How IBM, Ford, DuPont and Sony passed on Windows, the Cadillac, Gore-Tex and the iPod

There are many reasons why companies reject good ideas. Some of those reasons seem reasonable: the idea doesn’t align with the current mission statement, or it requires too much capital or manpower or too much management attention. Then there are the instances where the big bosses may not have paid enough attention.

Consider Thomas Edison, who briefly employed a man named Nikola Tesla in his lab. Tesla had devised an alternating current induction motor and suggested to Edison that it was a better source of electricity than Edison’s own DC alternators. “Spare me that nonsense,” Edison is said to have told the subordinate, in one of the clearest miscalculations in corporate history. Let’s discover a few more.

Apple Tunes

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In the late 1990s, as MP3 players began to flourish, an engineer named Tony Fadell had an idea for a line of digital music players. Fadell had worked for major consumer electronics companies but had been snooping around Silicon Valley for a decade trying to develop his own devices, with limited success. He took his player to one of the leaders of digital music at the time, RealNetworks, who sold music over a network and was hesitant to create a separate personal music device. Consumer electronics companies such as Philips and Sony were also not that interested.

Finally, he found a man named Steve Jobs, whose computer company was desperate to connect MP3 players to his iTunes app. Fadell thought he would get some advice to keep his own business alive. He thought wrong. Jobs told him: you’re going to work at Apple and build it up in a year. Fadell, like many others, apparently found Jobs as irresistible as he was annoying. Five years later, Apple sold its 100 millionth iPod. Sadly, after a 20-year run, the iPod will join the Walkman in the technology museum — Apple recently announced it will stop making the device.

DuPont lets one slip

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In the late 1950s, a chemical engineer named Wilbert “Bill” Gore got the hot confusion about a compound he was working with, called polytetrafluoroethylene. This probably didn’t make him popular at cocktail parties; however, it would make him a lot of money.

Gore thought the compound, which DuPont called Teflon, had more potential than his employer had in mind: a non-stick coating. So he and his wife, Vieve, set out on their own, founding WL Gore & Associates in their basement in Newark, Delaware, in 1958. PTFE was highly resistant to heat, making it perfect for electrical insulation — and just in time for the emerging space age and computer age, which craved electrical efficiency; it also applied to medical implants.

But that’s not why you know their last name today. In 1969, after their son Bob made a stretched version called expanded PTFE, the company found a market for a breathable, waterproof fabric they called Gore-Tex — which would make the winter weather much more bearable for all of us.

Ford vs Lincoln

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This is a story of two Henry’s. Henry Leland was a genius machinist, gunsmith and supplier to early car companies who could consistently make parts within tolerances (0.001 inch) that were unheard of at the time. He envisioned a high-end car that would run like a dream. Henry Ford, on the other hand, was a design innovator, but lousy in production at the time. And at the turn of the last century, in his second company, Ford couldn’t produce the low-cost, about $1,000 models he was hired for—and had no interest in $3,000 luxury cars.

So in 1902, Leland was brought in by the investors who controlled the Henry Ford Company to fix things. Ford, who no longer ran Ford, ran. Leland began to focus on high-end models and renamed the company Cadillac. Leland later sold Cadillac to GM, regretted it, and in 1917 revived the idea for a standalone luxury car brand. An admirer of a certain American president, his new luxury car was called Lincoln. However, Ford would have the last laugh when Lincoln went bankrupt in 1922. This year Lincoln celebrates its 100th anniversary, the legacy of two great entrepreneurs who didn’t always get everything right.

IBM opens the window for Microsoft

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The question was, “Do you want to buy it or do you want me to buy it?” The answer would change the computer. The speaker was IBM CEO Jack Sams, who needed an operating system for the IBM Personal Computer 5150. The machine was built with an open architecture – unheard of at IBM – when it was introduced in 1981. old Bill Gates, whose startup, Microsoft, didn’t really have an operating system, but found one called QDOS (for Quick and Dirty Operating System) from a local company. Given the option to buy or rent QDOS, IBM did the latter.

Gates cleverly negotiated the right to license QDOS – which became MS-DOS and later part of Windows – to all newcomers. And they came. The rush of third-party computer manufacturers that followed the introduction of the PC in 1981 — including Dell, Compaq, and HP — would make Microsoft the largest software maker in the world and ultimately force IBM out of the PC market. Sams’ question seems silly now, but that would have been less the case for a company racing for a market that is escaping. Maybe IBM should have asked for one of its mainframes first.

From the May/June 2022 issue of businesstraverse.com. Magazine