Perhaps, though, one of the strangest cases of a large company that lost focus was Xerox. This office products giant actually set up the most advanced private computer research facility in the world in Palo Alto. The remarkable group of scientists they assembled there actually invented and were developing the technologies on which Windows software, the Macintosh computer, and laser printing were based. Had Xerox seen these projects through to their conclusions, the company would today be the dominant player not only in copying products, but in computer hardware, software, and imaging as well. At that time, though, diversification conglomerates and stock swaps were the rage on Wall Street, while new technologies were ho-hum—exactly the opposite of today. Therefore, the powers-that-were at Xerox corporate headquarters tried to impress Wall Street, rather than do what was best for their own company. The remote executives in Rochester pursued a course of unfocused diversification and stock market maneuvering. The industry Xerox gave birth to is today dominated by Hewlett-Packard and two previously unknown companies whose chief executives had the good fortune to learn early about the new technologies at Palo Alto that weren’t being developed. Those two chief executives were Steve Jobs and Bill Gates. Their companies, Apple and Microsoft, are where they are today because Xerox execs in Rochester had more important things to think about than office products.

About a year ago, while attending a gathering of the Royal Society for International Affairs in London at which I was to speak, I heard speaker after speaker from the world’s largest telephone companies on the wonders of interactive cable and broadband media services. One after another they told how their companies were spending almost all of their multimillion-dollar development budgets pursuing these futuristic services. All of them said that in the future telephone calls would be unimportant, and actual calls would ride the network for free. Once again, I was alarmed. How could I hope to compete without spending billions on interactive cable technology too? Then I realized these guys didn’t know what they were talking about. They were so busy worrying about becoming obsolete by not leading the market in interactive cable and other futuristic technology that they hadn’t stopped to consider if anyone really wants it. In fact, like the automakers who didn’t improve their core product, but researched electric cars or diversified into aeronautics, they were vulnerable to be beaten by upstarts like us. When my time came to speak about the future of telecommunications, I had one simple thing to say: Ten years from now, people will still be spending billions of dollars making phone calls, except they’ll be making them with companies like us, because the other guys are going to be too busy trying to figure out why the sexy new technologies didn’t catch on.