Review: In Search of Stupidity

The world of high tech is filled with tales of spectacular failure and sheer stupidity; it is some of these tales that In Search of Stupidity – Over 20 years of high-tech marketing disasters (2nd edition) by Merrill (Rick) Chapman chronicles. While hindsight is always 20:20, Chapman argues convincingly that most if not all of the disasters could have been avoided, given just a modicum of common sense and situational awareness at the time. Better decision making might not have been enough to completely turn the fortunes but most of the idiocy could have been avoided. Having said that, In Search of Stupidity makes for very entertaining reading precisely because many companies did act so idiotically.

The book covers a period of some 25 years from 1980s to the middle of the first decade of the 21st century. That means lots of fascinating things made it in but lots were also missed, such as Apple’s new-found success in the mobile business. The title is however somewhat misleading; it’s not just marketing disasters that caused all the disasters – in most cases it took the co-operative idiocy of the entire company to drive them to the ground as successfully as many did. It’s also not just about failed companies, but also a pointed criticism at the many assumptions and beliefs that corporate world still holds dear. At the very beginning the well-known book In Search of Excellence is, once again, convincingly debunked. For those unfamiliar with the book, In Search of Stupidity provides the best summary I have seen so far:

The basic thesis of In Search of Excellence isn’t complex and can be summed up succinctly: Excellent companies create corporate cultures in which success flourishes. (Yes, this is something of a tautology, but it’s a nice one and people always like reading it.) An excellent corporate culture is one that loves customers, loves its employees, loves the company’s products, and loves loving the company. Once enough love is flowing through the corporate veins, a company will organically become excellent and in turn create excellent products and services. This will lead to more customer, employee, product, and corporate love, lifting all concerned to an even greater heights of selling and purchasing ecstasy. The cycle becomes self-sustaining, and a universe of almost sybaritic business success awaits those who master the Zen of Excellence.

If that sounds kooky, that’s because it is. Many companies identified in Search of Excellence were not excellent. Like Lanier. In Search of Stupidity explains what Lanier really was, pointing out that:

In Search of Excellence thought Lanier was really excellent, a company that “lives, sleeps, eats, and breaths customers.” […] The only problem with all of this was that Lanier wasn’t an excellent company; it was a dead company, a shot-through-the-head dinosaur whose sluggish nervous system hadn’t yet gotten round to telling the rest of its body to lie down and die.

.. and of course explaining why Lanier was dead and how it came to be. Well-known companies are given great coverage in the book; Apple, IBM, Digital Research, Microsoft, Ashton-Tate, Siebel, Intel (remember the bunnies? And the Pentium debacle?), Motorola, Google, Palm, Sun Microsystems, Value America, MicroPro, Novell, Borland, Netscape etc etc. If you’ve been involved in the high-tech industry any amount of time, it’s an excellent trip down the memory lane. And if some of these don’t sound well-known to you, well, maybe you should read the book.

But while dissecting the failures (and a few successes) of various companies in a very insightful, yet funny, way is the core of the book, there are plenty of other lessons to take away from it. Memorable lessons in product positioning, marketing, innovation, branding, handling journalists and PR, and many other facets are offered. Without going into those in any great detail, below are a few of my favorite parts of the book:

On the theories of bubbles – as applicable to the bubbles of today as the tech bubble of 2000:

Many reasons for the dot-com boom have been offered, but all are somewhat unsatisfactory. The most common explanations postulate the following:
[…]
* Wall Street is full of idiots. This theory is both popular and has a lot going for it.
* The people who bought stock from the idiots on Wall Street were also idiots. What?! Are you implying that the American people’s failure to, when confronted with IPOs that reeked of red ink and gobbled on about idiotic schemes to sell 30-pound bags of pet food directly to consumers at a guaranteed loss (Pets.com), not fall laughing hysterically to the floor before kicking these IPO turkeys out the door somehow makes them responsible for their own losses? This sort of speculation isn’t even worth a reply!

On the failure of Value America; this is something Google also recently failed at with the Nexus One:

The company also didn’t understand that when you sell something to a customer, you “own” that customer and all the customer’s associated problems, including the problem of customer dissatisfaction with a purchase.

On how Windows achieved it’s market position and on the difficulty of formulating and executing a “winning” strategy and actually, how corporate success is largely a matter of chance:

But for Windows to achieve its current monopoly position, the following events had to occur:
* Xerox, the original inventor of what we now call the graphic user interface, had to never develop a clue about how to commercialize most of the groundbreaking developments that came out of its PARC labs.
* Digital Research had to blow off IBM when it came calling for an operating system for the original IBM PC.
* IBM, which during the early years of its relationship with Microsoft could have crushed the company like a bug, had to behave as if prefrontally lobotomized from 1985 to 1995 as the gruesome OS/2 saga ground on.
* Apple had to decide to not license the Macintosh operating system, a decision that led to the company from approximately 30 percent market share in the early 1980s to 4 percent market share by 2006.
[…]
Now, how does one fashion a credible strategic plan that assumes your competition will agree to collectively shoot itself in the forebrain while unpredictable market forces break in such a way as to help ensure your eventual success?

The answer is that you can’t.

And as a final quote, several suggestions to the music industry are offered in order to improve their business, like stop suing people. Sensible, yes, but I still like this last recommendation the best 😉

A final suggestion is that decreased drug use by industry executives might lead to clearer thinking.

Now, the book certainly has some shortcomings, but dealing mostly with established, well-known history they are nothing major. Ironically, history in the form of events that took place after the book was written (in the past 4-5 years), has made some comments invalid. For example, Amazon is poked a lot of fun at while the company is quite successful these days. Also, not everyone will like Chapman’s humorous style of writing, but if you were able to stomach the above quotes, you’ll be fine. Finally, the author’s prediction of it taking 6-10 years before e-books begin to disrupt the print business proved, surprisingly in the tech world, to underestimate the pace of development.

All in all however, In Search of Stupidity is a highly entertaining, educating and recommended reading if you work in the high-tech industry. And if you don’t, you might have a good laugh at us – and perhaps lull yourself to a false sense of security that spectacular failures are only limited to the high-tech industry…

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13 Responses to Review: In Search of Stupidity

  1. rick chapman says:

    Hi, Sam. First of all, thanks for this kind review; very much appreciated!

    I do want to make on observation on E-books. As the person who, in 2000, published the first “interactive E-book” in 2000, I’ve been following the growth of this technology/market for quite some time and still think my prediction of six to 10 years is just about spot on. I wrote that section about the disruption of the traditional book publishing industry in 2005 while writing the second edition if ISOS. At the time, I made the statement that the only thing holding back the E-book market from fully disrupting the print model was the fact that ALL the E-book readers of the period sucked.

    Now, in my opinion, the current generation of such devices still suck, but they now suck less. Neither the iPad, the Kindle, nor their competitors are fully able to meet the prerequisites necessary for a full disruption to begin. The devices are still too expensive, too heavy, have too little memory, and make you carry too much on an airplane.

    Worse, no device meets the iron law of leisure reading! No device allows you to peruse tales in the three locations ALL ultimately successful E-reader MUST support. These are:

    The bathroom.
    The bed.
    The beach.

    Kindle is good at the beach, so so in the bathroom, and bad in bed but it’s light. iPad is bad at the beach, good in the bathroom and bed but it’s too heavy. Kindle is a too expensive and iPad is WAY too expensive.

    But, in the next couple of years, I expect things to change. We’re not far away from the device I describe in ISOS II and when it appears, the book industry will undergo rapid disruption. Until then, the herky jerky, stop/start process we see in print, where the vast majority of people are still buying print, but know this will change, will continue.

    That will bring my prediction to fruition in about seven years, which is, I think, not bad!

    (But I wouldn’t buy stocks based on my predictive abilities!)

    Again, thanks much.

    rick chapman
    http://www.softletter.com
    http://www.saasuniversity.com

  2. sim says:

    Rick,

    Thanks for visiting & many thanks for taking the time to reply to my review!

    Fair points. But I would argue that the e-book disruption began last year; I think the biggest book retailer of North America (Amazon) selling more e-books during the 2009 holiday season than physical books counts as one quite clear indicator.

    Also, to a certain degree it’s a matter of opinion whether Kindle or iPad suck; how, for example, is Kindle worse in the bed than a real book in terms of usage? Now, personally I do agree the e-readers aren’t good enough yet (and hence I stick to the dead-trees variety), but apparently millions of people think otherwise.

    Of course, setting the year of disruption is also a matter of opinion to some degree. I would set it at 2009, but 2011-2012 can be considered equally valid as we all have a bit different criteria as to what constitutes a disruption.

  3. rick chapman says:

    +++ But I would argue that the e-book disruption began last year; I think the biggest book retailer of North America (Amazon) selling more e-books during the 2009 holiday season than physical books counts as one quite clear indicator. +++

    You can argue the point. When you can no longer argue it, as you can’t with the music biz, you’ll know the disruption has taken place.

    +++ Also, to a certain degree it’s a matter of opinion whether Kindle or iPad suck; +++

    Not really. You can’t read a book on the iPad at the beach; physically impossible unless you can see into light spectrum normally closed to the human eye. Also, have you tried to read on an iPad for an extended period? Whew. That thing gets heavy after a bit!

    Same problem with Kindle in the bed. Unless you’ve got the light set just right, can’t see the screen. The back lit workaround give most people eyestrain or a headache after a bit.

    As I say in ISOS II, a disruption will not take place until the quality of experience offered by a new technology at least equals that offered by an existing system. E-books don’t quite do it, yet. As I said, the thing should have at least half a terabyte of solid state memory, be a quarter inch or so thick, and let you use the gizmo fully at the Three Bs. (This configuration also allows you to use the E-reader as a convergence device, combining a computer, reader, and phone in one airplane ready package.) The problem with all E-readers is they push you to the negative Bs, the three or more gizmos you don’t want to haul around. Right now it’s iPad/Kindle, laptop, phone. One gizmo too many.

    As I said, about two years away; maybe three if you calculate out the cost of SSD in that time frame.

    rick chapman
    http://www.softletter.com
    http://www.saasuniversity.com

  4. sim says:

    That’s definitely one way of categorizing disruption, to defer it to happening when you don’t have to argue it having happened. I would like to think a disruption is well under way already when starting a new business based on 100% the old model to be disrupted would be idiotic. I would say setting up a publisher (or retailer) today that focuses 100% on physical books only would fall to the idiotic-category. Hence my definition of the e-book disruption “happening” (or perhaps reaching the point of no return?) last year.

    Let’s, for the sake of the argument, say the iPad and Kindle suck. What would you then call the millions of people who have switched from reading paper-books to e-books on these devices? Compromising? Too-early-adopters? Stupid? 😉 I would like to think most are reasonable people who have made their own cost-benefit-analysis and come to the conclusion that it doesn’t, in fact, suck for them.

  5. rick chapman says:

    +++ That’s definitely one way of categorizing disruption, to defer it to happening when you don’t have to argue it having happened. +++

    I’m not in a position to “defer” anything. I am in a position to define it, however.

    +++ I would like to think a disruption is well under way already when starting a new business based on 100% the old model to be disrupted would be idiotic. +++

    It’s all a question of timing. I can’t precisely time a disruption; the best I can do is say what factors have to be in place for a disruption to take place. If you had built what you thought was a cool prototype for an E-reader and convinced some venture money that disruption was taking place in 2001, you’d be feeling idiotic right now because you’d be extinct and your VC folk would become grumpy when they recalled you. A lot of people thought the E-book disruption was taking place at the turn of the century; Adobe certainly did!

    But they were wrong because they didn’t understand about the quality of experience.

    +++ Hence my definition of the e-book disruption “happening” (or perhaps reaching the point of no return?) last year. +++

    This is my definition of disruption. When I go to the beach and the majority of the sun worshipers are reading the latest roman a clef or bodice ripper by the waves, THAT’S when I know the disruption has taken place.

    But for that to happen, the factors I describe in ISOS II must be in place (for the E-book market).

    But this CAN’T happen for the iPad; can’t read it at the beach.

    +++ Let’s, for the sake of the argument, say the iPad and Kindle suck. +++

    Well, they suck less than what you could buy in 2001. But, they both fail the “3B” test.

    +++ What would you then call the millions of people who have switched from reading paper-books to e-books on these devices? +++

    I could have made the same argument in 2000. OK, there were hundreds of thousands of E-book consumers (and more in the corporate market). E-readers have sold continuously over the last decade.

    What would I call the current E-book readership? A niche. Still a small majority of the book readers.

    +++ reasonable people who have made their own cost-benefit-analysis and come to the conclusion that it doesn’t, in fact, suck for them. +++

    Yes, that’s quite true. But the vast majority of the market is still making a different judgment.

    What’s going to happen in the E-book market is someone is going to introduce a reader that’s:

    Got a screen that meet’s the critical 3B requirement.
    Has half a terabyte of solid state ram (Store a decade’s worth of reading on your E-book!) (OK, OK, 256 gigs will certainly do it, but I’M holding out for that .5 terabyte!)
    Costs about $199 to $299.
    Can be dropped from a fairly decent height and not be ruined.
    Weighs < =.5lb. Thickness around .25 inch; three eighths will do. (God, it really is time the US went to the metric system!) And a couple of other things. The quality of experience test will be met. At that point, everyone will rush to buy one and rapid disruption will take place. Not quite there yet, but I'm tracking the pace of hardware development and what I describe shows up in two to three years. Putting my prediction pretty spot one. (I'm lucky in this respect because the pace of hardware development is fairly predictable in high tech. If I had to predict distribution trends, for example, this would be much harder.) BTW, there's a video up on the SL site somewhere of a presentation I gave in 2007 where I discuss this in greater detail. rick chapman http://www.softletter.com
    http://www.saasuniversity.com

  6. sim says:

    Thanks again for the reply! Seems we’re both pretty confident e-books will be a disruption, so our primary disagreement is really just about the point in time when you declare a disruption a disruption.

    When you see the majority of people reading books on e-readers rather than books, there is of course no question that the old model has been disrupted. But signs of this are already showing – in my morning commute, I would say 10% of the people are dozing off, 30% are listening to music, 20% playing with their phone and 40% reading a book or a magazine. Of the 40%, 10-20% are using a Kindle. It’s not a niche market anymore though I completely agree the e-books launched 10 years ago were doomed to fail.

    Sure the Kindle may fail to excel in all the B’s, but it’s good enough for many people and good enough to kickstart the disruption. Is it a mainstream device that “everyone” would buy? No. But it’s the first commercially successful foundation (and as such, a necessary prerequisite for a real disruption) that has taken place in the e-reader space.

    But again, it’s really just a question of what point in the disruption cycle does one declare a disruption. After reaching 1% of the final user base? 5%? 25%? If (and it appears when) we agree that we are well on the road to a major disruption, the exact point of declaring a “disruption” matters little.

    On a lighter note, I don’t hold very high hopes of manufacturers coming out with a device that “Can be dropped from a fairly decent height and not be ruined.” – generally most electronic things are pretty bad at handling sudden decelerations caused by concrete floors.. 😉

  7. rick chapman says:

    +++ Of the 40%, 10-20% are using a Kindle. It’s not a niche market anymore though I completely agree the e-books launched 10 years ago were doomed to fail. +++

    I’m not sure that’s a valid “scientific” sampling. Right now, I think the E-book market represents about 3% of the total book universe.

    http://www.3ones.com/2010/04/26/e-book-vs-print-book-numbers/

    By definition, that’s a niche. And please remember that while Apple has sold a fair number of iPads, a lot of them aren’t being used for serious reading. Again, the device has some serious limitations in this regard. It completely fails in one of the critical “Bs.”

    +++ Sure the Kindle may fail to excel in all the B’s, but it’s good enough for many people and good enough to kickstart the disruption. +++

    I disagree. As I say in ISOS, the quality of experience must EQUAL that offered by a current technology. All of the current devices fail this test. They’re not far away, but right now they don’t measure up.

    +++ After reaching 1% of the final user base? +++ No.

    +++5%?+++ No.

    +++25%.+++ Yes. And when the first truly disruptive device appears, you’ll hit that 25% very quickly. Then 50% even more rapidly. The print market will seem to disappear like dew.

    That’s a disruption. If it takes 25 years for E-books to replace print, that’s not a disruption, that’s evolution on a Darwinian scale.

    True disruption is more like punctuated equilibrium.

    +++ n a lighter note, I don’t hold very high hopes of manufacturers coming out with a device that “Can be dropped from a fairly decent height and not be ruined.” – +++

    Well, I think it will depend on cost. As the price of SSD drops, it may not pay to make a “tough” device. But I don’t think it would be that hard to make something that’s reasonably priced and survive, say, a four foot fall, particularly if there are no spinning parts.

    rick chapman
    http://www.softletter.com
    http://www.saasuniversity.com

  8. sim says:

    Oh of course my anecdotal sampling doesn’t classify as anything scientific. But neither do global figures really; for example, one can hardly call the iPhone a marginal phenomenon in some markets, but globally the Apple mobile phone market share is only about 2%.

    Again, I think we just disagree on the point of when a disruption can be called a disruption.

    But taking a step back, a common definition of a disruption is that of “innovations that improve a product or service in ways that the market does not expect” – nitpicking a little here, but as it appears “everyone” nowadays agrees that at some point in the not-too-distant future eReaders are going to be disruptive, that recognition and expectation alone would, by that definition, mean they are _not_ disruptive. But that’s splitting terminological hairs so let’s not get into that one..

  9. rick chapman says:

    +++ But neither do global figures really; +++

    Why not? Ken Auletta is a respected journalist. Does good work and looks into things. He certainly had access to people at the top publishing firms who provided him with data. The New Yorker is legendary for its fact checking corps. I think we CAN use this data aas a good starting point.

    Now, I understand that the data doesn’t support your thesis and does support mine, but we must go where the facts take us! In this case, unless the facts take us into the bed, bathroom, and beach, E-book disruption will not take place.

    +++but globally the Apple mobile phone market share is only about 2%.+++

    You’re focusing on a single gizmo; I’m not. By 2013 or so, there will be more smartphones than PCs, creating what I call when I write about this topic in Softletter “the fourth platform.” This is far more than “2%.” I don’t know which gizmo will be the most popular when it comes to E-books; the figures this article supplies seem to be device agnostic; they’re talking about E-books, not the hardware.

    And 3% is pretty much a niche, at this moment, no matter how you try to define the E-book market.

    +++ But taking a step back, a common definition of a disruption is that of “innovations that improve a product or service in ways that the market does not expect” – +++

    Maybe. Hard to say. Anybody who’s watched Star Trek has “expected” E-readers for decades. You can easily imagine all kinds of ways E-readers can offer new abilities and capabilities paper can’t match. I’m sure there are things to do I haven’t thought about. As I said, I experimented with just such an ability 10 years ago!

    But until the gizmo matches the current quality of experience, disruption will not take place. 3% is not a disruption. 25%+ market share will be.

    +++ but as it appears “everyone” nowadays agrees that at some point in the not-too-distant future eReaders are going to be disruptive, that recognition and expectation alone would, by that definition, mean they are _not_ disruptive. +++

    Yes, a little too epistemological for my tastes.

    I’m looking at this from a hard business standpoint. Disruption in the market will be taking place when I can see and begin to measure the effects. Right now, the print market is still growing, though at a tiny rate. E-books are growing, but still slowly. But once disruption swings into action, this will change quickly, as it did with music, PCs, phones, etc.

    Books represent the last great analog technology that still holds sway in the market. When all those dead trees go down, they’ll go down big and you’ll see and “hear” the crash.

    rick chapman
    http://www.softletter.com
    http://www.saasuniversity.com

  10. sim says:

    Oh I never doubted Ken Auletta’s work or his figures for that matter. That wasn’t the point. The point was that global (or even national in many cases) averages tend to skew things horribly, as some regions are way ahead of the average and many way behind. Hence my objection to using global figures to justify dynamic industry changes.

    I am fully aware of the impact smartphones will have. But for a long time, particularly the US press treated the iPhone as the only smartphone worth mentioning, ever – that is only now changing. But no more about that for now.

    One thing that I have to disagree with you on is the growth of print and e-book sales; Individual publishers like O’Reilly have pretty impressive figures for e-book growth; 2008 was 50% growth over 2007, 2009 was up 104% over 2008 and 2010 at current rate will be over 200% over 2009. I do not consider that slow by any standard.

    So that’s just one publisher, probably one that is well positioned to sell more e-books than average. Consider what the Association of American Publishers has to say then; 2009 book sales were down 1.8% from 2008. E-books? Up 176.6%. A fraction of the whole market for sure, but by no means slow growth.

  11. rick chapman says:

    +++ The point was that global (or even national in many cases) averages tend to skew things horribly, as some regions are way ahead of the average and many way behind. +++

    Actually, I’m not sure if that was a global figure; might be US only. Have to check. I think I’ll send Auletta a note and obtain a clarification on that.

    +++ But for a long time, particularly the US press treated the iPhone as the only smartphone worth mentioning, ever +++

    No, I’m sorry, that’s just not true. Huge amounts of tech and even main stream press was dedicated to RIM (the Crackberry). Palm, the various Windows mobile phones (the Samsung BlackJack was very hot for a while) all received major press. But Apple clearly built a wonderful device that surpassed the competition in several key areas.

    +++ 2008 was 50% growth over 2007, 2009 was up 104% over 2008 and 2010 at current rate will be over 200% over 2009. +++

    Yes, but as I’m sure you know, when you have a tiny share of the market it’s easy to post up impressive exponential growth figures; marketers do this all the time.

    I think that the curve for E-books will ramp up slowly over the next 18 to 36 months (from a market share standpoint); then the first device that “meets the Bs test” will appear; then the disruption will take place.

    We’ll have to see!

    rick chapman
    http://www.softletter.com
    http://www.saasuniversity.com

    link

  12. sim says:

    I was of course exaggerating the iPhone media coverage point, but seriously, the iPhone was and continues to be vastly over-represented in the media compared to its market share. Well played by Apple, obviously, but reports like this are too rare.

    Anyhow, we will indeed have to see how the e-books market share curve will ramp up over the next couple of years. At least it won’t be boring!

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