Learning from History: Xerox vs Google; Focus vs Diversification

The creation of the Paulo Alto Research Centre or PARC was an inspired decision. It was founded by The Xerox Corporation who – with the patent on the photocopier bringing a steady stream of income – foresaw as early as 1969 that perhaps these so-called new media were going to start edging out paper as the primary store of information and communication. They picked a good leader in George Pake, a specialist in nuclear magnetic resonance and provost of Washington University who was responsible for choosing Paulo Alto – 3000 miles from the company headquarters in New York.

Maybe it was distance. Whatever the problem, after the initial inspiration behind its PARC’s creation, Xerox never again backed their judgement or the genius of their team which included their Computer science Laboratory manager Bob Taylor who guided the lab between 1970 and 1983. It was under his auspices that some of the most revolutionary and important innovations in computing were conceived.

At the same time that senior management at HP were saying goodbye to Steve Jobs because they could not see any demand for the minicomputer he had designed, the senior management at Xerox were saying no to The Alto – PARC’s prototype computer which – light years ahead of its time had a graphical interface and a mouse! Needless to say the designers behind it were happy to join Steve Jobs in his parents’ garage.

Xerox subsequently ceded laser printing technology to HP, desktop publishing to Adobe, 3D graphics to Silicon Graphics and networking to Ethernet – all set up by ex PARCers after having their early work on the projects rejected by Xerox who were making huge profits selling photocopiers.

Indeed, success is a bad habit to get into. If Western Union hadn’t been so successful sending telegrams it might not have turned down Bell’s telephone. If the Remington Arms company hadn’t been so successful providing clerks they might not have turned down the typewriter. And if IBM and Kodak hadn’t been so busy doing what they did better than anyone else they would not have turned down Chester Carlson’s offer to develop dry photocopying – an invention which itself became Xerox!

The problems with not embracing failure and change in the 21st century are obvious and myriad. We live in exponential times: China will soon become the number one English speaking country in the world. The top ten in-demand jobs in 2010 did not exist in 2004. We are currently preparing people for jobs that don’t exist using technologies that don’t yet exist. 1 out of 8 couples married in the US last year met online.

The first commercial text message was sent in December 1992, now more text messages are sent everyday than there are people on the planet. It took Radio thirty eight years to reach an audience of 50 million, it took Facebook two. Futurologist Ray Kurzweil predicts that in Q2 2029 the singularity will be reached: computers will be as intelligent as man. How on earth does anyone make resource allocation decisions in the middle of all that change. A large number of projects being initiated today will see a radically different landscape by the time they eventually come to fruition.

“It is not the strongest of the species that survive nor the most intelligent but the ones most responsive to change.” said Charles Darwin.

But adaption in its most quintessential manifestation operates as a result of hundreds of thousands of copying errors in the genetic material during cell division. The resulting mutations contain variation within the gene pool from which the fittest survive. In 1998, Alta Vista and Yahoo dominated the search engine market but it was two guys – again in a garage – who went on to create what is currently one of the most valuable companies on the planet in Google. Like Steve Jobs they saw opportunity where other larger companies only saw risk. But who will create the next internet-based Black Swan?

Will semantics-based search engines rule for the next 10 years on the internet? Will virtual platforms usurp Windows’ dominance? More importantly, will the next generation of change come from within the current market leaders who have learnt from the mistakes of their predecessors in the past or will there only be 36 of the top 100 companies still around in the next 100 years? As organizations and individuals, how do we stop this from happening? How do we motivate ourselves to embrace more Short Term failure in order to achieve more in the Long Term? How do we change what we do?

Google’s method is to have learnt from the mistakes of its predecessors. It doesn’t mistake what it’s really good at at a fundamental level – learning – with what it appears to be good at superficially – search. Thus, it embeds learning into its business model requiring that everyone in the organisation spend 20% of their time doing just that in the form of training and the pursuit of personal challenging projects (in much the same way as Pixar does with a University on its campus).

It also embraces innovation that has nothing to do with its core product of search such as the Nexus, Android and more adventurously still Google Glass and the self-driving car. No one knows more keenly than Page and Bryn that the next innovation is AS likely to come from two other guys in garage as it is to come from within their innovations lab. All they can do is maximize the chances that the smartest guys in the room are in their room now and in the future.