There is a blind spot that undermines great managers in great organizations even when they identify real customer needs, deliver great products, and beat their competition to market
Philips Electronics fell victim to this blind spot when it spent a fortune to pioneer high-definition television (HDTV) sets in the mid-1980s. The company’s executives drove a development effort that succeeded in creating numerous breakthroughs in television technology, offering picture quality that customers loved and that the competition, at the time, could not match. Yet, despite sterling execution and rave reviews, Philips’s high-definition TV flopped. Even the most brilliant innovation cannot succeed when its value creation depends on other innovations—in this case the high- definition cameras and transmission standards necessary to make high-definition TV work—that fail to arrive on time. Philips was left with a $2.5 billion write-down and little to show for its pioneering efforts by the time HDTV finally took off twenty years later.
[This article republished with permission from the author and the Tuck School of Business.]