A Tale of Two Dinosaurs
Three decades ago, I was a young marketing product manager for EMI Medical, the U.K based company that invented the CAT scanner medical imaging system. This company had been formed just a few years prior to my joining to commercialize the CAT scanner technology conceived in the EMI Central Research Laboratory in London. EMI had no existing business presence in the medical imaging markets or related markets.
The CAT scanner was a graphic example of what is now known as “disruptive” technology. At medical conferences, when the first images produced on these systems were shown, 500 radiologists stood to applaud. Unfortunately, while the technology was disruptive, it was not particularly defendable. Most of the initial products from EMI were based on many of off-the-shelf subsystems, with a bit of proprietary hardware and software thrown in. Since EMI had no prior experience in this area, and no manufacturing infrastructure, these first systems were little more than lab prototypes.
This industry had a well established group of dinosaur participants, with GE Medical being the lead dinosaur. GE had been a market participant for about four decades at that time, with a well established world wide sales and service network, an efficient manufacturing infrastructure, an experienced R&D organization, and excellent customer relationships. GE could be said to be the T-rex of the industry.
While EMI struggled with fixing product problems, building a sales and service network and manufacturing infrastructure, meeting the demand for this revolutionary new product, and collecting awards, including a Nobel prize in medicine, GE set about to develop the next generation of CAT scanner, which was relatively easy to do since the first generation did not fully exploit available technology. Within two years, the GE product was on the market and was superior to the EMI products in most respects. Within ten years, what was left of EMI was absorbed into the GE organization.
I see great parallels between EMI and Eclipse, and GE and Cessna. As a new entrant, Eclipse must create everything from scratch, including not just a winning, defendable product, but also all the infrastructure that is required to sell, manufacture, and support this product, and must do this in a few years, rather than having the luxury of several decades to do this as the dinosaurs have had. This strategy introduces enormous risks, including the issue of creating a competitive, fully functioning organization without an appropriate period of time for organization learning. Even with world class individual employees (and Eclipse has some) it takes quite awhile for these people to learn work together at a high level of effectiveness.
So, the Eclipse story has been played out before (and undoubtedly in many other industries). The moral of the this story: if one takes on dinosaurs, be sure that they are extinct, or at least that there is not a T-rex in the group.