More than 130 years ago, Alexander Graham Bell and associates offered to sell their patent for the telephone to Western Union for $100,000. The president of Western Union dismissed the technology as a “scientific curiosity” that would never have a practical use.
A hundred years later, MIT student Hoo-min Toong created a spreadsheet program called 1-2-3 in the 1980s. When he offered to exclusively licence the technology to IBM for $3.5 million, IBM turned him down, saying “hardware is a multi-billion-dollar market [but] the market for software is a $50 million-dollar [novelty]”.)
Both these large corporations failed to cut through the red tape of procedure and policy to make lucrative exceptions that would have allowed them to make big gains – something many IT companies today have learned from.
Here are five companies we admire for their choice to set aside the standard way of doing things to realize amazing success:
Shadow IT makes big gains for SurveyMonkey and UserForce
The dilemma: The term “Shadow IT” refers to “IT systems and IT solutions built and used inside organizations without organizational approval,” generally seen as a problem for management.
The usual way of dealing with it: Send down a decree to the minions: thou shalt only use the programs we say to get thine work done. (As if to suggest “Efficiency be damned!”)
When they threw the playbook out the window: Companies found they could find great success in “Shadow IT” projects by embracing the best way of doing things, no-matter what the previous policy was: Salesforce.com got its start selling to sales departments who needed a solution that IT wasn’t having success providing. SurveyMonkey showed that lots of Fortune 500 companies will buy into a single piece of software (instead of just an impressive themed suite of programs) if it’s the most useful program for their needs. And UserForce CEO Richard Whitemore recently told ReadWriteWeb.com, “more enterprises are using UserVoice as an internal tool instead of an externally facing one”. Whitemore says, “this has been driven largely by Shadow IT after business units grew frequently unhappy with the larger idea management packages installed by IT.”
Here are some more Shadow IT success stories: http://www.readwriteweb.com/enterprise/2010/09/shadow-it.php
NZ IT firms get back to work no matter what it takes
The dilemma: A crippling earthquake that killed dozens and demolished infrastructure and some of New Zealand’s most beloved pieces of architecture also brought Christchurch’s IT district to its knees.
The usual way of dealing with it: Hunker down and wait for the utilities to come back on.
When they threw the playbook out the window: Staff at Clarus, which comprises an office of 12 staff and a pool of 60 IT contractors realized the best way it could contribute to getting the city back on its feet would be to keep people working. Clarus did (and is doing so) by having employees work out of their homes, web cafes and anywhere else they can get to that has power and web access. Clarus managing director Edwin Dando even set up a mini office of five desks and workstations in his house to pitch in.
Check out more details in this NZ blog posting “Down but not out” http://computerworld.co.nz/news.nsf/news/down-but-not-defeated-tech-companies-get-back-to-work
The dilemma: How to keep the ball rolling after years of success.
The usual way of dealing with it: Start churning out the next trend ASAP!!
When they threw the playbook out the window: After realizing in 1995 that an online bookstore could meet consumer needs in a unique and meaningful way, Amazon founder Jeff Bezos saw that the company would likely stick around if it continued to be relevant. The solution? Focus on the long-term. The company has expanded into a shopping destination well beyond just books and is growing new revenue streams with products like Kindle 3. Even amidst competition such as the iPad and a slew of other e-readers, Amazon sales grew 28% in 2009 (when many businesses saw drastic dips in sales.)
The dilemma: After five years of spectacular innovation and success, Google was set to go public, with an IPO in 2004.
The usual way of dealing with it: The frenzy of an IPO for such a clear up-and-comer would normally whip speculation and greed into a wild frenzy, resulting in heartbreak and outrage for people trying to buy Google stock as well as Google employees.
When they threw the playbook out the window: Rather than embrace the standard Wall Street model for this sort of thing, the Google gods – long-standing fans of democracy – instituted a custom-designed “Dutch Auction”-style IPO that allowed for fair pricing and almost none of the volatility that often surrounds tech-upstart IPOs.
(For more insight into how this IPO was truly outside the box and how Dutch Auctions work in general, check out this very helpful blog post on the subject: http://www.bubblegeneration.com/2011/01/tale-of-two-ipos.html)
The dilemma: After years on top of the world, the chip making giant faced hard times as tech firms were hit by the latest recession.
The usual way of dealing with it: Conventional corporate thinking suggests a good ol’ fashioned round of budget cuts and layoffs would help the company get lean and stay competitive.
When they threw the playbook out the window: Rather than panicking and trying to reinvent itself (probably in vain) Intel stayed the course, figuring when the economy bounced back, people would again want lots of computers (and the chips that power them). Intel’s ambitious gamble to sit tight and stay the course paid-off: In 2010, profits soared to a 10-year high of $2.9 billion.
Just being willing to take the human step to think outside the box – maybe even take a risk in doing so – can pay big dividends. The companies above all have at least one thing in common: they just threw policy to the winds and got it done.
By the way, in 1995, IBM finally did buy that licence for a much more advanced version of the 1-2-3 software (now Lotus) for $3.5 billion dollars…1,000 times what it would have cost them in the early 1980s!
More on building a successful IT upstart:
Building success into a high-tech start-up
Thriving in the New Normal – What Tech Companies and Employees Must Do
Young tech companies that are thriving (and why)