Interesting OT but related article. I think Scott may have posted it earlier. I just read it from another link. Good food for thought to Eric et. al
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November/December 1999
Invention Is a Flower,
Innovation Is a Weed
The inventor of Ethernet and founder of 3Com
shares some lessons with young innovators
By Bob Metcalfe
Bob Metcalfe?s
career traces
the trajectory of
innovation. He
started in the
academy, as an
undergraduate
at MIT and a
graduate
student at
Harvard. In his
doctoral
dissertation he
laid the
theoretical foundations for a novel method of
boosting the power of personal computers: network
them. At Xerox PARC, he turned that theory into
something called Ethernet. Xerox wasn?t particularly
successful at exploiting Ethernet commercially, so
Metcalfe decided to try himself, founding 3Com to
do the job. After many incarnations at 3Com, he
cashed in his chips and became, in his words, a
?technology pundit,? who writes a column for
InfoWorld, organizes some of the information
world?s best conferences, and sits on the board of
Technology Review. TR asked Metcalfe to tell us
what he learned as he followed the trajectory of
innovation from the lab bench to the boardroom and
beyond.
Prologue
Why should you listen to me about innovation?
Maybe you shouldn?t. (Especially if what you need
is gentle encouragement.)
True, I lived for eight years in Boston?s Route 128
high-tech innovation zone, back when it was
working. True, I lived and prospered for 22 years in
Silicon Valley. True, I invented Ethernet, a
computer networking technology that now connects
more than 100 million computers to the Internet.
True, 20 years ago I founded 3Com Corporation,
which now does more than $5 billion in annual sales.
And true, my personal fortune is a significant
fraction of a milliGates.
But Silicon Valley-style high-tech entrepreneurship
is certainly not the only way to innovate. It?s just
that, right off, I can?t think of any others.
Disclaimers
Before sharing a few lessons I?ve learned from
inventing and innovating, I?d best disclaim a bit.
Consider the fact that today we have computers fast
enough to compute the trajectory of a thrown rock
in real time. If you wanted to gather the equations to
compute the rock?s trajectory, the last thing you
would do is interview the rock.
Most successful entrepreneurs I?ve met have no
idea about the reasons for their success. They were
thrown?like rocks. I had the good fortune to be
thrown into Silicon Valley. My trajectory was a
mystery to me then, and only a little less so now.
Another disclaimer: I?m a sample of one. My
experience is not statistically significant. So you?re
going to have to read a lot of lessons learned by
many different innovators before you can put
together something that holds up. And even after
you do that, keep in mind that after 40 years of
tennis, I can tell you to get your racket back early,
move your feet, and step into the ball. But then
you?re going to have to spend a lot of time on the
court practicing before you can put it all together
and beat me.
Enough disclaimers. Here are some lessons I think
I?ve learned.
1. Selling Matters
I have a six-story townhouse in Boston overlooking
MIT on the Charles River. I often invite young
engineers and would-be entrepreneurs over to
schmooze. Many of them tell me my townhouse is
beautiful and they hope to invent something like
Ethernet that will get them such a house.
The picture they have in their heads is of me
lounging around on the beanbag chairs in a
conference room at Xerox PARC in 1973. They
see me having this idea for a computer network and
submitting it as an invention proposal to Xerox.
Then they envision me putting my feet up and letting
the royalties roll in until I have enough to come up
with the down payment on the townhouse with the
river view.
My picture?the actual picture?is different. It?s the
picture of innovation rather than invention, the weed
instead of the flower. In my picture it?s the dead of
winter and I am in the dark in a Ramada Inn in
Schenectady, New York. A telephone is ringing
with my wake-up call at 6 a.m., which is 3 a.m. in
California, where I flew in from last night. I don?t
know yet where I am, or where that damn ringing is
coming from, but within the hour I?ll be in front of
hostile strangers selling them on me, my company,
and its strange products, which they have no idea
they need.
If I persist, selling like this for 10 years, and I do it
better and better each time, and I build a team to do
everything else better and better each time, then I
get the townhouse. Not because of any flowery
flash of genius in some academic hothouse.
Most engineers don?t understand that selling
matters. They think that on the food chain of life,
salespeople are below green slime. They don?t
understand that nothing happens until something gets
sold. The way I think about it is that there are three
sets of people in the world. There is the set of
people who will buy your products no matter what
(think of your mother). There?s the set who will
never buy your products (think of your
competitors). Both are much smaller than the set of
people who will buy your products if the products
are competently sold to them. That vast middle set
is why sales is so important, and it represents one of
the key differences between invention, which comes
up with a brilliant new idea, and innovation, which
gets that inspiration out into the world.
Sales may not matter in invention, but it matters?in
a very big way?in innovation.
2. At a Startup, Jobs Grow Faster Than
People
In 1982 I suddenly lost my job as 3Com?s CEO
and became our vice president of sales and
marketing. Take this as a measure of our
desperation. I knew we needed feet on the street,
people to actually ask our customers for orders. I
didn?t have too many choices?it wasn?t a very big
company at the time?so I started looking over the
available candidates.
Dave didn?t initially look very promising, since he
wasn?t in sales. (He was a production engineer.) But
he was single, his dad was a salesman, and he could
move that week, so I assigned him the entire eastern
United States as his 3Com sales territory. This is
one of history?s bad decisions with a good outcome.
Since his background wasn?t in sales, Dave wasn?t
a good bet to succeed in the huge job I gave him.
But he was smart and energetic and he learned fast.
Pretty soon, orders started doubling. The volume of
sales was improving so quickly that I ?promoted?
Dave?from head of the entire eastern United
States to head of the northeastern region. Again, he
succeeded, and I was able to ?promote? him again,
this time by giving him the Washington D.C. metro
area. After another strong run of successes, Dave
went up the down staircase again by taking over all
private label sales in Washington.
If you counted from the top, as people tend to do in
big companies, Dave was getting demoted each
time. If you counted from the bottom, each
reduction in territory in our rapidly growing
company was a big promotion with more
responsibility and higher compensation. This is an
example of how in small successful startups the jobs
grow faster than the people, not the other way
around, the way they do in big companies.
3. Don?t Hire?Recruit
Lesson #2, that jobs grow faster than people in
successful startups, implies something very
important about the people you bring into such a
startup.
First, don?t ?hire? anyone. B people hire C
people?they collect resumes and choose the
person they want to honor with a job. A people
recruit A people. The people you need for a
growing startup already hold jobs much bigger than
the ones you need to fill. You have to recruit them,
beg them almost, to take the small jobs you?re
offering. Those with imagination will see that the
company has the potential to grow so quickly that
the small job will soon be much bigger than the
stable position they hold at a big company. Forget
about big company notions of performance. A
people can perform easily 10 times better than B
people, sometimes 100 times, or 1,000. The worst
thing you can do is rush to fill a job with a B or C
person. That could be very costly, perhaps even
fatal, to your company. Wait until you can recruit
the A person who can see the future and grow with
it.
4. People Have Operating Ranges
The fact that jobs are growing so explosively at
startups has other important consequences.
Consider operating ranges. Everybody has one.
From $0 to $1 million per month I ran sales and
brought in the orders, mostly through personal
selling. After that, sales became too technical for
that approach to work. Mike took over and carried
the company from $1 million to $3 million per
month. After a brief stall, Chuck took us to $5
million per month. John took over from Chuck to
get us to $25 million per month. Then Bob took the
company to $400 million per month. In each of
these cases, our head of sales succeeded within his
operating range. After that, a ruthless change had to
be made to bring the company to its next plateau.
How do you know when it?s time for a change?
How can you tell when the person who did such a
great job six months ago has hit the upper limit of his
or her operating range? The first sign is a decline in
performance?salespeople missing quotas,
engineers slipping schedules. At first it looks like the
plans were too ambitious; then it?s everybody else?s
fault. At some point, unless things start improving,
sometimes even before the proof is conclusive,
changes must be made. You have to be able to say,
?If you can?t do it, we?ll just have to find someone
who can.? If you wait too long for the person to
learn what they need to know or for conclusive
proof of whose fault it is, you may bring the whole
enterprise down. Better to risk the lawsuit for
wrongful discharge and save the venture.
5. Don?t Listen to Your Customers
In 1982, 3Com Corporation was the sole supplier
of Ethernet cards to a startup called Sun
Microsystems. These cards were for
Multibus-compatible computers, and so internally
we called them MEs (really). Sun and its
competitors were buying MEs at ever-increasing
rates, and they wanted us to make a cheaper, faster
next-generation card. Our salespeople were right
there with our big customers: They demanded we
work on what internally we called the ME II
(naturally referred to internally as the ?me too?).
We knew, however, that Sun was planning to
design Ethernet connections into their computers,
and that Intel, designer of the Multibus, was
planning a competitive ME. Despite overwhelming
customer demand, we decided not to develop the
ME II. Some of our salespeople quit in disgust,
because we were ?not listening to our customers.?
They were right; we weren?t. Instead, we invested
the time of our excellent engineers in designing an
Ethernet card, called internally the IE, externally the
EtherLink, for the new IBM Personal Computer.
Today, there are no Multibus computers left, but
3Com ships more than 20 million EtherLinks per
year.
The lesson? Well, of course I?m taking some license
by saying that the lesson is you shouldn?t listen to
your customers. The real lesson is that you have to
choose which customers to listen to very carefully.
And, even then, you cannot necessarily give them
what they say they want. You have to develop
products that your customers will need by the time
you are able to deliver them. If you don?t, when the
development cycle is finished, and you?re ready to
ship, you will be offering what the customer said he
wanted last year. And any salesman will tell you it?s
easier to give a customer what he needs now than to
sell him something you insist he said he wanted last
year.
6. Plan for Success
But if you do look ahead successfully and see what
the market wants, you will only create new
problems. During 1983, for example, 3Com was in
the tornado for exactly this reason: We had ignored
our customers and salespeople and guessed right
about what the market would want?Ethernet for
personal computers. In the third quarter, we grew
85 percent in three months, which almost killed the
company. We sold much more than we could
deliver, leaving a backlog of unsatisfied customers
for our competitors to unhook. We didn?t have
enough people to answer all our customer support
calls. Our production programs slipped behind
schedule.
I remember our CEO, Bill, saying we would never
grow that fast again. But I pointed out to Bill that
Compaq had the year before gone from zero to 10
times our size in one year. Our problem was not that
we had grown 85 percent in three months. It was
that we had planned to grow only 15 percent.
Which is to say that you can plan too
conservatively. (I hasten to add that if you have to
err on one side or the other, it is better to plan
conservatively. Just don?t overdo it.)
7. Be an Entrepreneur, Not a Visionary
In 1982 my board of directors starting calling me a
visionary, and I ate it up. Next thing I knew, I
wasn?t CEO anymore. Turns out, nobody wants
visionaries running companies. At my level of the
game, being called a visionary was faint praise.
Here?s the difference between a visionary and an
entrepreneur. Both have visions, which are a dime a
dozen. But an entrepreneur has, in addition to
visions, plans. In addition to plans, actions. You
might have heard that 80 percent of winning is just
showing up. Well, showing up is an action, like
taking that wake-up call in the dark in the Ramada
Inn in Schenectady. I wouldn?t touch a visionary
with a 10-foot pole.
Being a company?s proud founder is also foolish. As
they build their companies, many people walk
around saying to their employees, ?I am the founder
and you?re not.? You want every employee of your
company to be a founder. To have and therefore
feel ownership.
8. Know Your Own Operating Range
In 1990, I ?retired? from 3Com exactly 11 years
after incorporating it. I should have gone three years
earlier. Twice the board of directors chose someone
other than me to be CEO of 3Com. In 1982, when
I didn?t flounce out the door, but instead got sales
and marketing. And again in 1990, when I retired
amicably.
Putting together the board of 3Com was one of my
proudest accomplishments. I built that board with
the best people I could find. When they decided
someone else was better qualified to be 3Com?s
CEO, who was I to argue? Both times, in
retrospect, they were right. By 1990, 3Com had
outgrown me. Fortunately I had a board smart
enough to know that I had succeeded in moving
3Com out of my own operating range. You should
be so lucky.
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