Xerox PARC Was Never a Failure

In the 1970s, Xerox PARC was one of the most dominant innovation entities in the world.  Its track record was astonishing: PARC lab members developed the first personal computer with a graphical user interface, one of the earliest versions of the mouse, laser printing, and Ethernet LAN, among many other inventions.  Yet, PARC is widely regarded as one of the greatest failures in Silicon Valley history, because Xerox failed to bring any of these products to the mass market (despite the obvious, and historically vindicated, commercial potential).

The argument essentially runs like this: despite creating the future, Xerox failed to capitalize upon it.  For example, in allowing Steve Jobs to visit PARC in 1979, and view all of their technology, Xerox forfeited its valuable secrecy and IP, and allowed a competitor (Apple) to capitalize on PARC’s inventions.  Or, critics might point to the spinoffs out of PARC started by former employees, which together ended up exceeding Xerox’s value.

This is a classic example of ex post reasoning, or “creeping determinism.”  Xerox’s failure to capitalize on PARC’s inventions seems, in hindsight, an egregious error because of the technology’s later successes – the size of the opportunity makes it feel like it should have been impossible to miss.  However, such a story is overly selective in the evidence it considers – that Xerox was a large technology company, that it developed and owned this valuable intellectual property, and the very fact that Steve Jobs (a prominent competitor, even at that time) was so adamant about visiting the lab in person.  The first two are perhaps necessary for Xerox to have successfully developed its technology (certainly not the third), but by no means were they sufficient even if Xerox had made the ideal decision at every juncture.  Thus critics have developed lists of reasons why Xerox failed, including its corporate culture, its lack of a technology transfer mechanism, etc.

In focusing on what Xerox should have done, we fail to focus on all of the good that Xerox did do with PARC.  Most obviously, the very fact that Xerox was able to recruit so many top engineers and scientists, and put them in an environment to be successful to that degree, should be lauded.  The more nuanced point is that the very loose managerial culture, which encouraged exploration above all else, was probably the same reason that Xerox PARC was able to produce so many incredible inventions while simultaneously finding itself unable to develop them further.  If PARC had been trying to produce for the mass market in other words, as Apple later did (using PARC’s work on the mouse and GUI as inspiration), then PARC never would have made its breakthroughs in the first place.

If I were to defend Xerox, I would point to two pieces of evidence that demonstrate how successful PARC actually was.  First, not every project at PARC went undeveloped – in fact, the laser printer produced billions of dollars for Xerox, and “paid for every other single project at Xerox PARC, many times over.”  Second, even those projects which went undeveloped by Xerox still yielded value for the company, which is a remarkable achievement given that Xerox may have been ill-suited to develop those technologies itself.  For example, the legendary Steve Jobs visit was not just Xerox bumbling about, but rather part of a structured deal – that visit was in exchange for Xerox being allowed to buy a hundred thousand shares of Apple for a million dollars.  Not a shabby deal for technology that Xerox couldn’t get much out of anyway.

With minor edits, this text was originally produced for a class assignment at Booth.  

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