The Right Way to Make Mistakes

Making mistakes, learning from them faster than the competition does, and marshaling resources to stay in the game until you're in a position to win.

Main story: The Next Small Thing More: This is Jeff Hawkins on Brains

What's the secret to breakthrough entrepreneurial success? If the 15-year saga of the PalmPilot is any guide, it's not perfect execution. That's too much to ask of any new company. Rather, it's making mistakes, learning from them faster than the competition does, and marshaling resources to stay in the game until you're in a position to win.

Here are three lessons to take away from the PalmPilot's success.

1. Sometimes the wrong product is the best teacher.

Palm Computing's first product, Zoomer, was a failure. But it was a necessary failure. From it, Palm learned what consumers really wanted from PDAs. With Zoomer, concedes founder Jeff Hawkins, "We produced a flawed product." The second time around, he says, "I wanted no excuses for failure. Every step of the way, we investigated the relationship of every decision we made to the product we were trying to deliver."

2. If you want a big margin for error, build a lean organization.

One of the miracles of the PalmPilot was that Hawkins and his colleagues did so much with so little. Apple spent an estimated $500 million in designing, building, and marketing the Newton. Microsoft has invested $250 million on Windows CE, the key to its entry into the handheld market. Palm Computing needed just 28 people and $3 million in development spending to make a prototype of the Pilot. Even today, amid runaway growth, the company employs fewer than 300 people.

Credit Donna Dubinsky's less-is-more leadership style. "Early on," she says, "Palm Computing's controller was a woman who kept a close eye on the cash flow. And our motto was 'Cash is queen.' If we had always been on the verge of running out of money, we would not have been able to negotiate the best possible deal for the company."

3. There is no "I" in team.

It's easy to trace Palm's success to the vision of its founder. But the journey from brainstorm to breakthrough required a committed team. "When I look at my own contribution to the success of the Pilot," says Ed Colligan, "I can point to one major thing, and that's helping to build the best team in the industry. I can take some credit for that - and for trying to make Palm Computing a fun, exciting, energetic place to work. The team, rather than a good product idea, is what really makes things happen."

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