I’ve always been told that most start-ups fail — seem to recall numbers in the 95% range after five years. What’s amazing is that some do succeed and eventually replace the behemoths of their time, companies who had all the advantages that money, talent, economies of scale, established pipelines, and so on offer.
So why do the big guys (sometimes) lose? Here’s a priceless example from Chris Matyszczyk over at Cnet.com:
This is surely the greatest opportunity for the new MicroNokia. Both companies have plowed their own, sometimes lonely, road toward making products that enjoy a completely different aesthetic from Apple’s.
With time and a little more luck and taste, it’s in the aesthetic area that MicroNokia might make the swiftest progress.
One of the biggest obstacles is the imaginations of the companies involved. One brilliant phone designer told me recently that the biggest problem he faced was to persuade senior executives to accept revolutionary forms, ones that don’t look like existing products.
From “So Apple does own beautiful and sexy,” http://news.cnet.com/8301-17852_3-57613576-71/so-apple-does-own-beautiful-and-sexy/
Even Apple itself isn’t immune. As Dan Gillmor notes in The Guardian:
Apple’s iPhone may still be the slickest combination of hardware and software in the mobile market, though Android phones have grown vastly more sophisticated and easy to use. But Apple has resolutely declined to compete in one arena where the competition is kicking butt: size. While Apple tops out with a 4-inch screen, Samsung and the other phone makers are producing that lots of customers want: a bigger phone that can double, in some cases, as a small tablet.
The cause in Apple’s case may be the Maginot Line Syndrome:
Apple remains, as well, resolute in its wish to control how customers can use their devices. By restricting the sale of apps solely to its own store; by its sometimes heavy-handed treatment of third-party developers; and by any number of other actions over the years, the company has made it clear that it wants users of its products to enter a restrictive, if alluring, ecosystem that can be hard to leave.
From “Apple won the latest legal battle, but Samsung wins the size war with phablet,” http://www.theguardian.com/commentisfree/2013/nov/23/samsung-versus-apple-290-million-fine-phablet
Certainly Apple isn’t alone in this — Amazon, Samsung, and even Google try to lock you into their ecosystem. But the effect is corrosive across the board. If you think you have a “core competency” or a “barrier to entry,” you tend to want to defend it, which is an internal focus. Emphasis switches from operating inside customers’ and competitors’ OODA loops to locking phones and filing lawsuits. The courtroom replaces the showroom as the venue that occupies the board’s attention.
Tom Peters once suggested that instead of suing to protect previous innovations, companies should send technical descriptions to anybody who wants them, or patent and then license at nominal fees. What better way to insure that competitors never develop the abilities to innovate on their own? It will keep your company in fighting trim — paranoid as one might say — and always working to become leaner, quicker, and more opportunistic out in the marketplace where it counts.