What theory did you just use? News brief — Capitalist’s Dilemma version, week of Mar 7 2016

At the top of Clay Christensen’s mind these days is the Capitalist’s Dilemma. Clay has written a number of pieces about this paradox— first for the New York Times just ahead of the 2012 election and then a couple of years later with the added insight from a number of former students for Harvard Business Review.

Most recently, Clay spoke about the Capitalist’s Dilemma at a conference in San Francisco alongside prominent venture capitalist Marc Andreesen. Watch the recording or check out this great roundup of that conversation here: https://www.startupgrind.com/blog/marc-andreessen-clayton-christensen-venture-capital-is-abundant-opportunity-is-scarce/

This semester at HBS, Clay is working with a handful of students to examine different pieces of the capitalist’s dilemma puzzle, so for this week we’re highlighting a number of articles from his weekly news brief for which this new, working theory of growth framework (performance-improving innovations aka sustaining innovations, efficiency innovations, market-creating innovations) has opinions.

Let us know if there are other stories that you think we should be following too.

· WSJ: Citi to Sell 20% Stake in China Guangfa Bank for $3 Billion (2/29/16): Deal is expected to close in the second half. Citigroup Inc. reached a deal to sell its once-prized strategic foothold in China’s banking sector for $3 billion, making it the latest big Western bank to sell off its Chinese bank holdings. The New York-based bank said Monday it agreed to sell its 20% stake in unlisted China Guangfa Bank to China Life Insurance Co., China’s biggest life insurance company by premiums, for 19.68 billion yuan.

· WSJ: Cisco Acquires CliQr for $260 Million (3/1/16): Cisco CEO Chuck Robbins says CliQr’s technology will help companies that adopt a hybrid cloud approach. Cisco Systems Inc. said it agreed to buy closely held CliQr Technologies for $260 million, the networking giant’s latest move to adapt to the trend toward cloud computing. The startup, based in San Jose, Calif., offers technology to help companies deploy and manage software applications in their own data centers and on external public cloud services. Cisco, instead of competing against big cloud vendors like Amazon.com Inc., has adopted a strategy of trying to act as an intermediary between operators of such services and their customers.

· WSJ: How a Less-Skilled American Workforce May Be Holding Back Growth (2/29/16): Theories abound as to why U.S. productivity growth has stalled. Economists attribute it to everything from a slowdown in business investment to inadequate measurement techniques that fail to capture efficiency gains from new technologies. A recent research note from J.P. Morgan Chase offers another theory: It’s at least partly because the American workforce as a whole is simply less skilled than it used to be. That matters because productivity growth drives wage growth, which by some estimates has stagnated for most of America’s workers.

· QZ: Airbnb and Uber are the next frontier in the struggle between capital and labor (2/29/16): When we talk about the “sharing economy,” Uber and Airbnb tend to be mentioned in the same breath. Both are known for their smooth, convenient, peer-to-peer services for consumers. In enlisting providers like hosts and drivers, they promise their workers that they can make extra money on their own schedule. But there’s a big difference in the kind of extra money that people earn on platforms like Airbnb versus platforms like Uber. A new study from the JPMorgan Chase Institute, a think tank under the bank, finds that people who rent out assets on “capital” platforms like Airbnb or car-sharing site Turo are bringing in supplemental income. That’s starkly different from people who sign up for “labor” platforms like Uber or TaskRabbit. They’re typically working to offset shortfalls in their monthly earnings.

· WSJ: EMC Begins Selling Novel Data-Storage System (2/29/16): New system resulted from 2014 purchase of DSSD. EMC Corp. is stepping up its commitment to a technology once seen as a threat, including a novel box backed by one of Silicon Valley’s most celebrated hardware designers. On Monday, the company — which has agreed to be purchased by Dell Inc. — is introducing a new data storage system that resulted from its 2014 purchase of DSSD Inc. The startup was bankrolled by Arista Networks Inc. Chairman Andy Bechtolsheim, the German-born engineer who co-founded and developed computers for Sun Microsystems Inc. and supplied early funding for Google Inc.

· WSJ: Here’s Proof the U.S. Is on the Verge of Huge Innovations (3/1/16): So much of what the presidential candidates and the American people want to accomplish over the next four years and beyond depends on the U.S. economy growing faster, and more inclusively, than it has in recent years. This year’s hot economics book, The Rise and Fall of American Growth, by one of America’s most distinguished macroeconomists, Robert Gordon, casts a pall on whether this is possible, arguing that the U.S. had a golden century of increasing innovation from roughly 1870 to 1970, but this was unique. Since then, the rate of innovation, as measured by the annual growth in productivity (adjusted for additional labor and capital), has slowed markedly, and in Gordon’s view will continue at a slow pace for the foreseeable future, whether or not the ostensibly growth-boosting policy recommendations Gordon advances at the end of the book are implemented.