Not just innovation, but successful innovation

We've heard of "The Innovator's Dilemma", Clayton Christensen's book that describes how market leaders focus on customer needs and are surpassed by other, more innovative companies. That certainly seems to apply to the IT industry. Consider:

IBM, in the 1960s, introduced the System/360, an innovation. (It was a general-purpose computer when most computers were designed and built for specific purposes.) Later, it offered the System/370 which was a bigger, better version of the System/360. They were successful, yet IBM missed the innovation of minicomputers from DEC, Wang, and Data General. IBM offered the old design, yet customers wanted innovation. (To be fair, IBM later offered its own minicomputers, different from its mainframes, and customers did buy lots of them.)

IBM introduced the IBM PC and instantly became the leader for the PC market, eclipsing Apple, Radio Shack, Commodore, and the dozens of other manufacturers. IBM enjoyed success for a number of years. The IBM PC XT was a better version of the PC, and the IBM PC AT was a bigger, better version of the IBM PC (and PC XT). Yet IBM stumbled with the PCjr and the PS/2 lines, and never recovered. Compaq took the lead with its Deskpro line of PCs. IBM was offering innovation, yet customers wanted the old designs.

DEC was successful in the minicomputer business, yet failed in the PC business. Its early personal computers were smaller versions of its minicomputers; compared to PCs they were expensive and complicated. DEC was offering the old designs, yet customers wanted someone else's design.

Commodore built success with its PET, CBM, and especially its C-64 models. It failed with its Amiga, a very innovative computer. Commodore offered innovation, yet customers wanted the IBM PC.

It seems that successful innovation requires two components: a break from past designs and a demand from customers.

Apple innovates -- successfully. From the Apple II to the Macintosh to the iPod (the innovation there was really iTunes) to the iPad, Apple has introduced products that break from its past *and* that meet customer demand. The genius of Apple is that many of its products don't fill a demand from customers, but create the demand. Few people realized that they wanted iPhones or iPads (or Macintosh computers) until they saw one.

There is a lesson here for Microsoft. The PC market is changing; innovation is needed. Microsoft, if it wants to remain a market leader, must innovate successfully. It must introduce new products and services that will meet a customer demand.

The same lesson holds for other technology companies. IBM, Oracle, and even Red Hat should look to successful innovation.