Malcolm Gladwell dazzles at PDS Tech Conference

If you’ve read any of Malcolm Gladwell’s best-selling books, you know how hard it is to put them down – or forget them. The author of The Tipping Point, Blink, and Outliers has a knack for presenting new and challenging ideas with an effortlessness and clarity that make you feel as though you could have – and perhaps should have – come up with them yourself. Of course, you didn’t. He’s clearly smarter than you, but he doesn’t make you feel dumb. In fact, he invariably makes you feel a lot smarter than you really are.

Well, as anyone who attended Gladwell’s keynote presentation at the PDS 2011 Technology Conference in Milwaukee last Thursday now knows, he’s every bit as engaging a speaker as he is a writer.

In his presentation, Gladwell focused on the difference between invention and innovation (i.e., the refinement of existing inventions) – and the corporate cultures that encourage both.

He made the provocative claim that invention is vastly overrated in our society, and that you don’t always want to be the first to come up with a new product – in fact, you probably want to be third.

That sounds a bit absurd when you first hear it. After all, pioneers are lionized in our society. Who was the third man on the moon? You can certainly name the first, and can probably name the second. But almost no one knows the third. (Charles “Pete” Conrad Jr. I had to look it up, of course.)

But who came up with the mouse and the graphical user interface? If you said Apple and Steve Jobs, you’d be wrong. The right answer is Xerox. That Jobs is vastly better known for those two earth-moving inventions than Xerox is, is a powerful commentary on the importance of being a hungry and nimble organization and the advantage followers often have over leaders in technologically complex markets.

As the legend goes, Xerox founded Xerox PARC in Palo Alto, Calif., and staffed it with dozens of the brightest people in the industry. They worked in a palatial headquarters and were given a huge budget to create new and exciting products. They succeeded, of course – but Jobs and Apple are the ones who prospered. When Jobs visited Xerox, he was wowed by the mouse and graphical user interface, and the rest is history.

That’s not to say that Xerox never implemented any of its own ideas. In 1981, the company came out with the Xerox Star desktop computer at a cost of $16,000.

“Why did it cost $16,000?” said Gladwell. “Because if you have a giant palatial R&D lab that holds 60 of the most brilliant Ph.D.s in the world, that’s what they’ll give you.”

Jobs, said Gladwell, had something none of those computer savants at Xerox PARC had: a pressing need for new ideas. He needed to hit a home run, and he instantly saw the commercial potential of what Xerox had created.

“The only person who is going to make a computer that you can actually use is a hungry 24-year-old from down the street who is desperate for a new product,” said Gladwell.

Apple is not the only example of this phenomenon, of course. For example, Kodak invented the digital camera. But being the biggest player in the photography biz, it probably didn’t feel the urgency its successors did. And it might not have seen the market as clearly as those who followed it. That’s another advantage of being a bit later to the party, said Gladwell.

“When you follow into a technologically complex market, you have a better chance of understanding the marketplace, and that’s because in a technologically complex market, the technology moves faster than a consumer’s understanding.”

Xerox misunderstood the market for desktop computers. It thought it would continue selling high-ticket items directly to businesses. That understanding quickly changed – but other market players were the ones who took advantage.

Similarly, Facebook took off and has continued to prosper precisely because it wasn’t first. Friendster and MySpace preceded it, and both have pretty much fizzled.

“[Facebook] had the benefit of being third, because by the time they came out, they understood that the market for social media was a lot different than the people who came out with Friendster and MySpace thought it was,” said Gladwell. “Friendster and MySpace thought social media was about social media, was about connecting people, and it’s much more than that.”

Gladwell noted that the importance of innovation – as opposed to invention – can be seen in the Industrial Revolution itself. He said that one leading theory as to why the Industrial Revolution took root in England is that the country had a surfeit of “tweakers” who could take existing inventions and make them better and more efficient. The number of inventors the country had was not all that important – but the numerous (now nameless) people who could refine what the pioneers had come up with had an enormous impact.

So being hungry and nimble – and being able to see how the market is evolving for a product – is extremely important.

“If you’d given Steve Jobs $100 million in venture funding, would he have been so eager to make use of that graphical user interface?” said Gladwell. “We think we want to be Xerox PARC, but we don’t. We want to be Apple.”

Those are pretty encouraging words for those resource-poor companies now struggling to find a foothold – and they’re also food for thought for established companies that think they have the world by the tail. They may, but they need to beware of those hungry up-and-comers.

Note: Special thanks goes to PDS for inviting me to the conference and allowing me to meet Gladwell, who is fast becoming a national treasure. I was pinch-hitting for IB Publisher Jody Glynn Patrick and Editor Joe Vanden Plas, who both had scheduling conflicts that made it impossible for them to attend. So truly, in some cases, it is a big advantage to be third.

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