There Needs To Be Conviction And Action

Another Thing I've Observed Is How Critical The Role Of The Ceo Is When A Technology Truly Is Disruptive. In Looking Back On Companies That Have Successfully Launched Independent Disruptive Business Units, The Ceo Always Had A Foot In Both Camps. Never Have They Succeeded When They Spin Something Off In Order To Get It Off The Ceo's Agenda. The Ceos That Did This Had Extraordinary Personal Self-confidence, And Almost Always They Were The Founders Of The Companies.

Every Disruptive Innovation Is Powered By A Simplifying Technology, And Then The Technology Has To Get Embedded In A Different Kind Of A Business Model. The First Two Decades Of Digital Computing Were Characterized By The Huge Mainframe Computers That Filled A Whole Room, And They Had To Be Operated By Phd Computer Scientists. It Took The Engineers At Ibm About Four Years To Design These Mainframe Computers Because There Were No Rules. It Was An Intuitive Art And Just By Trial And Error And Experimentation They Would Evolve To A Computer That Worked.

Year After Year After Year, People Write Books About Managing Innovation Or About Leadership, For Example, Without Ever Going Through The Pain Of Saying, "this Kind Of Leadership Will Cause This Result In These Circumstances And A Very Different Result In Those Circumstances." This Is Academic Malpractice Of The Worst Kind.

How Could Digital's Collapse Be So Precipitous? It's Because, In Many Ways, Financial Performance Data Is Misleading. As You Move Up To The Top Of The Market, You're Getting Rid Of The Less Profitable Products At The Low End And Adding Business With More Attractive Margins At The High End. The Rate Of Unit Volume Growth Might Be Tapering Off As You Pursue These Smaller Markets, But Your Margins Actually Look Better. So Wall Street Rewards Your Stock Price Until You Hit The Ceiling.

The Outsourcing Gurus Have Been Driving The Theory, And They Are Saying Everybody Ought Always To Do This. But It Is Really Contingent On Where You Are On The Spectrum From "not Good Enough" To "more Than Good Enough," Relative To Each Tier Of The Market.