Chapter 1 Lightning Doesn't Strike Twice (sample)
What Happens When You're Lucky but Think You're Smart
It is the mark of an inexperienced man not to believe in luck. —Joseph Conrad, Polish-born English novelist
Companies that were once in the right place at the right time sometimes forget that they were lucky. By taking advantage of their good fortune, they grow powerful. However, in some cases these companies focus on their power and position in the market and ignore signals that their market is changing. Because these companies take their success for granted, they do not plan for a time when an upstart will challenge them. They rely on the illusion of invulnerability as a strategy.
Lucky companies—that is, companies that find themselves in the right place at the right time—face a common dilemma. The entrepreneurs who start these companies typically understand that they are lucky; they have created an innovative product or service and brought it to market just when there happened to be a demand for their offerings. They hit the market right, and their strategy has garnered substantial rewards. However, these same entrepreneurs often lose sight of their humble beginnings and early missteps; they start to believe their own marketing hype, and they attribute their success solely to their own smarts. At this point, management often begins to think that their company is invincible. Such arrogance can cause a once lucky company to falter, but this doesn't happen overnight. It may take a decade before arrogance turns an enterprise with a promising future into a dismal disaster.
This chapter presents examples of successful companies that were unable to sustain their leadership positions, explores the combination of luck and good judgment that enabled these companies to succeed in the short term, and examines the processes and practices that led to these companies' downfalls. Entrepreneurs can learn to a lot about success by studying the reasons why others fail.
In the technology market, we tend to live in the moment. It is difficult to imagine a time without the Internet, a time when so much information wasn't available to so many people so quickly. Few of us remember when a single computer covered an entire city block and sold for millions. Not long ago, Microsoft was the most important emerging company in the world of high tech. Today a new batch of behemoths, with names like Google, Amazon.com, and Facebook, appear to be unstoppable. As the technology industry has grown, new companies have emerged in a steady stream and grown gargantuan and powerful. But, as I've mentioned, these companies tend to become arrogant with the growth of their revenue and influence. Sometimes they are smart enough to keep focused on their long-term strategy and the factors that brought them success, and by doing so they attain sustainability. Other times, failing to recognize that the only constant is change, they lose focus, assume their market position is permanent, and, ultimately, fail.
In the computer industry, there are many examples of companies that were lucky enough to be in the right place at the right time, but then weren't savvy enough to harness that luck in order to sustain their market position. Three particularly good examples of this pattern are Wang Laboratories, Digital Equipment Corporation, and Sun Microsystems. Each of these companies became huge and powerful by entering the market at just the right time. They were all lucky. They all had spectacular opportunities, which they took advantage of and executed brilliantly. Yet not one of these companies exists today. In 1999, Wang Laboratories sold its remaining assets to Getronics N.V., a subsidiary of the Dutch IT & Telecommunications firm KPN. In 1989, Digital Equipment Corporation was sold to Compaq Computer, Inc. (which was later purchased by Hewlett Packard). Sun Microsystems was sold to Oracle Corporation in 2009. So what happened? All three were blinded by their own hype. They began to believe that their power would sustain them into the future and that it was unnecessary to change with the times.