What can we learn?

What can be learned from Infocom? First of all, a working strategy for one kind of business does not necessarily translate to a working strategy for another business. In the games business, Infocom spent self-financed capital and grew the company with its profits. Although Infocom raised some outside money, it tried a similar self-financed approach with Cornerstone and failed. Infocom also attempted to maintain portability and squeeze its software onto floppy disks. This worked well for its games, but it provided little advantage for Cornerstone. Thus, a company should re-think its approach when trying to transfer strategies for success to entirely different businesses.

Second, companies must ensure that they buy enough time to improve and refine new products. The first version of Cornerstone may have been a commercial flop, but its shortcomings were going to be addressed in future versions. However, Cornerstone never got the chance to evolve beyond its first version because Infocom spent money with the expectation that it would be profitable from the start. Unable to sustain Cornerstone's losses, Infocom had to cut it immediately. Had Infocom been able to stay afloat, Cornerstone might have improved to the point where it became immensely profitable for the company. Christensen calls this lesson a "learning" strategy. He argues that companies should not assume that they will get products right the first or even the second time:

"I must therefore plan to be wrong and to learn what is right as fast as possible. I cannot spend all of my resources or all of my organizational credibility on an all-or-nothing first-time bet, as Apple did with its Newton or Hewlett-Packard did with its Kittyhawk. I need to conserve resources to get it right on the second or third try."

Perhaps most importantly, the story of Infocom shows that success and failure are not simple matters. In the same way scientific and engineering revolutions cannot be explained by a single phenomenon or "eureka" moment, one cannot attribute Infocom's failure to a single decision or mistake. It would be a gross oversimplification to say, for example, that Infocom failed because it decided to enter the database market, or because it did not make graphical games. Infocom's success and failure was a product of many factors: the environment, the company's technical expertise, management, engineering culture, and just plain luck.


Game Over