Tuesday, September 24, 2013

Missing The "Innovation Thing" (Redux)

In 1883, Henry Ford was tinkering with a neighbor’s watch and claimed later to realize that it could be manufactured for as little as thirty cents.  He never bothered to pursue his idea, however, because he concluded that “watches were not universal necessities, and therefore people would generally not buy them.”

Ford was a brilliant entrepreneur but missed “the watch thing.”

IBM was the second most profitable company in the world and probably the smartest technology company when it missed “the desktop thing.”  DEC and Wang were brilliant upstarts that missed the “the personal computer thing.”

Microsoft completely whiffed on "the search thing, “the cloud thing," and, as Steve Ballmer most recently disclosed, the "phone thing."

Eric Schmidt admitted that he and Google had missed on “the friend thing.”

Really smart people and organizations miss really big opportunities, even when those organizations have their eyes wide open and antenna fully extended.

Picture this scene. At the Constitutional Convention in the summer of 1787, delegates took a break from deliberations to see a first in America--Mad John Fitch running his crazy steamboat up and down the Delaware River. Some even went for a ride. Needless to say, this was a gathering of the smartest, richest men in America, many of them active speculators with an appetite for risk. The value statement for the steamboat in America was extraordinary: Farmers who floated down the Ohio and Mississippi rivers to sell their goods in New Orleans could a) pole their boats home against a 12-foot-per-second current (which almost none did), or sell their boat for lumber and either b) walk home to, say, Kentucky, or c) sail to Philadelphia and walk home across the Allegheny Mountains.  

There are some subtle value statements in the business world, but that is not one of them.

Fitch died without ever being able to successfully commercialize his idea. The Founding Fathers, standing on the sunny shore and watching transformative innovation chug up the river before their eyes, simply missed "the steam thing."

Smart people get distracted, show strong biases, and sometimes are brilliant along certain vectors and blind along others. Occasionally money and a fast-follower strategy makes recovery possible, but often not.

It's news that should give the rest of us hope, and keep us plugging away. The "innovation thing" is hard to see, even when you're capable of building a thirty-cent watch, a killer operating system or a powerful search engine. Sometimes even when it paddles by you on the river in broad daylight.

(Updated and edited from a June 2011 post.)