Stories Are Important, We Should Get Them Right

Stories Are Important, We Should Get Them Right

Business November 01, 2016 / By Greg Satell
Stories Are Important, We Should Get Them Right

The appeal of parables is that they reveal a simple truth without having to explain facts and that is also why they are so dangerous. The world is not such a simple place, which is why parables so often lead us astray. As Alfred North Whitehead put it, seek simplicity, but distrust it.

Blockbuster Video is a cautionary tale, but not for the reason most people think it is. As the story is usually told, the executives at the now defunct video rental giant ignored the threat coming from Netflix until it was too late. Their futile efforts to meet the challenge came too late and the company went bankrupt in 2010.

The real story is decidedly different. In fact, Blockbuster CEO John Antioco recognized the threat and began to make serious changes as early as 2004. Soon, its Total Access program was gaining ground against Netflix. Alas, both investors and franchisees balked at the cost of the changes, Antioco was fired and the strategy was abandoned.

Notice how the real story is much more ambiguous. It’s easy to conjure up images of “fat cat executives” who are asleep at the wheel. It’s far more unsettling to realize that we can come up with the right strategy, execute well and still fail. The truth is that the world is a messy place and if we are to learn something useful from stories, we need to get them right.

A Global Market For 5 Computers?

Thomas J. Watson, the iconic CEO of IBM, is often pilloried for observing in 1943 that “there is a world market for maybe five computers.” It’s a remark so foolish that PC World ranked it #1 on its list of the 7 worst tech predictions of all time. The magazine implies that he failed to see the future because he didn’t imagine that computers would move beyond vacuum tubes.

It is a puzzling comment to be sure. What makes the observation even more curious was that he was supposed to have made it in 1943, three years before the first digital computer was introduced in 1946. How could Watson predict a market for five computers when none yet existed? To envision a market of any size would have been strange at the time.

Other facts make the comment seem out of character as well. Watson took a major risk  when he established IBM Research in the depths of the Great Depression to ensure that his firm would be on the forefront of computing technology. He also went to the trouble to hire the legendary John von Neumann to help develop digital computing in the 50’s. IBM then went on to dominate the technology for decades.

The truth, as Kevin Maney points out in his definitive biography of Watson, is that he never said it. The source of the confusion is probably a comment that Watson made to his board in 1953 about a sales trip he took for one of IBM’s early computers, the 701. “As a result of our trip,” he said “on which we expected to get orders for five machines, we came home with orders for 18.”

So the truth is vastly different than the myth that has been so widely peddled and the facts are easy to check. Why does the false story persist?

Ballmer’s Blunder

When Apple came out with its iPhone in 2007, Steve Ballmer, Microsoft’s CEO at the time, dismissed it out of hand, and predicted, “there’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item.” In retrospect, it was an incredibly stupid thing to say and displayed a serious misreading of the market.

Many point to that moment as Microsoft’s fortunes went south and it lost the ability to compete. In the years that followed, Apple became the world’s most valuable company and Microsoft continued to struggle with mobile computing. Considering that Apple was near bankruptcy less than a decade before, it was a remarkable turn of events.

Yet here again we’re not getting the whole story. While Ballmer was bungling mobile computing, he was remarkably prescient in creating an entirely new division called servers and tools. It was those early investments that led to Microsoft’s highly successful cloud business, which grew by 102% last quarter.

That’s not all either. In the nearly ten years since Ballmer made his ill-advised comment, Microsoft’s revenues have grown by more than 11% annually. That’s impressive considering both Microsoft’s size and the fact that the period includes the worst economic downturn since the Great Depression.

Maybe Ballmer actually got a few things right…

The Eureka! Moment

Many people know the story of Alexander Fleming’s. Fleming was a brilliant, but sometimes careless biologist who returned from his summer vacation in 1928 and found that the bacteria cultures he had been growing weren contaminated by a mold that was eradicating the colonies. He decided to study the mold and… Eureka! he discovered penicillin.

Yet penicillin didn’t become commercially available until 1945, so clearly that story leaves out quite a bit. In fact, what Fleming discovered wasn’t very useful at all. It was just a mysterious substance — he called it “mold juice”— that could kill bacteria in a petri dish. It was nothing that could cure anyone which is why, when he published his findings, no one really noticed.

It wasn’t until a decade later that Howard Florey and Ernst Chain rediscovered Fleming’s work. They and their colleagues figured out how to transform the “mold juice” into a storable powder and develop a fermentation process it to produce enough penicillin to perform studies on mice, which were incredibly successful.

Yet still, penicillin was far from a finished product. In fact, the first patient died because they ran out of the wonder drug. So in 1941, Florey and another member of the team, Norman Heatley, travelled to the US, where they collaborated with American labs to identify a more potent strain of the mold and develop an industrial scale fermentation process.

So what at first seems like a single flash of insight that changed the world, was actually a major collaborative effort, encompassing dozens, if not hundreds, of scientists and technicians across several labs in two different continents.

Beware Of Parables Offering Simple Truths

All of these stories have something in common in that they are are subtle morality plays about the difference that a single individual can make in a single moment. We also like to see that powerful people can make mistakes and pay for them, just like we want to know that an underdog can outsmart the big guys.

So it’s much easier to believe that Blockbuster’s CEO was incompetent, rather than that he came up with a viable strategy and was fired, in part, for costs associated with it. We take comfort in knowing that powerful men like Watson and Ballmer can make outrageous blunders. The story of Alexander Fleming’s “Eureka! moment” is just too good to sully with pesky details.

Yet the truth is that the world is a messy place. A single flash of insight is unlikely to amount to much. People can get a lot of things wrong if they get a few important things right. Big, slow companies like Microsoft and IBM have endured so long precisely because they prepare for the future so long in advance. It is better to prepare than to adapt.

The appeal of parables is that they reveal a simple truth without having to explain facts and that is also why they are so dangerous. The world is not such a simple place, which is why parables so often lead us astray. As Alfred North Whitehead put it, seek simplicity, but distrust it.

This article originally appeared at DigitalTonto 

Greg Satell is a popular speaker and consultant. His first book, Mapping Innovation, is coming out in 2017. Follow his blog at Digital Tonto or on Twitter @DigitalTonto

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