Xerox : Failures - Innovation - Success

Chester Carlson built the first Xerox machine in his kitchen, and he was granted a patent for this in 1942.

He sold a license to Haloid Photographic Company and went to work for them, and in 1949 they launched the Xerox Model A photocopier, which utterly and completely failed.

#Failure: Photocopier being six times the cost for machinery, and the same cost per copy, no one was interested in replacing a machine that on average made about 100 copies per month.

#Innovation: This time instead of replacing another machine, like the mimeograph, they tried to replace a typist. In 1959, they launched the Xerox 914 and 

#Success: Within five years they were selling 500 million dollars of 914s annually. After the breakthrough with the 914, Haloid changed their name to Xerox and they kept innovating. They made machines that were faster, that could copy on both sides, that could staple and sort. The machines were big and expensive. And they still mostly sold to the largest organizations.

(Note: This was not based on a technological breakthrough - the 914 wasn't really that different from the first photocopier that Carlson built in his kitchen. The innovation was in the business model - finding the right problem to solve, the right way to create value.)

#Failure: In the 1970s when Ricoh and Fuji introduced new, smaller copiers. Technologically, their machines were a lot like the original Xerox Model A. Their value proposition was the same too - "replace your mimeograph" and their target market was "every company in America, and Japan and Europe too." They addressed this by not having a sales force at all - they sold their machines through office supply stores. All this nearly put Xerox out of business.

#Innovation: To find new growth markets, Xerox started to invest heavily into R&D on personal computers and the team basically invented all of the critical parts of personal computers.

#Success: Xerox became the first computer company in the world to offer a PC with: a mouse, a graphical user interface, network capability, laser printers, and many other things. They ended up getting into the market through Apple and the first Macintosh PCs and made a ton of money off of laser printers.

Xerox today manufactures and sells a wide variety of office and production equipment including LCD Monitors, photo copiers, Xerox Phaser printers, multi-function printers, large-volume digital printers as well as workflow software. Xerox also produces fax machines, professional printers, black and white copiers and several other products.

#Learnings:

1. New ideas usually need new business models to realize their potential impact.

2. It takes time to find the right new business model, have patience.

3. The threat of new entrance sometimes put you think of innovation and new business models to survive.