The right vision can trump high-tech innovation: The Whiteboard
What do Xerox and Kodak have in common?
Both companies invented game-changing new products. Both lacked the vision to see what these products could become. Both watched while others adopted their ideas and changed the world.
I was contacted recently by a woman studying for a master’s degree at the London School of Economics. She was writing an essay on decision-making at Apple and the success of the iPhone. She had found a column of mine about Apple that was published in this paper in 2014.
Her research had highlighted Apple’s technology as the key to its success. She wondered if I had a point of view about that and about how Apple made decisions. I do have a point of view, and after checking her on LinkedIn to be sure she was a real person, I shared it with her. I think it is important enough to share here.
Technological innovation at Apple, while important, was not the key to the success of the iPhone or anything else that Apple has ever done. Apple didn’t invent most of the new technologies in its breakthrough products. It recognized and employed ascendant technologies in ways that others didn’t see coming.
Apple didn’t invent the graphical user interface (GUI) or the point-and-click mouse that are now industry standard. Engineers at the Xerox Palo Alto Research Center, or PARC, did that. The engineers were excited about it, but Xerox executives, whom the engineers called “Toner Heads,” didn’t know what they had. If it couldn’t make a copy or sell toner, they weren’t interested.
Engineers at Apple heard about the work at PARC and got a demo. Contrary to legend, they paid for the demo in pre-IPO Apple stock. When Steve Jobs saw what Xerox had, he knew immediately that it would be the future. He had his engineers start designing their own GUI, which became standard on the Macintosh computer, and which forced Microsoft to create Windows to remain competitive.
The key to the success of Apple’s iPod wasn’t new technology. Similar devices existed. The key was the Apple Music Store. The breakthrough was the direct sales of music, over the internet, one song at a time, for a very low price. The iPod was just a vehicle, though an elegant one. Apple became a market leader in music sales overnight.
The experience with the GUI, operating systems and compact music players led to the iPhone, with the addition of one new technology: the multi-touch screen. That technology had existed for a decade, but wasn’t widely commercialized until Apple put it to work. No clunky keys or easy-to-lose stylus for Apple. Instead there was a great user interface, great applications and an elegant design.
That brings us to Kodak. Every smartphone has a digital camera. Almost all cameras are now digital cameras. Steven Sasson, an engineer at Kodak, invented the digital camera in 1975. The executives at Kodak weren’t “Toner Heads.” I guess they were “Film Heads.” They couldn’t see the possibilities and let others change the world. In 2012 Kodak filed for Chapter 11 bankruptcy.
Technological innovation does not guarantee success. A lack of technological innovation does not guarantee failure. Xerox and Kodak didn’t lack technology — they lacked vision. They couldn’t see that new developments might change the world in unexpected ways. The list of companies that have been blindsided by industry-wide disruption is a long one.
Apple thrived while Kodak and Xerox faded because it selectively used available technology and continually rethought its business model. It blindsided powerful companies in music distribution and mobile phones. They never saw it coming.