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.
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