Lessons From ‘Business Adventures’
August 17, 2014 Leave a comment
Bill Gates recently revealed that his favourite business book is Business Adventures, a 1969 collection of New Yorker articles by John Brooks that illustrate the formation of the modern American corporation. Here are some of its key lessons that are still applicable today:
Innovators need to keep innovating
Gates writes that one of the most instructive stories in the book is the article, “Xerox Xerox Xerox Xerox.” After the Xerox 914 hit the mass market in 1960, “xeroxing” a document soon became office parlance. Five years later, Xerox brought in $500 million in revenue. Move a few years into the future, Xerox’s leadership became comfortable resting on its laurels. This attitude would eventually lead to huge losses in the late 1970s as competitors started releasing their own photocopiers. But because Xerox executives didn’t think these ideas fit their core business, they chose not to turn them into marketable products. Others stepped in and went to market with products based on the research that Xerox had done. Gates says, “I’m not alone in seeing this decision as a mistake on Xerox’s part.”
Don’t let egos trump research
Another one of Gates’s favourite case studies is the story of the Ford Edsel, which remains one of the most disastrous product launches in corporate history. Ford’s executives decided that they would use research to develop the perfect car for middle-class Americans. Its designers and marketers spent two years gathering suggestions from the public and testing on focus groups. But after all that research, Ford’s executives did what they wanted. They also tried to please everyone instead of focusing the brand on one thing. Ford debuted the Edsel in 1957 in 18 variations, none of which seemed to target a particular audience.
Don’t get into a situation you can’t get out of
Before the car was finished or even named, Ford began promoting teasers for the ‘E-Car,’ which promised to revolutionise the automobile industry. Brooks says that the executives never even considered failure an option. The stock market took a nose dive in the summer of 1957, and people stopped buying mid-priced cars. The Edsel was set to launch in 1957. Had Ford’s leadership acted more cautiously and avoided betting so much on the Edsel, they likely would have been able to avoid losing $350 million.
If you fail, accept it, learn and move on
Despite the countless mistakes that Ford’s leadership made with the Edsel, Brooks found that no one would take responsibility for the failure and felt they had done everything right. Edsel marketing manager JC Doyle even tells Brooks, “People weren’t in the mood for the Edsel… What they’d been buying for several years encouraged the industry to build exactly this kind of car. We gave it to them, and they wouldn’t take it. Well, they shouldn’t have acted like that.”