Start-up stories of HP, Sony and Microsoft – Adaptive Iteration

Adaptive Iteration can be seen in the start-up stories of Hewlett Packard, Sony and Microsoft.  All three started with a high level purpose to start a business, but without specific constraints about the products and markets they would serve.  In essence, the founders only had the constraint that the business be built on their core expertise and interests.  Each adaptively iterated until they developed business designs (products, markets, competitive advantage, operating philosophy) that were both profitable and met their high level purpose.

For Hewlett-Packard, the founders iterated through a range of product and market combinations as they adapted to the rapidly growing and evolving electrical and electronics marketplace.  These included audio oscillators for Walt Disney Studios, electronic test, microwave and data printing equipment, medical electronics, electronic calculators, mini computers, inkjet printers and personal computers.  No doubt, Hewlett-Packard also used adaptive iteration to design, test and refine each of its products and product categories.  Not only was Hewlett-Packard a master of adaptive iteration of its business and products, it also excelled at the adaptive iteration of its people based practices.  These included profit sharing, flexible working hours, flexible work spaces and management by walking around (MBWA).

The start-up history of Sony Corporation, is a constant series of adaptive iterations in response to the founders’ objective to build a technology company and to the resource constraints in Japan following World War II.  Sony’s history involved failed ‘experiments’ with rice cookers and electrically heated cushions, extensive use of a network of contacts to ‘observe’ opportunities in the marketplace and improvisational design to address those opportunities and to overcome shortages of materials.

Before founding Microsoft, Bill Gates and Paul Allen had at least two failed experiments to exploit the business potential of their programming skills - a machine, called Traf-0-Data, that counted traffic and an offer to various large computer companies to write a BASIC computer program for the then new Intel 8080 microprocessor chip.  The next adaptive ‘experiment’ was an offer to a small company called MITS to write a BASIC computer program for their just announced Altair computer – the world’s first commercially available micro-computer.  MITS accepted this offer and Bill Gates and Paul Allen formed Microsoft.  Microsoft then began the adaptive iteration of its business model and software products.

In his book ‘Strategic Intuition‘, William Duggan argues that it was Gates and Allen’s strategic intuition that enabled them to see the opportunity for personal computer programs.  I believe that strategic intuition is another name for highly developed observation and interpretation skills. Gates and Allen were able to recognise the weak signals that personal computing was about to emerge as a significant technology and that it would create a self-reinforcing cycle of hardware and software developments.

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