Lessons of Failure
Humans + Software Development = Always Interesting

Oct/09

22

Adapt or Die Thinking You’re Right

From the late 1800s until the 1950s, railroads dominated the transportation landscape.  Want to go from LA to Chicago?  Chances were you did that by train.  It was the preferred choice of the traveler–cost effective, comfortable, and enjoyable.  In short, the railroads enjoyed a near monopoly on passenger movement for nearly 100 years.

When the automobile began to dominate the landscape, railroads simply ignored the threat.  “We are vastly superior, have a lock on many markets, and offer an experience you can’t touch!”  Unfortunately, the American consumer disagreed with them and railroads entered a period of decline.  Cars became the preferred mode of transportation, changing the way cities were built and how people spent their leisure time.  By 1966, railroads only carried 2% of all intercity passenger traffic.  And by 1970, only one major railroad carried passengers at all.  The railroads shrank, cut routes, and closed down wondering what happened.  This is now a classic example in business texts, MBA courses and lectures:  railroads failed to understand they were in the transportation business, not the passenger business.  They didn’t realize their core strengths causing certain death when their market shifted.

Back in the early 90s, my first job out of college was technical support at a GUI toolkit company.  This company’s claim to fame was a platform portable library(written in C, later adding a C++ framework) where you could build a user interface on say Windows and then move it to Motif, Mac, OS/2 or a litany of other unfamiliar and obscure platforms, recompile and BOOM, your app ran there too.  At the time, it was a novel concept and one folks were paying a mighty fine premium to obtain.  Licenses ran about $2000 a piece, plus annual maintenance for support.  Writing these kind of applications required a level of GUI expertise that wasn’t commonly available to many developers of the era which gave rise to a Consulting and Training Group that charged hefty rates for their highly sought-after services.  Life was good:  the company sold several million dollars of support, product and services each year.  ISVs writing C and C++ applications gobbled up the software as voraciously as their CFOs would approve the purchase orders, creating a very large and lucrative market during that time.  They were kings of the hill.

Fast forward about 3 years.  Java and HTML appear on the scene.  Younger developers in the company are checking these new technologies out and sending emails to the executives saying how cool Java is and how HTML is taking over the world.  The executives didn’t care.  “HTML?  Bah, that’s for children.  Java?  A toy language at best…all it can do is make Duke dance in an applet window.  Ignore them.  We have the Enterprise to worry about.”  They missed the point.  They were in the business of providing a platform-portable GUI development solution.  They forgot that technology doesn’t factor into their mission statement.  They were focused on getting new customers in their existing market.  They insisted everyone would use C++ forever because it sucked less than HTML and Java, instead of seeing how the market had changed.  Just like the railroads.

A few years later, the company shrank from the 100+ employees in 1994 to less than 5 by the Millennium.  Developers left in droves because Java was the hot new language and C++ developers were in demand.  Professional services was sold to another company because management wanted to “focus on product sales, not services”.  The product sales dried up slowly and only a few stubborn customers who couldn’t get off their C/C++ platforms paid the outrageous maintenance fees charged by the remaining shell company.  Java became the defacto language for the enterprise.  HTML is the lowest common denominator of every web framework today.

Seth Godin nailed this in a short post:  When you have a hammer, everything looks like a nail.  But making sure you have the right tool for the right market is about how quickly and easily you can switch hammers.  Not hitting the same nail again and again.

The lesson here is clear:  Understand your strengths because your market isn’t static.  When the market changes, be prepared to adapt to it with those strengths. Otherwise, you’ll die thinking your strategy was right.

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