Sailing-ship builders knew they had a problem when the first steamships were introduced. Initially, steamships were not as fast or reliable, so to sink the potential threat, conventional ship-builders quickly set about designing more efficient sailing ships. But steamships improved far beyond the best of the sailing ships, and the latter, were finally sunk.
Ironically, this phenomenon often works to a company’s short-term benefit, further clouding the picture. Renewed efforts on old technology frequently bring significant improvements. Troubles begin, however, when management interprets this as a sign that the business has turned abound and funds a technology that is running out of momentum. Competitors, meanwhile, put their resources into technologies with vastly greater potential and eventually get greater returns for small investments. Economic realities favor attackers.
RCA Corp. acutely exhibited the sailing ship syndrome when it devoted its resources to the vacuum-tube devices it had successfully developed and marketed over many years. It continued to pour effort and money into designing ever more sophisticated tubes even after solid-state technology appeared. Its early success gave the company false hopes. But by the late 1960’s tubes could no longer counter transistors, and RCA’s market, investment, and effort went for naught. And, because it had focused solely on the old technology, RCA had lost its chance to become a force in the new market.