Xerox, the company that gave the world the photocopy machine, could have given the world a whole lot of other products as well. "Just think of Xerox's Palo Alto Research Center, which famously owned the technologies that helped catapult Apple (the graphical user interface, the mouse), Adobe (post script graphical technology) and 3Com (Ethernet technology) to success. Why didn't Xerox exploit them?" asks Mark Johnson in his new book Seizing the White Space - Business Model Innovation for Growth and Renewal.
ed hardy clothing Over time successful companies become good at what they do at. But any new product or opportunity requires the company to operate very differently "with a different formula for making money, a new set of resources and processes, different expertise, and maybe a new way to co-ordinate and control activities." Given this, most companies give these new opportunities a miss.
Now take the case of the now "ubiquitous" Apple iPod, which "wrapped a good technology in a great business model." As Johnson writes, "Apple's genius lay in its realisation that making it easy and convenient to download music to the iPod would fuel demand for its high-priced music player. Eighteen months after introducing the iPod, Apple launched the iTunes Store, a service component that tightly locked hardware, software and digital music into one user-friendly package. This move recalled one of the great business model innovations of all time: King Gillette revolutionising men's shaving by choosing to give away the razor handle-a durable-in order to lock customers in to purchasing his consumable, high-margin blades. Apple reversed Gillette's model, essentially giving away the blades - low margin, consumable iTunes music - to lock in purchase of the handle - the iPod - whose margin returned high profits."
The bigger question is which company should have logically captured the market for a product like iPod? The answer, of course, is Sony whose "Walkman line had dominated the portable music market since the early 1980s." But the trouble was Sony was also a music company with all the expensive music artists bringing out their music albums on the Sony music label. By supporting a product with MP3 technology like iPod the company would risk its entire music business given that MP3 songs can easily be copied. "In fact, the music industry was deeply suspicious of the MP3 technology, which it correctly thought would cannibalise the CD market," writes Johnson.
Sony should have logically captured the market for the MP3 player market, but it remained stuck to its existing way of doing things and lost out on a huge opportunity.
An example similar to that of Sony is Kodak, which remained so obsessed with an existing way of doing business, that it couldn't see that the world around it was changing. "In 1975, Kodak engineer, Steve Sasson invented the first camera, which captured low-resolution black-and-white images and transferred them to a TV. Perhaps fatally, he dubbed it "filmless photography" when he demonstrated the device for various leaders at the company," writes Johnson.
Kodak at that point of time was the number one producer of photo film in the world. And given that, why would it want to even think of a product that would compete with it. As Johnson tiffany heart toggle bracelet writes, "Later Sasson recalled management's overall assessment of the development. "It was filmless photography," he said, "so management's reaction was, 'that's cute - but don't tell anyone about it.'"...It took more than twenty-five years for Kodak to find success in the digital camera market with its Easyshare brand."
Moral
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