THE BLOG
03/14/2013 02:57 pm ET Updated May 14, 2013

Lessons in Obsolescence From Former Technology Leaders

Ernest von Simson has been in the front row of watching the challenges and opportunities facing the information technology industry. He is a senior partner at Ostriker von Simson, a consultancy which assists the largest worldwide enterprises in the selection and deployment of advanced technologies and leading edge software providers. He is also co-director of the CIO Strategy Exchange, a joint venture with Kleiner Perkins Caufield and Byers which provides a forum for emerging start-ups, establishment computer vendors like HP, IBM, Oracle and Dell, venture capitalists and 50 top CIOs. Recently I was able to interview him about his recently updated book, The Limits of Strategy: Lessons in Leadership from the Computer Industry. Our focus was the problem of rapid obsolescence that is common in the world of technology today.

What made you write this book originally and what compelled you to update it?

There were two motivations. First, over the 25 years when I was the Research Partner at the , we examined the major computer companies every year or two, interviewing most key executives and the CEO, on the basis of fairly meticulously background research. We then wrote reports on four or more of these companies at a time that were distributed only to clients. Over the years, the contents of these reports provided a unique, longitudinal perspective on both key companies and the IT industry as a whole.

Many clients and IT industry executives encouraged me to write a first hand history based on interviews written as events occurred rather than based on recollections twenty years later.

As I spent the next few years pulling the reports together, I came to realize that the pace of change in IT makes these experiences a kind of a wind tunnel for business as a whole. The difference between success and decline hinges around innovation, though "innovation" is an amorphous term. It's certainly more than a few dozen smart people in a lab or a lab at all, as the new edition tries to explore. Twenty years after 1992, the contrasting fates of HP and IBM provide an irresistible fodder for analysis: after all, these are the second and third largest companies (after Apple) in the computer industry.

In a way, this book seems to be a morality tale about how easy it is for major technology companies to slip into obsolescence. Do you agree? If so, tell us a few of the lessons that can be learned.

Business obsolescence is a fate with many fathers, but several lessons seem to recur in multiple collapses starting with these three:

The need for continuous reinvention as evidenced recently by Apple, EMC, Google and IBM while many other tech companies are burdened and eventually buried under legacy products, business models and processes.

The cultural danger that a leadership cadre will become overconfident based on their company's earlier ascendency. "Prior success handicaps change" once observed a guru. The debris left by misplaced hubris litters the landscape. Just consider Apple's total domination over HP and Dell in tablets, Facebook's over My Space and Friendster among social networks, or Oracle's over SAP for cloud-based applications.

The difficulty of updating the sales force's grasp of new market realities. Nothing is slower to change than an army of independent-minded field reps as evidenced in the 1990s at IBM, and more recently (with the introduction of cloud-delivered services) at nearly all the purveyors of cloud-delivered software.

The title of the book includes the idea that "strategy is not enough." What do you mean, what else is needed but overlooked?

Strategy is too often a vision, and road map to the future, based on recent realities. But the strategy may have missed some powerful new trend, especially in the IT sector. Or the strategy simply can't be executed because of the company's legacy baggage such as obsolete product lines, ineffectual distribution channels or rearward management mindsets. Strategy is not enough; what's needed is leadership and a nimble culture capable of rapid transformation.

There are several major technology leaders out there today. Do you see how they may be failing to learn the lessons of the companies in your book? If so, give me some examples and the lessons they need to learn.

Two of today's troubled companies are HP and Dell, whose dearth of product innovation and organizational agility are now obvious to all. At HP, the new CEO labors heroically and smartly to shore up weaknesses incurred over fifteen years of spotty top management. At Dell, the founder wants to take his company private, but that move is unlikely to reignite innovation without dramatic cultural upheavals that could require selling off major segments of the business. In both cases, the moves come very late.

Kevin Price is publisher and editor in chief of US Daily Review and Host of the Price of Business on 1110 AM KTEK in Houston, Texas. He is the author of Empowerment to the People and has twice received the George Washington Honor Medal in Communications from the Freedom Foundation at Valley Forge. His column is nationally syndicated and he is a frequent guest on major media around the country, being found on Fox News, Fox Business, and other networks. For more see KevinPriceCentral.com.