When I was in grade school, I distinctly remember a field trip to visit a high-flying local company called Prime Computer. At the time, in the 1980s, Prime was a Fortune 500 company with a popular line of minicomputers and a runaway stock. But today, Prime is long gone and barely remembered. A Wikipedia page is about all that remains.

For a long time, I didn’t understand this. How could a company so successful simply cease to exist? Prime, of course, isn’t alone in this phenomenon. The same thing happened to Blockbuster, Radio Shack and many others.

I didn’t learn the answer to this puzzle until many years later. In his book The Innovator’s Dilemma, Harvard professor Clayton Christensen provided this counter-intuitive explanation: When successful companies fail, it is precisely because of their success that they end up failing. What happens is this: As a company’s success increases, it pours all of its energy into doing more of what made it successful in the first place: building the next iteration of its product—and the next and the next. But as they do this, they end up focusing more and more inwardly. And when they do that, they ignore the proverbial entrepreneur in the garage—the upstart competitor who is able to look at things with fresh eyes and thus develop something completely new. And then the result is what happened to Prime and Blockbuster and all the others.

Christensen passed away recently, and it occurs to me that his concept of the innovator’s dilemma has special relevance today, as we struggle with the effects of the coronavirus. At its core, Christensen’s warning to companies was that they need to avoid being too narrowly focused. And while this is valuable advice for businesses, it applies equally well to all spheres of life, including personal finance. Below are three specific aspects of personal finance where I believe you can incorporate this thinking.

Investing. I often advise against stock-picking, and the stock market’s behavior this year provides another lens through which to understand why. At its lowest point a few weeks ago, the U.S. stock market was down about 33% from its prior peak. But that was just the average. Across companies, there was—and continues to be—wide disparity. Airlines, hotels and cruise lines, as you would expect, fared much worse than average. American Airlines, for example, dropped 64%. But other companies did much better. Amazon lost just 12%. Pharmaceutical companies which are on the hunt for a vaccine actually saw their stocks rise. And, of course, companies in the videoconferencing business have all done very well.

Why am I mentioning this? Isn’t this all old news? The reason I point it out is because there is a parallel to Christensen’s thinking. His point was that companies run into trouble when they ignore upstart competitors. But the reality is that competitors are just one of the many unpredictable factors that impact companies and their stocks. Today’s public health crisis is just the latest example. Looking back over the past twenty years, we’ve also experienced war, terrorist attacks and a financial panic. They each, more or less, came out of nowhere, and each impacted different stocks in different ways—some positive, some negative. This, in my view, is yet another reason to favor index funds over individual stocks or actively-managed mutual funds. It’s just too hard to know what is going to happen in the future.

To be sure, a few hedge fund managers have been proudly trumpeting their foresight in shorting stocks this year, but there’s a reason you can count them on one hand. For most people, most of the time, it’s impossible to predict what’s coming.

Household finances. Later in his career, Christensen wrote a follow-up book, The Innovator’s Solution, to help companies avoid becoming the next Prime Computer. While there was no silver bullet, he provided more than a dozen recommendations. His overall message: Never rest and never accept the status quo. While these may sound like cliches, there are many ways to apply these ideas to your finances. Especially if you have a little more free time during this work-from-home period, here are some specific steps:

• Look for mortgage refinance opportunities. While many people just leave their mortgages on auto-pilot, this is an area where you could save tens or even hundreds of thousands of dollars over time. For a few weeks recently, banks were raising rates, despite the Fed lowering them. But things have started to turn around, and I am now hearing of very attractive rates.
• Your mortgage may be your biggest expense, but don’t ignore the little ones. As Benjamin Franklin pointed out, “A small leak will sink a big ship.” That may be overstating it, but I would scrub your credit card bill for all the little recurring expenses that, in aggregate over time, might not be so little. I would then move all those recurring charges to a separate credit card so you can keep an eye on them more easily.
• If you’ve tried software like Quicken but found it too tedious, I don’t blame you. I would try one of the newer tools such as YNAB or Tiller Money. There is no one-size-fits-all, but if you find a system that works for you, it can pay big dividends in helping you feel a greater sense of financial control.

Financial planning. A question many people are asking is why the world wasn’t better prepared for this virus. After all, in recent years we’ve seen SARS, Ebola and other outbreaks. And of course there is Bill Gates’s now-famous warning from 2015. So why didn’t we see this coming? One explanation, I believe, is that our attention is fragmented. Especially with the 24-hour news cycle, Facebook, Twitter, and so forth, it’s awfully hard to focus. This applies to our personal finances as much as anything else. With so much information and so little time, it’s very hard to focus on the big picture.

What’s the solution to this problem? Again, it would sound like a cliche to say that you should think more broadly or consider a wider range of outcomes when planning for your financial future. But Christensen, in an interview, offered an important insight: “For whatever reason, the way they designed the world, data is only available about the past. When you teach people that they should be data-driven and fact-based…in many ways we condemn them to take action when the game is over.” While this sounds a little grim, his point is well taken: As you plan your financial future, look beyond recent experience, and look beyond what the experts are saying. As you build your plan, also build a Plan B and a Plan C. Hopefully you’ll never need them, but I’m confident this will help you sleep easier no matter what the future brings.