"If I'd asked customers what they wanted, they would have said a faster horse." - Henry Ford
Microsoft's continued failure in emerging non-Windows-centric markets is a prime illustration of a pattern that should seem familiar to anyone who has followed the technology business for any length of time. A company is innovative, rises to the top, sets the standard for all to follow, but then loses its supremacy rather rapidly, and becomes just another company. The causes of failure are the very things that made the company strong. They do everything right, get lauded by all the business and technology rags for their brilliant management, and then just a few years later, are seen as losers with terrible management.
Clayton M. Christenson's The Innovator's Dilemma, explores this problem. It's not that these companies are badly managed, he argues, it's that they are so well managed. They keep their focus on their customers, listen carefully and do everything they can to deliver what they want, but in the end they lose their supremacy. The companies to whom this has happened have some big names: IBM, XEROX, Apple (yes, Apple).
Through the course of my career, I've seen this up close and personal. I've worked for some successful software companies and I've seen how the devotion to an existing customer-base can cripple innovation. Not just technical innovation, but business and marketing innovation as well. A new bit of technology, not necessarily revolutionary in itself, makes a new kind of product possible - a microcomputer, a laser printer, a graphical user interface - but the market doesn't seem too profitable with the existing business models. Typically, the profit margin is lower than the existing product and business model. Even more importantly, the existing customers have no use for the new technology. They only want, and insist, on bigger, better, faster versions of the things you're already selling them. So, in spite of the fact that the company is entirely capable of entering this new market - it has the technical know-how and the financial resources - on the advisement of the expert and professional product managers and business managers, the new venture is deemed as not profitable and is ignored. It all makes perfect sense. Unfortunate, just a few years later, the company finds itself in decline. Revenues are flat or falling, and those customers that you tried so hard to keep by listening to them, are defecting to a competitor you never knew you had.
By protecting your "franchise" at all costs, you end up destroying the value of your company. Value propositions are not carved in stone, they are transient and they change over time. A failure to recognize this can lead to destruction. Audiophiles will insist that vinyl records (analog technology), with the right equipment, sound far superior to any kind of digital format. Unfortunately, given the equipment that most people possessed at the time, the difference in quality was negligible but the convenience of digital formats was obvious and CD's replaced vinyl records. Back in the day, we argued over the merits of the various turntable manufactures who were locked in cutthroat competition and innovating like crazy. MP3's are even lower quality than CD's, but again, the convenience of the medium matters more. When it comes to audio quality, for most of us, "good enough is good enough." The value proposition changed and those who were dependent on the old value propositions, who couldn't change the way they did business, are gone and forgotten.
Listening to customers and giving them what they want, is part of every major company's mission statement and even makes it onto their business cards. Being customer focused is probably more often than not a good thing. Sometimes, however, your customers can become an echo chamber. As Henry Ford once said:
"If I'd asked customers what they wanted, they would have said a faster horse".
Indianapolis Motor SpeedwayWhen it comes to Microsoft and the pc tablet business, their problem seems to be that they are hell-bent on protecting the family jewels: Windows. Unfortunately, and as the iPad is proving, tablets are not pc's are not meant to compete with pc's (yet), and have a completely different value proposition, one that renders current pc operating systems (Mac OS as well as Windows) irrelevant. Apple recognized this and did not simply port Mac OS. They started from square one and envisioned an entirely new device with an entirely new value proposition. At some point, however, and we may already be there, the new value proposition will be a threat to the old. Consider what the vast majority of PC users in the consumer market do: they do email, they browse the internet, they play digital content. They don't need a desktop, or notebook computer for that. And an iPad is thinner and lighter than the thinnest and lightest notebook. In the corporate world, they are showing up everywhere, much to the chagrin of IT departments.
As Christensen warns, protecting your franchise, as Microsoft seems to be trying to do can end up having the opposite effect:
The fear of cannibalizing sales of existing products is often cited as a reason why established firms delay the introduction of new technologies. As the Seagate-Connor experience illustrates, however, if new technologies enable new market applications to emerge, the introduction of new technology may not be inherently cannibalistic. But when established firms wait until a new technology has become commercially mature in its new applications and launch their own version of the technology only in response to an attack on their home markets, the fear of cannibalization can become a self-fulfilling prophecy.
The irony is that few companies are have the financial and technical resources that Microsoft has at its disposal. They could potentially dominate, but their business model, their culture, their DNA are preventing them.
In the future, there will still be PC's as we know and love them. But a lot fewer of them. Microsoft will still be around, but just like IBM before them, they will no longer be "the environment," the dominant force that dictated direction to an entire industry. I remember when the saying was, "No one ever got fired for buying IBM." Well, that was a long time ago, and since then I have seen people get fired for buying IBM.
Who besides Microsoft is on your list for a mighty humbling? Oracle? Blackberry? SAP?
Enjoy fast, free delivery, exclusive deals, and award-winning movies & TV shows with Prime
Try Prime
and start saving today with fast, free delivery
Loading your book clubs
There was a problem loading your book clubs. Please try again.
Not in a club? Learn more
Join or create book clubs
Choose books together
Track your books
Bring your club to Amazon Book Clubs, start a new book club and invite your friends to join, or find a club that’s right for you for free.
Download the free Kindle app and start reading Kindle books instantly on your smartphone, tablet, or computer - no Kindle device required.
Read instantly on your browser with Kindle for Web.
Using your mobile phone camera - scan the code below and download the Kindle app.
There is a newer edition of this item:
Book recommendations, author interviews, editors' picks, and more. Read it now.
Frequently bought together
$45.34
Get it as soon as Tuesday, Jan 23
Only 1 left in stock - order soon.
Total price:
To see our price, add these items to your cart.
Choose items to buy together.
Similar items that may ship from close to you
Page 1 of 1 Start overPage 1 of 1
About the author
Follow authors to get new release updates, plus improved recommendations.
Reviews with images
All Photos
Pages falling out of the book?
While I would love to comment on the quality of the reading, the book itself showed up with a slash near the binding that caused a bunch of the pages to fall out. Its hard to enjoy a book when you need to worry about pages falling out of the binding.
Top reviews from other countries
iAPX
Must read for anyone that want to think forward
Reviewed in Canada on February 10, 2016