When we asked Nolan Bushnell to tell us about a time when he lost a game in life, he mentioned his having to sell Atari to Warner for twenty-eight million dollars. It was a loss to him, because he couldnât move his company into retail consumer sales fast enough. But he made the decision with reason and intuition and went on to build other companies. At the time he visited our class, video games and his old company Atari were riding high with billions in sales. But conditions have changed since then, and so has Bushnell. His name now comes up as a backer of successful new technology.
Related Quotes
If there is one characteristic that signals creativity in business, it might be follow-through. For instance, Nolan Bushnell is only one of the people who could be credited for fathering the video game, but he often gets the credit because he was the first to bring any to market in a big way. He says:
After the creative moment I thought, âGee, anybody should be able to make a business out of it.â As it turned out, anybody could. I had twenty-seven competitors so fast! (Laughter)
Policies and control processes became so foundational to our work that those who were great at coloring within the lines were promoted, while many creative mavericks felt stifled and went to work elsewhere. I was sorry to see them go, but I believed that this was what happens when a company grows up.
Then two things occurred. The first is that we failed to innovate quickly. We had become increasingly efficient and decreasingly creative. In order to grow we had to purchase other companies that did have innovative products. That led to more business complexity, which in turn led to more rules and process.
The second is that the market shifted from C++ to Java. To survive, we needed to change. But we had selected and conditioned our employees to follow process, not to think freshly or shift fast. We were unable to adapt and, in 1997, ended up selling the company to our largest competitor.
His [Steve Kane] crucible moment wasnât merely that he correctly foresaw that going public wasnât right for Gamesville. And it wasnât merely that he knew that a bird in his hand was worth more than the millions in the bush. Itâs that he had stayed in touch with where he was from and what had formed him. He remembered that he was the son of an entrepreneur, a scrappy, end-the-day with-more-money-than-you-began entrepreneur. His dad and my iceman grandfather would have loved to play cards together.
THREE: New Venture
âSun Microsystems had declined to pursue the consumer marketplace for PC video game hardware. So had Loriâs former employer Silicon Graphics, the industry leader in three-dimensional graphics. (Employees there were busy animating the CGI dinosaurs for Jurassic Park.) The failure of the major players to invest in PC gaming created a vacuum in the marketplace, which a brigade of start-up businesses was now scrambling to fill.
The concept was to take the hardware used to paint the wire-frame skeletons of model airplanes and dinosaurs and repurpose it to create controllable animated figures in three-dimensional games.
Disruptive technologies, Christensen had observed, often grew out of hobbyist communities. They were developed using âbootlegged resourcesâ in which âoff-the-shelf componentsâ were redeployed for something other than their intended purpose. They started out wonky but rapidly improved along attributes of performance that established players ignored.
But even once you had absorbed this lesson, it wasnât easy to implement. Pursuing niche markets cost profits, making investors question your sanity. This, too, Christensen had foretold: âOne of the reasons managers at established firms find it difficult to serve emerging markets is that their investors and customers tell them not to.â
That was the real secret of The Innovatorâs Dilemma, which readers often missed. It was not a book about how to succeed; it was a book about how not to fail. Christensenâs book wasnât a how-to for start-ups but a counterinsurgency manual for senior managers at stagnating firms. Thirteen years in, Huang felt that Nvidia was at risk of becoming such a firm, and it was as much paranoia as optimism that led him to pursue the mad-science market.