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52 THE PRACTICE OF INNOVATION

And yet to this day we really do not know what caused the change.
It occurred well before any of the events by which it is usually
explained, such as the shift of the center of demographic gravity to
the teenagers as a result of the “baby boom,” the explosive expansion
of higher education, or the change in sexual mores. Nor do we really
know what is meant by “lifestyle.” All attempts to describe it have
been futile so far. All we know is that something happened.
But that is enough to convert the unexpected, whether success or
failure, into an opportunity for effective and purposeful innovation.

III

THE UNEXPECTED OUTSIDE EVENT

Unexpected successes and unexpected failure have so far been dis-
cussed as occurring within a business or an industry. But outside
events, that is, events that are not recorded in the information and the
figures by which a management steers its institution, are just as
important. Indeed, they often are more important.
Here are some examples showing typical unexpected outside events
and their exploitation as major opportunities for successful innovation.
One example concerns IBM and the personal computer.
However much executives and engineers at IBM may have dis-
agreed with each other, there apparently was total agreement within
the company on one point until well into the seventies: the future
belonged to the centralized “main-frame” computer, with an ever
larger memory and an ever larger calculating capacity. Everything
else, every IBM engineer could prove convincingly, would be far too
expensive, far too confusing, and far too limited in its performance
capacity. And so IBM concentrated its efforts and resources on main-
taining its leadership in the main-frame market.
And then around 1975 or 1976, to everybody’s total surprise, ten-
and eleven-year-old kids began to play computer games. Right away
their fathers wanted their own office computer or personal computer,
that is, a separate, small, freestanding machine with far less capacity
than even the smallest main-frame has. All the dire things the IBM
people had predicted actually did happen. The freestanding machines
cost many times what a plug-in “terminal” costs, and they have far less
capacity; there is such a proliferation of them and their programs, and