Deadly sins the tech industry can't seem to shake

Doing the same thing over and over and expecting a different result is crazy. So why does the tech industry keep making the same mistakes?

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When Unix was developed, ironically on a computer built by Digital, Olsen rejected it, preferring to stick to his company's own operating system. Today, we'd call that "the not invented here syndrome," and it's not something the tech industry has altogether moved beyond, says Henry Chesbrough, a professor at the University of California at Berkley's Haas School of Business. "It was an ethos that saw R&D as a fortress instead of sharing and leveraging technology," he says. "You see echoes of that in AOL's failed 'walled garden' strategy and SAP's platform that was closed until fairly recently."

Olsen was forced out by his board of directors in 1992, and the company's best days were behind it. But it was still sold to Compaq for $9.6 billion in 1998. Like the subsequent sale of Compaq to HP, the merger was a fiasco. The cultures didn't match, and the technology was from different planets; Digital was built on the Alpha chip and its own OS, Compaq on Intel and Windows. It was never clear why the two companies should become one.

But Wall Street loves mergers and the huge paydays they create for the investment banks that bring them to fruition. No matter that intellectual property can be lost and thousands of employees -- along with their knowledge and experience -- are invariably pushed out when big companies merge.

Sun's McNealy didn't learn from Olsen's mistakes
The jury is still out on Oracle's acquisition of Sun. It may turn out to be the rare megamerger that works, but there's no doubt that Sun was close to death after years of red ink and strategic missteps.

Like Olsen, Sun co-founder Scott McNealy was loath to see that the product he built the company on was well past its prime. Sun's proprietary servers and their proprietary chips built the Internet, while industry-standard products became the norm -- but at Sun, they "weren't invented here."

What's more, McNealy, like Olsen, was a victim of "founderitis" and simply couldn't let go. By the time he stepped down from his post as CEO, it was simply too late for Sun to stand on its own.

To be fair, McNealy hardly stands alone in that respect. Michael Dell pioneered the direct model and did much to make PCs ubiquitous. When that idea ran out of steam, the company faltered, but Dell simply wouldn't let go of the reins. Steve Ballmer didn't found Microsoft, but he has -- as they say -- a very low badge number. He and Bill Gates were late to the Web, late to mobile computing, and late to open systems. Still, he's not going anywhere.

Nor can Oracle/Sun be singled out as the sole failed merger: Here’s a short list compiled by Steve Tobak, a former semiconductor executive now in venture capital: AOL/Time Warner, Alcatel/Lucent, Daimler Benz/Chrysler, Excite/@Home, JDS Uniphase/SDL, Mattel/The Learning Company, Borland/Ashton Tate, Novell/WordPerfect, and National Semiconductor/Fairchild Semiconductor.

Olsen deserves to be remembered with respect while we learn from his failures as well as his successes.

I welcome your comments, tips, and suggestions. Post them here so that all our readers can share them, or reach me at bill.snyder@sbcglobal.net. Follow me on Twitter at BSnyderSF.

This article, "Deadly sins the tech industry can't seem to shake," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

Copyright © 2011 IDG Communications, Inc.

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