lose their ability to pursue the small emerging markets of today that will be in fact tomorrow's exciting growth opportunities because the numbers just don't make sense now that they've become big and in this line of thinking that you see on the board here companies values change as they get bigger and the criteria that they have to employ in allocating their resources can only focus on big markets and unfortunately those big markets are already dominated by other companies i'd like to just think for a minute about some of the implications of these findings on what we need to worry about as members of our church one of the things that i have observed in my more recent church service as a counselor in our mission presidency in massachusetts is that the bigger wards become they become significantly less engaged in missionary work and what i've got on this chart is four bars on the leftmost side these are wards and branches with average sacrament meeting attendance of less than 100 people the next one sacrament meeting attendance between 100 and 150 the third 150 to 200 and then the far right hand bar are units with sacrament meeting and tenants greater than 200. the height of the bar takes the number of referrals given by members of those units to the missionaries in their units the numbers of missionary referrals divided by the number of active members in the ward and so it's a measure of how actively engaged the members of the water branch are in finding people for the missionaries to teach and you can see that the smaller units are three times more engaged in missionary service than the largest units and i think it's because when we find ourselves in a large ward there are so many people there that we worry mainly about who's there and it doesn't matter who's not there because the word functions fine in a small unit we care a lot about who's not there and one of the bittersweet rewards of successful growth in our church is that as our wards become successful and strong we actually and the evidence is quite clear lose our fire to find people for the missionaries to teach and as you leave byu and become leaders in your wards and branches this is something that i would really urge you to work on because in god's eyes individuals matter and there's an organizational phenomenon that happens to many of us in the church that cause us to stop worrying about who's not there when we become large and successful there's another model that i'll just put up here about how strategy develops most companies one one of our colleagues at harvard did a study of successful corpora of i'm sorry he did a study of 400 graduates of our school who had started new businesses and about half of them had been successful half of them had not and if those who had been successfully asked them look at the strategy that you've been following that has led to your success and contrast it to the strategy that you had intended to follow when you first raised the money for your business 93 percent of the successful companies responded that the strategy that led to their success was completely different than what they had set out to accomplish the only difference between the ones between the ones that succeeded and the ones that failed is the one that ones that succeeded had enough money left over after they failed to try again and the ones that failed blew it all on the wrong side when a new business is first emerging rarely is it possible to know the right strategy at the beginning and i depict this coming from the bottom that the way you figure out the right way to solve these problems in your marketplace is you get into the market and you try things and sometimes you fail and sometimes you succeed but once you've figured out a system that works then strategy needs to come from the top because then the ceo of the company says all right we have a product customers value they'll pay money for it we can make money at it and we just need to focus on doing that better than anybody else and this is how intel became very successful they discovered the microprocessor by a complete accident and through trial and error developed a business model that enabled them to make good products that they could sell for attractive profits and once the business model became clear then andy grove's genius was to say all right the time for experimentation is over everybody focus on building the microprocessor business and because they allowed the right strategy to emerge in the initial phase and then drove it from the top in a later stage and standardized it across the world they became very very successful then a tough thing happens because when the original growth game ends and for intel the original growth game is coming to an end companies find it very difficult now to flip back around and let the next solution to the next generation products bubble up again from the troops because the troops have developed such a reverence for the wisdom of the ceo they think that that's where the strategy the the strategic directions should come from and in a context where things are very unresolved usually the ceos find it impossible to know what the right direction is and you've gotta again let new solutions to the new problems bubble up from below and i found that thinking back into the history of the church that we've actually come in a very similar direction that many of the most valuable institutions bubbled up now the doctrine always comes from the top and it always needs to be but the sunday school the primary the concordance to the scriptures family home evening institutes of religion the welfare program early morning seminary holding home evening on monday evening even the six missionary discussions were innovations that members of the church in their wards and stakes and missions developed to solve problems that they were encountering at their level and they were inspired by the spirit of the lord to do that because we all know that in our callings having that revelation is a right and then the worldwide management i call it the management the world life leadership of the church recognized these things that had been developed in response to local problems and subsequently then standardize those just like andy grove did and deployed them worldwide as the church's intended policy and strategy and that's very important for the growth of the church is that once we understand solution to a set of problems we need to teach everybody what those solutions are but then the danger comes as we have been in a mode of implementing the solutions that the leadership has seen work as we move now into a new set of problems that the church confronts we need to remember as local leaders entitled to receive local inspiration that we should not abandon the right god has given us to to innovate in ways that solve these new problems and let these things bubble up to the senior brethren who can then recognize from their inspiration what works and what doesn't is a way to address the next generation problems and there really is a pattern in which there are certain times in institutions history when solutions need to bubble up other times when they need to be imposed in a standardized top way top down there has been no company that i'm aware of that has ever gotten this right when they succeed they it bubbles up then they implement it and then when the new generation of problems emerge they have such a hard time letting new solutions bubble in and i pray that as you go into your callings as you graduate from from this institution that you will be able to take with you this opportunity that the lord has given you to be inspired to do things beyond what you've been told to do and i think to the extent that you do that the lord will bless this church to to grow at an even more rapid rate well these are just a few of the insights that we've had in trying to figure out what is it that can cause successful companies to lose their growth and ultimately stumble and i just tried to apply it in a couple of institutions with the healthcare industry where right now it's just characterized by high cost and inconvenience and i'm proposing that even in an institution as complicated as that what we need to do is enable people with less skill to do more sophisticated things and then i propose that there are some tendencies across all organizations that we need to be aware of as dedicated latter-day saints to help this institution grow and prosper in the future as it should well thank you very much for spending a bit of time with me this morning you