When Dominance Leads to Incompetence and Catastrophe

Dominance means leaders and employees alike lose the ability to experience risk.

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Lost amidst the week’s geopolitical and propaganda dramas was a signal event in the long history of dominance leading directly to collapse: Microsoft bought Nokia’s mobile phone business for $7.2 billion (5.44 euros). Considering that this business was valued at 260 billion euros ($340 billion) not that long ago, that is a rather precipitous decline from tech-dominance grace.

As Microsoft buys Nokia, Finns mourn their claim to fame

Microsoft has a long history of acquiring innovations by buying tech companies by the dozen, and of overpaying for acquisitions and eventually writing down the value of the purchases. With Nokia’s market share down to 4%, it could be argued Mr. Softee is once again overpaying, but perhaps the patent portfolio will be worth the purchase price.

Or maybe not. Patent trolling is no substitute for creativity, innovation and appreciation of risk.

Microsoft is a case study in dominance leading to incompetence and catastrophe. Within the moat of near-monopoly/dominance, competence dwindles to the ability to keep doing what worked spectacularly well in the past, and keeping bureaucratic infighting and divisional rivalries down to a dull background erosion of initiative and talent.

Doing more of what succeeded spectacularly in the past works until it doesn’t, at which point doggedly pressing on with the old formula of success leads to catastrophic failures.

Nokia and Blackberry are recent case studies, but the rise of Google Chrome and smart-phone/tablet computing is beginning to threaten Microsoft’s core business of being the utility monopoly in the PC space.

Dominance means leaders and employees alike lose the ability to experience risk. The customer will take what is delivered, regardless, for the simple reason that alternatives are either unavailable or cumbersome.

In the PC space, the other mainstream choice to date has been the costly Macintosh family of Apple computers.

Now that cheap tablets running the free Chrome operating system can do pretty much everything a PC can do, and do so on the go, Microsoft’s monopoly is threatened. It’s not just that consumers hate the Windows 8 operating system–the entire PC platform is slipping from dominance.

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