Long ago, someone asked Bill Gates why Microsoft was so successful. Gates replied that he found it odd that at his competitors’ key technology decisions were being made by the people who knew the least about technology, while the people who knew the most about technology had no say in key technology decisions. He called this technical inversion.
Technical Skills Drop Off at Upper Levels
At Gates’ competitors, the most technically knowledgeable people were the programmers who implement the technology—people at the very bottom of the organization chart. The first-level managers knew less than programmers. They got their jobs because their social skills exceeded their technical skills or they had been good programmers, but after a few years of managing, their programming skills began to atrophy and advances in technology rendered their knowledge increasingly obsolete.
At the next level, former programmers learned that spending more time on politics and social activities instead of keeping up their technical knowledge is the key to getting ahead. After 10 years away from the front lines of technology, they had few skills relevant to the latest technology. As former programmers move up the corporate ladder, technical skills continue to drop off until you reach the CEO, who often knows relatively little about the technology that the company’s value is based on.
The large-scale technology decisions that fundamentally determine future success or failure are ultimately made at the top of the organization by people with little or no understanding of the technology the company is based on.
How is the CEO supposed to decide between deep learning, artificial intelligence, block chain, or quantum computing for their fundamental self-driving car technology? Advocates of each of these approaches will passionately present them to the CEO using charts and graphs, projections, cost estimates, delivery dates, and performance claims. But the CEO cannot evaluate any of that. Their choice of future technology is a crap shoot meaning that in five to ten years the company may have failed.
From his lengthy internal memos on Microsoft’s technology directions, it is clear that Bill Gates was intimately familiar not only with all of Microsoft’s technology, but with all its competitors and emerging technologies as well. With all this information, he could make good decisions about which technologies to pursue and which to avoid. But his competitors’ CEOs were far less equipped to take the most important decisions a technology company can make. So, he said it was easy for him to beat competitors a hundred times his size. Following this simple dictum, Bill Gates led his Microsoft to become the most valuable company in the world.
Technical Inversion Enables us to Beat Much Bigger Competitors
Dan leads The Dawn Project. He knows more about developing software that never fails and can’t be hacked than anyone else. He has designed, managed, or directly implemented all The Dawn Project technology and he makes all the decisions regarding technology development. The managers below Dan have been steeped in this technology for over 20 years. They know far more about software development than the people below them in the organization chart. And so on down to the lowest level. But even at that level, we have nothing but Special Forces class programmers.
Some of Dan’s competitor firms are much larger, but they are technically inverted. That is why Dawn can succeed at what most would perceive to be an impossible task. Dan’s competitors have no idea what technology to pursue. They have become buzzword-driven marketing companies with no viable technology. In a technology business, bad technology always loses.
Dan has learned the valuable lesson that Bill Gates credited with making his company the most valuable in the world: avoid technical inversion.