At launch, the Xerox Alto sold for $32,000 – far beyond most customers’ price range. And despite repeated requests from the researchers at Parc, the management refused to fund the development of a more affordable version, instead spending their funds on the development of a new typewriter. Other companies quickly filled that void.
The firm’s failure to evolve led to many other missed opportunities, besides the company’s failure to capitalise on the Xerox Alto. Heracleous notes that a couple of the company’s researchers had also created some innovative publishing software, for instance. After Xerox failed to capitalise on the invention, the employees eventually bought the rights to their intellectual property for a mere $2,000, and founded their own start-up in 1982. That company, Adobe’s is current market value is around $191bn (£143bn). Xerox, in contrast, is valued at $4.2bn.
Lessons learned
Any company facing the competency trap may require an organisational overhaul, says Heracleous, to ensure that every manager is open to the potential of new innovations. One solution could be to encourage every employee to work within a research and development department for a few months, which should lead them to lose of cognitive rigidity that comes from their existing expertise, so they can be more open to new ways of doing things.
Leaders should make a special effort to listen to junior employees and new starters who might have a fresh viewpoint on the organisation procedures at the company, and to encourage all staff to question the underlying assumptions behind a company’s decision making. “What is crucial is to have ways to challenge the status quo, to inject variation in the corporate DNA,” says Heracleous.
To avoid fossilisation, you need to embrace evolution. And as Xerox learnt to its great cost, those lessons need to be learnt from the bottom to the top.
David Robson is the author of The Intelligence Trap, which examines why smart people (and businesses) act foolishly and the ways we can all make wiser decisions. He is @d_a_robson on Twitter.
