5 mistakes every organization should avoid if they want to be around for hundred years
Problem: wants to learn more about business and common traps to avoid
Desire: learn valuable lessons from history.
About 340 Million PCs were sold in 2021. But, do you know who actually invented the PC?
Follow me as I unravel the Story of how one company invented the PC, mouse, Graphical user interface (GUI), and the Ethernet. And then, gave it all away.
In the 60s and 70s, computers were everywhere but limited to rich corporations because Only CEOs, Banks, and the big guys were able to run them because they needed 3 men to keep them running.
Amid these changing times, there was a company or should – I say researchers that foresee and started building the future for the world.
Now to the question, who invented the PC?
The answer is Xerox.
Who is Xerox?
Xerox Corporation, founded in 1906, is engaged in the document management business, offering an array of document products, services, and solutions.
The word “Xerox” was once a household name that had a specific meaning: copy.
Xerox created Palo Alto Research Center popularly known as PARC as its second research center.
Xerox Years of success
Being an icon of innovation for research carried out at Palo Alto Research Center and a leader in the copier market, Xerox experienced decades of success.
Xerox came to prominence in 1959 with the introduction of the Xerox 914, “the most successful single product of all time.” The 914, the first plain paper photocopier, was developed by Wilson Carlson and John H. Dessauer; it was so popular that by the end of 1961 Xerox had almost $60 million in revenue. The product was sold by an innovative ad campaign showing that even monkeys could make copies at the touch of a button – simplicity would become the foundation of Xerox products and user interfaces. Revenues leaped to over $500 million by 1965. However, things drastically changed from the year 2000. Xerox’s share price had fallen below $4, from a high of $64 a year earlier. Moreover, the copying and printing giants around the world (especially the Japanese companies) were taking chunks of its market share.
Palo Alto Research Center (Xerox Research Center)
Xerox hired the best brains the US had to offer and put them to work in Palo Alto, California. This was the birth of PARC – a genius club.
Researchers at Xerox and its Palo Alto Research Center invented the first PC ever – Xerox Alto and was pumping out revolutionary tech elements of personal computing, such as the desktop metaphor GUI, the computer mouse, and desktop computing which were adopted and scaled by Apple and Microsoft. At then IBM had great computing machines but nothing came close to being personal.
Alto was years ahead of its time. The guys at PARC managed to fit in almost everything in it – in the first go. Alto was the first PC with a Graphical User Interface (GUI). It had Ethernet, icons, a keyboard, a mouse, and the first laser printer.
What happened to Xerox and 5 reasons Why Alto never make it?
So many factors contributed to Xerox’s failure or relegation – if I may have my way, but the most brutal was:
- Bad managerial decisions: Xerox management was money-oriented and only cared about making money for their shareholders so commitment to a long-time business is ungratifying. Unfortunately, Alto – the first PC which should’ve been a huge success suffered from a bunch of stupid decisions and a lack of foresight from Xerox management. Xerox invented digital communication (the pc, mouse, graphical user interface, Ethernet, etc, etc), yet it was not able to see how any of these innovations could replace black marks on white paper. The cost of developing digital technology would have been very expensive, it was easier to just keep making copiers.
Who can blame them? After all, Xerox was making tons of money, copy volumes just kept climbing, and it controlled the high end of its’ market. Under those conditions, you don’t get ahead by being the champion of the unproven! Instead, you double down and manage your money.
- Lack of vision: What wounded Xerox was the lack of vision – the inability of senior management to recognize new technologies that would supplant Xerox’s copier technology. The sad thing is that Xerox invented most of the technology that wounded it.
- Showing potential competitors its inventions at incubation: While researchers were working to perfect Alto at PARC, Apple was also working on Lisa, which would become Apple’s first PC with a GUI. Xerox saw the potential in Apple and decided to buy 100,000 shares. Jobs agreed to the deal with a condition. That, he would get some tours of PARC. This is crucial to what happened afterward. Xerox’s management decided to go for the deal.
Jobs visited PARC 3 times. And on his last visit, he found Alto. PARC Engineer, Larry Tesler showed what Alto was capable of. There were no commands you could just use a mouse. Or, type in a word processor without manually writing lines of code.
Here’s what it looked like in an interview in 2002 Jobs said “I was so blinded by Alto’s GUI and what it could do. It was the greatest thing. It could work with what they called – a mouse. In 10 minutes it was obvious to me that all computers would work like this one day.” Steve Jobs saw this but Xerox CEO was blindfolded by instant gratification and unable to see PC’s future potential.
Jobs knew Alto would be the next big thing. Now, if you Google around – you’ll find 100 articles saying Apple store from Xerox. That’s only half of the truth. Apple did what they do best, innovate.
- Imperfect or unimproved innovations: Xerox finally launched Alto in 1981. Alto had unending reliability issues.
- The mouse would break down often
- The software wasn’t reliable Alto eventually failed.
Jobs decided to make a PC that Alto eventually set out to be. Jobs wanted a “mouse” that wouldn’t break every month. Jobs wanted a UI that would look as if it was from the future. Apple already had a PC but it didn’t have a GUI or a mouse. Alto inspired Apple to do what they were already doing better. Apple set on a path to add a GUI to its PCs – what we know today as MacOS. And, Alto eventually led to Apple Lisa. Apple launched Lisa on January 19, 1983, two years after Alto.
- Unable to commercialize PARC products: Xerox was a company full of technological products created ahead of their time but their leaders were not marketing entrepreneurs! Xerox’s failure to commercialize its own inventions was partly due to the disconnection between those ideas and its core business-making copiers. Executives within the main business were disparagingly referred to as “toner heads” because they failed to see the commercial value in new inventions that were not directly related to photocopying or printing. As such, even as their team made great technologies, Xerox failed to combine this innovation with sustainably profitable business models.
To succeed at innovation, companies need to design their internal processes to engage in three key activities:
- Facilitating the serendipity that creates sparks of creativity among employees.
- Capturing and testing the outputs of this creative process.
- Transforming creative ideas into commercially successful products.
Interestingly, in the case of the Apple Macintosh, these key activities appear to have happened in three different organizations. According to Malcolm Gladwell, “The mouse was conceived by the computer scientist Douglas Engelbart, developed by Xerox PARC, and made marketable by Apple.” The problem with Xerox is that it failed at executing the final step of this process (i.e. commercialization), which is the step at which Apple succeeded.
John Seely Brown, former Chief Scientist and Director at Xerox PARC, highlighted this point when he stated, “Not everything we start ends up fitting with our business later on. Many of the ideas we work on here involve a paradigm shift to deliver value. So sometimes we must work particularly hard to find the ‘architecture of revenues. At Xerox, there has been a growing appreciation for the struggle to create a value proposition [from] our research output, and for the fact that this struggle is as valuable as inventing the technology itself.”
Xerox lacks the wherewithal to commercialize the invented products at PARC.
Xerox had all it takes to succeed, but complacency made it give away its vision and lead to some stupid decisions by its management. Xerox wasn’t able to reap what it sowed into PARC talk less of eating the fruit of its labor. Apple and Microsoft and other computer manufacturers are the recipients of Xerox’s hard labor. Xerox is a $3.2 Billion company while Apple is at $2.8 Trillion.
I guess no organization can thrive with the wrong management. Xerox is a great lesson in,
“The only way to save your business from technology is technology” – Aditya Gaur