It is well known that in today’s market, you cannot afford to be slow. The pace of technological change is rapid, and if you fail to make the changes required to your business, a newer, young competitor will pull the rug from under you and take over your market. You cannot let your company be locked into a single way of doing things, lest you sign its death warrant. Why is it then, that big companies are often the ones that fail? That get out-innovated by their smaller rivals into insignificance? Do they not recognize that they need that speed to survive?
After all, the economic benefits of a fast-moving enterprise are many. Being first to the market has obvious economic value – you get the media attention, build customer loyalty and often earn bigger margins. This also means that firms will quickly identify and move on opportunities, ensure that no opportunity is one missed. They can reduce the impact of potential problems, because any solutions will be out the door quicker, mitigating the damages. And, of course, it allows them to quickly respond to changes in market conditions.
Often, the charge is laid that big companies are bureaucratic, more interested in their pet projects than innovation and reinvention. But the lessons of the market are clear, and big companies have recognized the folly of allowing bureaucracy to doom them. After all, they too were once young start-ups that fought their way through entrenched businesses to get to the top.
No, companies usually rise to the top due to a new competitive formula they’ve discovered, one that allows them to outmanoeuvre the competition. A combination of business strategies, efficient processes, well-handled relationships and strong corporate values build them into a strong behemoth – one that competitors are too happy to ape.
But success reinforces the belief that the company has found the ‘one true way.’ This starts to blind the strategic thinkers, and new strategies are hamstrung by being forced to fit into the ‘one true way.’ Information gets ignored as it does not fit into the strategic vision, and the way is lost. These strategies, of course resulted in efficient processes, and those get locked in. Instead of processes, they become something far worse – routines. Instead of continually searching to improve processes, no newer efficient methods are tried because that’s not the ‘one true way.’
Even customer relationships become shackles – the need to maintain existing customers keep them from trying new innovations, for fear or losing them. And even a company’s values, as you’d expect from finding the ‘one true way’ can turn into dogmas. Values turn into rules and regulations, within which innovation dies.
But it doesn’t have to. Back in 1989, Dave Cutler was a legend in the software industry. He’d programmed the VMS operating system for Digital Equipment Corporation and was spearheading a new team on the west coast of the USA, developing a new operating system for their PRISM computer. Then DEC cancelled the project. Microsoft heard about this, and Steve Ballmer, their Sales Manager and later CEO, contacted Cutler and offered him a job developing a new version of their current operating system, initially called NT OS/2.
Microsoft had identified nascent threats from two sources: the potential of new chips replacing the Intel chips their software was based on, and the danger of the Unix operating system from mainframes coming to personal computers and destroying their MS-DOS based hegemony of the PC market. Dave Cutler, with a few colleagues who joined from DEC, was tasked with building a ‘Unix-killer’ that would operate on any chip.
By the end of 1989, Cutler and his team has a working prototype, and was ready to show it to the world. But something else happened – Windows 3.0 was released, and it sold 16 million copies in 6 months. Microsoft decided that it would not do to have this NT New Technology based on OS/2, which it had developed with long-time partner IBM, and Cutler was tasked with turning it into Windows NT.
It took him another 3 years to reach that goal – his team having expanded to 150 people from the initial 6, and the project ultimately costing Microsoft US$ 150 million, at the time the most expensive computer program ever. But it reached it goals. It became the core of the Windows operating system we continue to use until today, and Windows 10 is the latest descendant of Windows NT. Because it could be ported to any chip, when 64-bit chips made their debut, Windows was ready. Due to Dave Cutler and Windows NT, Microsoft became the company that it is today.
Many companies had tried similar projects before, and had failed. Cutler’s move to Microsoft was the result of one of those failures at DEC. What was different? First, Cutler was given the resources to do what he must – US$ 150 million is no small sum. Furthermore, Gates had ceded authority to Cutler and Paul Maritz, who kept an eye on the market, and made sure Cutler stayed informed.
Then there was the teamwork – but not the usual kind. Teams are generally homogenous – quite antithetical to creative work. Cutler’s team were full of very opinionated people. They broke old rules and made new ones when the old no longer made sense. They didn’t ask permission before taking important decisions that they believed would improve NT. And they ignored any prohibitions that seemed nonsensical. And finally, when they had to make a choice, Microsoft broke from the shackles of their IBM alliance to chart its own course.
Microsoft was already an established giant when the NT project launched, and the 150 people that it blossomed into is far larger than a start-up. Yet they still managed to bring about that innovation that saved the company from ruin, and gave it life for another 15 years. They changed the world. No start-up would have had the resources for a project such as this. Perhaps the lesson to be learned here is that all big companies can turn into dinosaurs, too big to move. But if you want to survive, you have to learn to be nimble.