• by Gord Hotchkiss , Featured Contributor, June 19, 2013

A few weeks ago, I introducedyou to my Underwood No. 5. Today, I’d like to tell you a little bit about the company that created the iconic No. 5. The story may be over a hundred years old, but that doesn’t mean that the businesses of today can’t learn from it.

The first designs for the typewriter started showing up in the 1870s. After some rather imaginative designs, including one that looked like a pincushion, the Sholes and Glidden Type Writer (1873) was the first writer to introduce the QWERTY keyboard (which I’m still using today). The QWERTY design was (supposedly) introduced to overcome the physical limitations of the machine, which tended to become jammed if frequently used keys were located next to each other. The reason we still use it? Well, suffice to say, habits are a tough thing to break.

The S&G design, and all the other variations that followed for the next two decades, tried various approaches, but all had one thing in common: They were all “understroke” or “blind” writers. The keys hit the paper on the bottom of the platen so users couldn’t see what they were typing.

In the mid-1890s, John T. Underwood was trying to figure what to do with his company, a fairly significant provider of ribbons and carbon paper to then-industry-dominant typewriter manufacturer Remington.  That company had spun off its typewriter division from the sewing machine division, which in turn had evolved from its main business, making guns. But Underwood had heard that Remington had plans to start making its own consumables. He countered by declaring, “All right, then, we’ll just build our own typewriter.” Fate upped the ante by bringing together Underwood and German-American inventor Franz X. Wagner.

Wagner had designed a better typewriter. Or, at least, he had reached an acceptable compromise by combining many of the best innovations of the competitors, together with a few twists of his own, and putting them together into a new package (Does this sound a little like a precursor to the iPhone?). The result was a design that would define what almost every typewriter would look like for the next six decades, until the electrified IBM Selectric.

Underwood quickly locked down Wagner’s design by purchasing his company – and then made Underwood the biggest manufacturer of typewriters in the world. To say Underwood dominated was an understatement. The No. 5 outsold all other competitors combined for the first two decades of the 20^th century.

In 1927, Underwood merged with Elliot-Fischer to consolidate market share, with the goal of ensuring dominance. But the decline had begun. One of the problems was that Underwoods seemed to last forever, so replacement sometimes took decades. The other challenge came in the form of a minor distraction known as World War II. During the war, Underwood cranked out carbines for the troops.

By the ‘40s, at the end of the war, Underwood struggled to regain relevance and dominance. But it was saddled by technology that was almost half a century old – all the company knew how to build and sell. There was no “next big thing” to open up new markets. Underwood was also held back by inertia. It was hard for company strategists  to understand why the thing that made them so successful was no longer potent enough to enable survival (Microsoft?).

Eventually, Underwood was gobbled up by Olivetti (1959) and the Underwood name last appeared on a portable Olivetti built in Spain in the 1980s.

There are a few relevant lessons here.  The more dominant your technology, the more likely it is that your company will be limited by it. Dominant technologies, no matter how innovative they are when they first appear, tend to build inertia in organizations as they ride a long winning streak. Struggle is good for the corporate soul, and the simple fact is, competitors are forced to struggle, which makes them sharper, more nimble and more aggressive.

Secondly, along with inertia, successful companies also become complacent. They generally don’t start looking for the next big thing until the existing product line (or lines) begins to falter -- and by then, it’s too late. The competition, which is hungrier and moves more quickly, has too much of a lead on them.

And thirdly, it seems that the more reliant companies are on a single product or business line, the more susceptible they are to the inertia and complacency that comes with dominance. They are restricted by a single product cycle, rather than spreading their chances for survival over multiple bets, each at different stages of market maturity.

Underwood is no more. But for four decades, it had a good run. It’s difficult to say whether this is a sad thing, or it’s just the inevitable life cycle of a company.