Innovation, timing, a good idea and luck are all ingredients of success in the technology industry, according to keynote speakers at the Wharton Business Technology Conference titled, “Enterprise Agility: Lead with Speed.”
Former Microsoft executive Rob Glaser, who went on to found RealNetworks, the streaming media company, and Glenn A. Britt, CEO of Time Warner Cable, both said strong technology businesses are built on firm technical footings, but shaped by business forces that are not always predictable. “Any successful entrepreneur who says luck did not play a role is either lying or lacks self-awareness,” said Glaser during the conference’s luncheon keynote.
Glaser joined Microsoft in 1983 right out of college when Microsoft’s workforce consisted of only 250 employees. He had run a small game venture while a student at Yale and was interested in learning how entrepreneurial firms scale up. He rose within Microsoft to become vice president of multimedia and consumer systems. “When I went to Microsoft, I had no idea it would be a fantastic 10-year ride at the center of the PC revolution,” he said.
In 1993, eager to combine his technology experience with a long-standing interest in media, he set out to build his own company. Initially, Glaser said, he was interested in an interactive political television channel that would combine his passions for politics and media. At the time, big technology companies were enthused about the potential for interactive fiber-based networks. Time Warner was working on a highly publicized cable project in Orlando, Fla.
Glaser, after talking to people in technology and media companies, grew increasingly confident about the personal computer, but warier about the new fiber infrastructure. “I learned that for all of the hype, there was no practical way this was going to be deployed,” he said. “Nobody was going back to see if the solutions were rock solid.”
Meanwhile, as streaming audio and browser technology grew more important, Glaser turned his attention to a venture that would become RealNetworks. “When I started, the big companies were following the fiber. Thank God they weren’t doing streaming audio. We saw things that were different than the things the big companies saw.” As a result, RealPlayer and RealAudio were introduced in 1995 and the company became a pioneer in digital media.
“Don’t make the mistake of letting conventional wisdom vote on whether your idea is a good idea,” Glaser said. “When you do the conventional thing, you will almost certainly lose to companies with existing scale.” When he founded the company, the idea of streaming media was uncharted, or what Glaser called a “blue ocean” idea. “It turns out that a side effect of success is other people go after you.”
Indeed, Glaser said RealPlayer became the Goliath in streaming media — a position that attracted attention from Microsoft, which then began to compete with its own Windows player. The two companies were soon locked in a bitter dispute that became an element of the long-standing U.S. Department of Justice anti-trust case against Microsoft. In 2003, RealNetworks sued Microsoft; in 2005, the two companies reached a settlement in which Microsoft paid RealNetworks $761 million in cash. Microsoft also agreed to promote RealNetworks’ Rhapsody subscription service for online music throughout Microsoft’s MSN network.
Glaser said he accepts that competition is important in business, but it should be within rules established by society. “It turned out a team at Microsoft believed they were just competing with us and we thought it was crossing the line. We tried to make it as professional as possible and not personal, because some of these people were, and still are, good friends of mine.”
Glaser pointed to five factors that lead to success in technology. He says three and a half of them are within one’s control, while the other one-and-a-half are a matter of fate. The most important factor is preparation — which entails many dimensions, including technical knowledge, maturity, life experience, relationships and working hard.
The second element is a classic — passion. Glaser said a person who is passionate about work will be constantly thinking of ways to solve problems. “The passionate person will win 100% of the time. That person will be thinking about work not only when he is supposed to be thinking about it. It will be percolating all the time. Work won’t feel like work. You will be rejuvenated.” The third element is a good idea. Success does not necessarily rest on the power of the idea an entrepreneur starts out with, he noted. Assessing a good idea is important, and it’s one of the elements of technology management that leaders can control.
Timing is the fourth characteristic. Glaser said entrepreneurs only have partial control here. “A lot of things that are good ideas five years from now aren’t good now because the infrastructure isn’t there.” Finally, Glaser pointed to luck as the fifth ingredient in making a technology that either works or that is “relegated to the dustbin of history.” He takes comfort in knowing that three and a half of these critical elements do fall within the control of technology managers. “If not, we would just go to Las Vegas.”
Innovating with Internal Business Practices
In the conference’s closing keynote, Britt, Time Warner Cable’s CEO, stressed the importance of innovation in building a technology company. “We talk constantly about innovation. We talk about how we can ensure that innovation continues to be part of our culture. We look at past success as evidence that we have the capability to do it and keep on doing it as our business continually changes.”
Indeed, according to an article in the Wall Street Journal March 26, Comcast and Time Warner Cable are in talks to fund a new wireless company, to be run by Sprint Nextel and Clearwire, that would establish a nationwide wireless network using WiMax technology. Other investors in the venture reportedly include Intel, Google and Bright House Networks.
As Britt noted in his keynote presentation, the cable industry was founded by innovative entrepreneurs who, as far back as the late 1940s, began to provide television reception to households that were unable to receive broadcast signals because they were in remote areas or mountainous terrain. “So entrepreneurs fixed the problem. They put antennas on the tops of mountains to get the signal and ran cable down into the town.”
Throughout his speech, Britt focused on business and marketing issues that shape the industry along with technological advancement. He noted that cable companies are now in the telephone business with Internet voice and data transmission packages. Cable has found ways to innovate on the business side of the telephone industry which, he noted, is more than a century old.
The industry grew up as a regulatory monopoly and its regulators decided that long-distance calling was a luxury that should subsidize local calls. As a result, long-distance was billed by the minute and was expensive. “Phones are now deregulated, but that pricing practice persisted,” said Britt. “As we were contemplating entering the phone business, we looked at this and noticed that in some cases, the phone companies actually spent as much money keeping track of minutes and billing as providing service in the first place.”
These days, unlimited fixed-price packages are standard offerings of cable and telephone companies. “It sounds easy now that everybody copied it. It was innovative a few years ago. We are continuing to innovate in this space. Now we have the international one-price plan.”
Britt said Time Warner Cable is also innovating with internal business processes. The company has more than 45,000 employees, most of whom have regular contact with customers. “That means we have a lot of chances to do things right and a lot of chances to do things wrong. As consumers, we remember the things that go wrong.” To improve service, the company looked for ways to make work easier for employees. This year, Time Warner Cable is rolling out new desktop systems that allow customer service representatives to call up all of a customer’s relevant information on one screen. “It used to be on 19 screens,” he said. “It’s a simple thing, but it makes life easier for customers as well as our reps.”
It’s important not to innovate simply for the sake of innovation or because technology allows change, Britt noted. “Why do some people fail and others succeed?” he asked. “First, you need a consumer orientation. Second, you need the technology to enable the idea and third, you need a viable financial model.”
Britt discussed the now famous Orlando interactive cable television trials in the early 1990s. “In 1993, we saw lots of possibilities for new things and we decided to take a 5,000-home neighborhood in Orlando and spend the money to do push technology. It got a lot of publicity, but it was really an R&D experiment. I would say although it was a failure in coming up with a product that was deployable at that time, pretty much everything we’ve done came out of that,” he said, pointing to video-on-demand and broadband as examples.
“We were attacked, [with some people asking] ‘Why are you spending all this money?'” Britt added. “You’ve got to do these things to see what the technology [is capable of] and how consumers react to things.”
Today, the company is exploring wireless technology, he said, adding that the cell phone and text messaging industry is mature and not the place for new entrants, such as Time Warner Cable. However, there is a whole set of ideas related to wireless broadband that the company is considering. “One interesting thing to think about: There is no such thing as a pure wireless network. Every time you pick up a cell phone, the phone call at some point travels in a wire. The call goes to the cell tower, then switches networks by wire and goes on to wherever. The future is going to be hybrid, not pure wireless or wires. I don’t think you should see those as separate things down the road.”
Britt acknowledged that competitors will copy technical innovation as soon as it occurs. To move forward, he said, technology firms must do a better job of marketing. As the price of media and communications declines to commodity levels, marketing will become just as important as it is to Procter & Gamble, which competes successfully against far less expensive private-label products. “Somehow, emotionally, [P&G is] able to create brand identity and images that evoke emotion in people.”
Technology companies, too, will need to improve branding and customer service to differentiate themselves from one another.
Finally, he said, successful innovation involves risk and creative thinking but must be rooted in the real world. “It’s got to be practical and it has to be built on what came before. If you think about the entrepreneurs with those mountains, they didn’t foresee CNN or high-speed Internet — or the Internet, for that matter — but they certainly would be pleased.”