As much as I like Jobs, he didn’t get this right, IMHO. The reason Xerox “failed” (relative term, they still make copiers) is because their CEO had no pressure to keep innovating because they had a monopoly. At some point, the CEO should have been very worried that they didn’t have products that could dominate new industries. As head of Intel, Andy Grove knew that lesson well. He even wrote a book about it “Only the Paranoid Survive”.
It wasn’t that Xerox were marketing and sales led per se. I mean Apple has always had great marketing, for example. It was just that they had no true pressure to grow. Even an MBA manager with zero engineering background can set a goal that the company should create and capitalize on a new industry dominating product every couple of years. And Xerox had the money and technology to do so. You know Xerox invented Ethernet? But they never productized it properly. And then they didn’t innovate it further. And then they didn’t even buy up the emerging companies that had innovated Ethernet further. That’s three serial management failures in one huge industry category. They did the same thing for GUIs, mice and a bunch of other things.
Elon’s recent tweet said it best when he said Tesla should be considered as an amalgamation of different growth companies. Tesla has innovation coming out of its ears.
And why is that, exactly?
The easy answer is that Elon is unique and a great leader and manager. But I think that’s an incomplete answer. Before Elon took on SpaceX and Tesla, Elon looked like any other competent Silicon Valley entrepreneur. Good results with Zip2 and PayPal, but nothing exceptional (by Silicon Valley standards).
But then Elon decided to do the (almost) impossible. No, not starting a rocket company and a car company. Just doing that would have been hard, but not nearly impossible. Instead Elon decided to create a human civilization on Mars, change the entire transport sector to electric, and change energy generation to renewable. OMG. It’s probably a good thing he didn’t emphasize his first goal too loudly at the beginning or else he would have ended up in a padded room
To bring this all the way back to why Xerox failed to grow, and Tesla is doing nothing but growing, it has to do with the pressures applied to both companies. In Elon speak, there was no forcing function to cause Xerox to grow. They had a reliable revenue stream that required little brainpower to maintain. Tesla, on the other hand, was trying to do something that only happens once in generations, and it was a raw undercapitalized startup. If they didn’t innovate like crazy, they would have failed. Again, as Elon tweeted, pressure makes diamonds. Elon drove and still drives the company hard since their goal is so huge.
I’ll end this with a concrete example. By nature, Elon probably isn’t a hard ass kind of ice blooded manager. He has quite a heart and feels things deeply. Yet we know he has fired a lot of people, quickly and brutally. He does this because the pressure to perform is intense. He has no other choice, and he is smart enough to realize it. That’s what pressure to perform does to a company, makes it either very efficient or puts it out of business. For other examples, see evolution.
