One of the sadder examples for me is Polaroid, they were doing some strong work in digital imaging but supposedly it didn't receive internal support because "it would undermine our film business". It's one thing to turn a blind eye to upstart innovation, it's another to intentionally stifle it within a company.

Any examples of companies that have done this right? Succeeded at replacing their own obsolete technology with upstart technology?

Seems funny to talk about IBM in this context but they did start out making punch cards in 1896. They successfully made the transition to computers, mainframes, and then PCs, but then finally missed the shift from hardware to software. From about 1896-1980 they were pretty on the ball, though.

Also AT&T has made the transition from fixed to cell phones, okay so far.

It's a lot easier when the new business has the same business model but new technology. When the business model changes along with the technology, often the established company doesn't view change as "profitable enough" and decides to fight the future. If you're curious about this "The Innovator's Dilemma" is a really good book.

Them missing the shift to software wasn't for lack of trying. They had lots of mainframe software, and then had a huge division making PC applications software in the eighties, which no one much liked. Then they made a major push with OS/2 and forked DOS from Microsoft, and bought Lotus. Unfortunately for them, for some reason IBM didn't seem to be able to make mainstream software that people wanted to buy.

The trickiest shift is the business model. IBM could always sell software to corporations. They never managed to sell software to consumers.

"Also AT&T has made the transition from fixed to cell phones, okay so far."

Actually, no. AT&T Wireless blew themselves up with a epic botched software upgrade, and was sold to Cingular at a heavy discount. (Who has since been rebranded AT&T after a complex series of mergers and acquisitions.)

Woz brought the personal computer to HP, for nothing, and they turned it down. Another shining example of vision failure (and from a company that had historically been a leader in everything they did).

Apple is really good at this. They are always willing to obsolete their products if there is something else better. A great example is the iPhone. They didn't care that it would cannibalize iPod sales, because they knew the iPhone was the next move. If they didn't do it, someone eventually would shrewdly combine music + phone and beat them to the punch. By trying to constantly out do themselves, and make a better "iPod", they stay ahead of the curve, and make sure the sales always come back to Apple.

Steve Jobs is a big advocate of this. In hindsight it seems so obvious, but most companies just don't get it.

My dad once told me (in a business context; otherwise this would sound kind of weird): "If you're going to get destroyed, you want to own the means of your own destruction." It makes sense to me, but maybe that's easy to say as a student and hard to say as an executive with shareholders.

I suspect that the shareholders, by and large, are pretty happy with the "owning" part; I am guessing that it's your Senior Vice President of Polaroid for Organic Chemistry Research you have to worry about.

It's easy to say as an executive too. Just hard to do. Any music exec will tell you "We need to own music distribution on the internet." But it's hard for an organization to actually work on two goals at once when those goals are

1. Crush the new business model

2. Make the new business model your own

You have different parts of the same company working against each other, and that either poisons the environment or everyone ends up favoring one side over the other.

"market leaders get eaten from the bottom"

Textbook Innovator's Dilemma.

Yeah, you'd think somebody at Intuit would have read it.

But, even with the knowledge of the problem, seeing it in your own industry, and recognizing it when you're facing it and before it's too late, seems to be almost impossible. I suspect Intuit are beginning to get a feel for the weight of the problem they face, but I suspect their solution will be ill-conceived. They'll keep chugging away on "integrating" their desktop product with their web product, finding "synergy", and providing "more value" to their existing customer base...all the while that customer base flakes off bit by bit and lands right on Mint's plate. By the time Quicken has a credible web-based version, Mint will already be a more capable product and Intuit will be milking their tiny market share into the grave (there will probably also be a lawsuit or two, which they will lose).

"Textbook Innovator's Dilemma."

"Yeah, you'd think somebody at Intuit would have read it."

At the last "leadership conference" at Intuit, Brad Smith the CEO and other "leaders" were quoting Christensen every 10 minutes or so. A bunch of managers even got some face time with Christensen and the resulting videos were "cascaded" down to the peons in Bangalore.

fwiw. :-D