The business examples are everywhere: Kodak missing Xerox, IBM missing Microsoft, Sony missing Apple, Microsoft missing Google, Google missing Facebook, Facebook missing Twitter, Blockbuster missing Netflix, Walmart missing Amazon, and on and on. In each case, the already dominant, well-positioned, and resourced company failed to take advantage of a huge opportunity emerging in its own front yard.
The history of business provides many such examples of great companies with big money, big brains, and great market positions making epic mistakes because while becoming great, they learned mental models that misoriented and misdirected their ongoing learning.
Kodak, once the world’s leading image processing company, didn’t think reproducing pictures of paper (copying) was worth investing in. The world’s leading computer company at the time, IBM thought the market for personal computers was so small that it gave away the PC OS business to, at the time, the tiny company Microsoft. Sony, the world’s leading brand of portable music players, at the time, didn’t get the inevitability of digital music and players such as iPods.
How could such well-funded companies, run by intelligent and experienced leaders, fail to recognize and capitalize on such huge opportunities? Because they had learned not to. Because the mental models (they learned) about their market and their position in the market misoriented and misdirected their ongoing learning.
Their failures were not the result of a lack of learning capacity or a lack of learning. Rather their failures were the result of learning in the wrong ways and about the wrong things. Their failures were the products of their own misoriented and misdirected learning.