Long ago, back in the glory days of the Ming Dynasty, a Chinese merchant returned from Venice with an invention that was taking Europe by storm.
The Italians had hit on an exciting new material that could be sculpted and coloured to produce drinking vessels of striking originality and the merchant hoped his clients would place big orders for Venetian ‘glass’. But they were unimpressed; compared to the high artistry of Chinese ceramics, glass was crude, ugly and cheap. For the next 500 years the Chinese continued to perfect their craft, producing the finest pottery in the world… while the Europeans mucked about with windows, mirrors, lenses, prisms and test tubes; creating the essential tools of the Scientific Revolution that would transform the Western world and leave China back in the Middle Ages.
For what looked like a poor substitute for pottery turned out to be an entirely new way of seeing the world.
1985. At one end of a conference table sits Min Lee, a skinny kid from Silicon Valley. At the other, a brace of senior executives from Encyclopedia Britannica, possibly the most successful publisher in history.
Their product was the work of over 4000 scholars (including 110 Nobel Prize winners and five US Presidents) and their command of the market was formidable: they were in every government department, newsroom, school, library and damn near every home.
Min held up a plastic disc. ‘Choose the very best material from the Encyclopedia’ he said ‘and burn it onto this CDRom and you’ll be on every computer on Earth’… to which one of the executives scoffed, ‘Who do you think we are, Funk & Wagnells?’
Which is who Min talked to next. F&W loved the idea (especially because EB hated it) and together with Microsoft they launched Encarta in 1993. Britannica’s sales figures never recovered.
It’s a classic story: people who build their empires on an old idea don’t like to experiment out on the fringes of what they do. So when, one day an outsider comes to bring the next logical step to their attention, the response is always the same: As IBM said to Apple and Blockbuster said to Netflix; ‘NO.’
But my favourite story of this ‘Future Blindness’ comes from the 1967 Swiss Watch Manufacturer’s Conference.
The industry had just seen a presentation of Beta 1, the world’s first quartz movement. It was faster, cheaper, lighter and more accurate than any mechanism ever made. It looked like a watch, worked like a watch and ticked like a watch, but it wasn’t built like a watch, which is why the Swiss craftsmen shook their collective heads.
As far as they were concerned, this was crude, ugly and cheap; no substitute for high precision engineering.
By the late 70’s the Swiss share of the world market had fallen from 80% to 15%, as Japanese companies like Seiko embraced the new technology to drive the production cost of a watch down from $200 to just 50 cents a piece.
And here’s the irony. Guess who invented the Beta 1? A group of researchers at the Centre Electronique Horloger in Neuchâtel, Switzerland. Now guess who paid for their research? The very same experts that not only rejected quartz technology but refused to even patent it.
Looking for the future of your industry? It might be staring straight back at you.
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