GGanesh, who worked with me at acmet, sent me this link to a post by Paul Graham. The post decribes why, in Paul's view, Yahoo failed to see the opportunity that eventually Google seized.
Xerox's Palo Alto research center developed the mouse and GUI interface but Xerox defined itself in the office paper copier business. Apple took that and came out with its series of desktop computers that became the mainstay of desk-top publishing. IBM really grew the personal computer market with its open hardware architecture. But they did not realize the importance of holding on to the OS. That made Bill Gates the richest person in the world.
Success carries within itself the seeds of failure. Success creates a vested interest in preserving the status-quo. Individual careers, status, reputations, self-esteem, organizational "caste" system gets linked to maintaing the status-quo. But the business environment changes. Especially in an economy like the US, where it is easy to found companies and dissolve them and venture capital is more readily available, it is easy for a competitor to come up.
The Horsed Cavalry Mentality refers to the attitude of the British Army brass during the inter-war years. See pages 12 (middle) thru 15 of this RAND Corporation report. The folowing quote is particularly relevant:
"In spite of the experimental and strategic creativity of its leading military minds, the British army did little to overturn the antiintellectualism and lack of disinterested professionalism that permeated the traditional regimental culture. This was manifested by its unwillingness to develop and adopt effective combined-arms techniques. Infighting among the armored-warfare advocates compounded problems, as did the absence of a strategic vision."
Sounds like what happened at Yahoo.
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