Famous Last Words

featured-crewcallEach year at this time, I am alerted to the coming of spring by that special fragrance that’s in the air, by those sounds that indicate the coming of a new season.

In our business, that fragrance is the smell of shrink wrap and packing peanuts, and it harkens the coming of new technologies that will change the way we do business.The sounds are the voices of the currently dominant players who are loudly and proudly denying that such changes are possible.

I can always tell which new technologies will be successful by listening to the naysayers, denying the usefulness or necessity of the new tech. And there’s no better way to determine which “big boys” are about to get their comeuppance.

There are a number of ways that the big players use to deny that they can be upstaged or displaced. Let’s take a brief and nostalgic look at a few of them:

Denying Product Necessity

Market leaders tend to rely on this one when faced with a new product, service or technology that they don’t have in their arsenal. It’s an excuse for complacency (or a way to hide the panic they are feeling internally). The best example I can think of currently is RIM, which brought us the Blackberry (or “Crackberry”). When faced with the onslaught of the iPhone, the company’s co-CEO actually said: “There may be 300,000 apps for the iPhone and iPad, but the only app you really need is the browser.” — Jim Balsillie, November 2010

There is no better industry for this kind of dismissal by the big players. Take a look at some of the other gems from the past that remind us to take these statements with a grain of salt – or to look at investing in their competition:

  • “I think there is a world market for maybe five computers.” — Thomas Watson, chairman of IBM, 1943
  • “There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman & founder of Digital Equipment Co, 1977
  • “640K ought to be enough for anybody.” — Bill Gates, 1981
  • “Apple is already dead.” — Nathan Myhrvold, former Microsoft CTO, 1997

Dismissing the Issues

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Another great sign of a big player that’s begging to be taken down a peg is for them to deny issues surrounding their own product, even among the truly great players. Here’s an instructive example from the 800-pound gorilla of software:

  • “Two years from now, spam will be solved.” –Bill Gates, founder of Microsoft, 2004

And one from a huge company they helped to displace:

  • “Almost all of the many predictions now being made about 1996 hinge on the Internet’s continuing exponential growth. But I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” — Robert Metcalfe, founder of 3Com, 1995

Can’t Be Done

Another way the big guns, and the market in general, blind themselves to possibilities is the “It isn’t technically feasible” or “the market won’t buy it” approach. It’s been used in our market to deny everything from the coming of digital video to the possibility of today’s high definition streaming, but the best examples I can think of are these:

  • “In today’s regulatory environment, it’s virtually impossible to violate rules… it’s impossible for a violation to go undetected, and certainly not for a considerable period of time.” –Investment guru and current federal prisoner Bernard Madoff, Oct. 27, 2007
  • “The concept is interesting and well-formed, but in order to earn better than a “C,” the idea must be feasible.” — A Yale University management professor in response to a paper from his student, Fred Smith, which proposed reliable overnight delivery service. Smith went on to found Federal Express Corp.

So, when looking for new technologies to watch, watch for the denials by their competitors. When the leaders spend time and effort to deny the possibility of new competition, or new technologies, they point the way for the market.

Is this a conscious decision on their part? A delaying action? Possibly, but in my opinion, there’s another reason, and I leave you with one final quote:

“You have attributed conditions to villainy that simply result from stupidity.”
― Robert A. Heinlein, The Green Hills of Earth