Page 228 - ENTREPRENEURSHIP Innovation and entrepreneurship

53231_Innovation and Entrepreneurship.qxd 11/8/2002 10:50 AM Page 221

“Hit Them Where They Ain’t” 221

—the first one, by the way, that had the features of the true computer:
a “memory” and the capacity to be “programmed.” And yet there are
good reasons why the history books pay scant attention to IBM as a
computer innovator. For as soon as it had finished its advanced 1945
computer—the first computer to be shown to a lay public in its show-
room in midtown New York, where it drew immense crowds—IBM
abandoned its own design and switched to the design of its rival, the
ENIAC developed at the University of Pennsylvania. The ENIAC was
far better suited to business applications such as payroll, only its
designers did not see this. IBM structured the ENIAC so that it could
be manufactured and serviced and could do mundane “numbers
crunching.” When IBM’s version of the ENIAC came out in 1953, it
at once set the standard for commercial, multipurpose, mainframe
computers.
This is the strategy of “creative imitation.” It waits until somebody
else has established the new, but only “approximately.” Then it goes
to work. And within a short time it comes out with what the new real-
ly should be to satisfy the customer, to do the work customers want
and pay for. The creative imitation has then set the standard and takes
over the market.
IBM practiced creative imitation again with the personal computer.
The idea was Apple’s. As described earlier (in Chapter 3), everybody at
IBM “knew” that a small, freestanding computer was a mistake—
uneconomical, far from optimal, and expensive. And yet it succeeded.
IBM immediately went to work to design a machine that would
become the standard in the personal computer field and dominate or at
least lead the entire field. The result was the PC. Within two years it had
taken over from Apple leadership in the personal computer field,
becoming the fastest-selling brand and the standard in the field.
Procter & Gamble acts very much the same way in the market for
detergents, soaps, toiletries, and processed foods.
When semiconductors became available, everyone in the
watch industry knew that they could be used to power a watch
much more accurately, much more reliably, and much more
cheaply than traditional watch movements. The Swiss soon
brought out a quartz-powered digital watch. But they had so
much investment in traditional watchmaking that they decided on
a gradual introduction of quartz-powered digital watches over a
long period of time, during which these new timepieces would
remain expensive luxuries.