Strategy's Limits: a Chat with Ernest Von Simson

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".

By Nancy Weil
Fri, July 30, 2010

IDG News Service — 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 (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 (HPQ) 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.' "

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