Economic history abounds with examples of companies that failed by ignoring innovations that would make their products or services obsolete and poach their customers. Eastman Kodak died because its executives refused to embrace digital photography, even though the company had pioneered the process and held many important digital photography patents. AT&T and the Regional Bell Operating Companies disappeared because they ignored the cellular phone transformation, even though their researchers were among the first to perfect the technology. Baldwin Locomotive went out of business almost a century ago because it ignored the advantages and growing popularity of diesel locomotives, believing its clients would always embrace steam power. Rarely, if ever, in recent history, however, has a nation harmed itself by rejecting a new low-cost technology in favor of a much more costly one, although many countries have sacrificed growth by delaying the introduction of innovative technologies through regulations or actions that protected established enterprises.
More than 100 years ago, France lagged behind the UK in embracing the Industrial Revolution. The country’s slowness was not deliberate but due to scarce resources and an economic structure based on small family firms. More recently, some nations have frustrated programs that would have accelerated growth to protect vested interests. Portugal under Oliveira Salazar and Spain under Francisco Franco recorded years of low growth because they blocked market liberalization. Such nations foundered not by rejecting innovation but by being slow to adopt it.
