Former Xerox CEO FundedFabled PARC but FailedTo Harvest Innovations
While He Focused on the Bottom Line, Researchers Departed With IdeasTo Build Modern Computing
By STEPHEN MILLERWSJ, December 23, 2006; Page A6


This is an extreme example of what I find over and over in dealing with companies who want to innovate. It is so much more than generating ideas – the role of senior leadership and the right corporate climate is so important. We had a debate in our last Driving Organic Growth class on whether large companies can grow through innovation. Our contention is they can but they must recognize there our critical elements that must be addressed and, if needed, changes must be made. This article highlights some of those critical issues……

Peter McColough (became CEO in 1968) never powered up a personal computer, but he helped unleash the digital revolution. Many of the technologies at the center of today's computerized offices and homes -- the mouse, the laser printer, the local area network -- were first developed in the 1970s at a Silicon Valley skunk works he chartered at Xerox Corp(THEY HAD THE IDEAS).


But Xerox never reached Mr. McColough's goal of being at the forefront of what he called "the architecture of information." The company still best known for copiers pioneered in the 1950s and '60s failed to develop many of the technologies into marketable products. Instead, a herd of start-ups, often headed by the very workers at Xerox's Palo Alto Research Campus who had invented them, rumbled in and created industries in personal computers, networking, office software and others.

"If Xerox had known what it had and had taken advantage of its real opportunities, it could have been as big as IBM plus Microsoft plus Xerox combined -- and the largest high-technology company in the world,(THE LOST OPPORTUNITY)" Apple Computer Inc. co-founder Steve Jobs is quoted as saying in "Joe Wilson and the Creation of Xerox," a book by Charles Ellis about the company and its early chief executive.

The reasons for Xerox's inability to take advantage of its own inventions are debated in business schools to this day. Jacob Goldman, Xerox's chief scientist at the time who founded PARC, blames short-sighted managers unwilling to take chances on small-scale, unproven technologies.(THE IMPORTANCE OF FOCUSING ON SHORT AND LONG TERM…..UNDERSTANDING HOW TO MANAGE UNCERTAINTY IS ALSO A IMPORTANT COMPONENT OF THIS SHORT SIGHTEDNESS—THE MANAGERS DID NOT KNOW HOW TO DEAL WITH THESE NEW OPPORTUNITIES BECAUSE OF THE UNCERTAINTY. OPTIONS THINKING IS CRITICAL!) "They managed the company quarter to quarter and looked at the bottom line," Mr. Goldman says. "They weren't thinking about the future really."(OVER FOCUS ON HORIZON 1 PROJECTS…FOR OUR ALUMNI, RELATE THIS TO OUR DISCUSSION OF MANAGING THE INNOVATION PORTFOLIO)

Others cite a culture clash. "The guys on the West Coast were just laughing at the uptight suits there in freezing Rochester," Mr. Ellis says in an interview, referring to Xerox's headquarters then in that N.Y. city. "The straight-laced guys couldn't stand the idea that these hippies were coming to work at noon."(THE CORPORATE CLIMATE FAVORING INNOVATION MUST BE ESTABLISHED TO COMMERCIALIZE INNOVATION)

And some say part of the blame should go to Mr. McColough, who succeeded the outgoing Mr. Wilson as CEO in 1968 after joining the company then called Haloid Co. 14 years earlier. The bottom-line-oriented Mr. McColough, a graduate in the storied Harvard Business School class of '49 that produced an unprecedented number of CEOs, "lacked the will to back bold initiatives with hands-on perseverance,"(THE ROLE OF SENIOR LEADERS IS ABSOLUTELY CRITICAL) wrote Robert Alexander and Douglas Smith, authors of "Fumbling the Future," a dissection of Xerox's management during the 1970s……………

Instead of marketing new technology being developed at PARC, Xerox was pushing electronic typewriters to compete with IBM's Selectrics and the massive 9200 model copier that spat out two pages a second and cost $300 million to develop (THE ONLY REAL FOCUS WAS ON PROTECTING THEIR CURRENT BUSINESS – HORIZON 1. A GREAT EXAMPLE OF THE "INNOVATORS DILEMMA"). At the same time, IBM and Eastman Kodak Co. began to compete with Xerox in high-end copying, and Japanese rivals like Ricoh Co. introduced copiers for small business, a market Xerox had ignored