July 30, 2010, 2:15 PM — As co-founder of The Research Board, an exclusive, IT-focused think tank established in 1970, Ernest von Simson watched time and again as corporate leaders took their companies through change and crises over three decades. During those years, he came to believe that steadfastness is the most vital leadership characteristic for success, as he demonstrates in his new book, "The Limits of Strategy: Lessons in Leadership from the Computer Industry".
"It's too easy for a leader to be distracted from a bold new strategy by his underlings or his customers," von Simson says in a rare interview, citing Tom Watson Jr. The IBM chief had to fend off being told "there's not a market for tape, not to do the 360, when it took out everybody else ultimately," von Simson says, referring to the competition after the company released its System/360 mainframe system in mid-1965. System/360 models brought a major turn in enterprise computing, allowing businesses of all sizes to run all manner of applications and to upgrade without losing compatibility. Customers embraced the change, pushed by Watson Jr., who as IBM's second president, led Big Blue out of the punch-card era.
The intertwined story of IBM and the Watsons is part of "a highly compressed synopsis of the computer industry's self-immolating and resurrecting history to set the book's timeline and a few overarching trends," von Simon writes in the book's first chapter, which ends with a look at the results of consolidation and PC hardware commoditization.
The "magnitude of the implosion" brought by those changes became obvious on June 16, 1992, when DEC founder and CEO Ken Olsen was forced out of his job and Hewlett-Packard CEO John Young announced his retirement, ousted by Bill Hewlett and Dave Packard. Wang Labs declared bankruptcy in August that year and IBM reported a quarterly loss for the first time ever in October. That led CEO John Akers to lose his bonus and then his job.
"In the end," von Simson writes of those times, "the minicomputer establishment was immolated by five young men." He goes on to list Larry Ellison, Scott McNealy, Bill Gates, Steve Jobs and Michael Dell, citing industry-changing accomplishments of each of them at their companies.
While ostensibly classified as a business book, "The Limits of Strategy" is equal parts memoir, history, case study and entertaining yarn, told in lively prose with a deft touch. As Irving Wladawsky Berger says in his endorsement: "It is rare to find a business book that is as well written and actually fun to read as 'Limits of Strategy.' "
Von Simson, who took two years to write the book, used the nearly 100 research reports produced by his company, artfully weaving information from those with his memories to create case studies whose "intention is to show how many barriers to change there are that you don't even think of," von Simson says. How leaders navigate those barriers is of keen interest to von Simson.
The book at times gives a behind-the-scenes view of what came to be major IT news events -- von Simson recalls visiting Microsoft headquarters the morning after Gates knew that the U.S. Department of Justice was "entirely serious" in its threats to file an antitrust suit against the company. "One unshaven and unwashed executive after another came into our meeting room," he writes. "The management team looked as if it had been closeted all night trying to frame a suitable response. Most rushed out after a few minutes. Chief scientist Nathan Myhrvold had apparently been asked to spend more time than usual with the visitors, so he distracted us with future technology, answering our questions with what seemed to us amazing civility and patience.
"Finally, Bill arrived, looking equally unkempt, and launched a nonstop, breathless rant. We decided not to take notes in deference to his disheveled state of mind. But I recollected angry, high-pitched diatribes against Joel Klein, the assistant attorney general who headed the Justice Department's antitrust division; the technological ignorance displayed by the government; and the popular resentment against successful people who have made lots of money."
