IBM CEO Ginni Rometty
Photograph by Sophie Elgort/Feature Photo Service for IBM—AP

Companies don’t fail because of technology or bad luck, but because of arrogance.

IBM and Apple are firms at a crossroad. Neither can continue as it is; both face a fundamental reinvention. The difference is that one knows it, and the other shows all the signs of being in denial. Our bet is that IBM will succeed, and that Apple, contrary to conventional wisdom, may be the one to fail.

IBM ibm is on a long losing streak, with 14 quarters of revenue decline. Many commentators have forecast that this decline will soon undermine profits, and some have even expressed doubt in the wisdom of the mighty Warren Buffet for his investment in the firm.

Apple aapl , on the other hand, is the world’s most highly valued company and one that has brought delight to its millions of loyal customers. It’s a firm at the top of its game and, despite slipping from its pedestal last quarter, it still enjoys the enthusiasm of investors.

And that’s a reason for worry. Our research over more than 30 years has told us that it can be dangerous to be at the top of your game the way Apple is now. Business history is littered with examples of once great companies that missed the next wave of innovation in their markets. The likes of Kodak, Blackberry, and Nokia have all fallen by the wayside in recent years.

What we’ve learned is that these companies didn’t fail because of technology or bad luck, but because of arrogance. Sears shld is a fine example. At one time, one in every nine dollars spent in America was at a Sears store. Its executives ignored the advance of Wal-Mart wmt and built the Sears Tower as a monument to their greatness.

IBM and Apple have both faced adversity. Apple was in trouble before Steve Jobs’s triumphant return in 1997, and IBM famously danced its way back to profitability under legendary CEO Lou Gerstner following its near-death experience of the early 1990s.

 

What separates the two is that IBM learned from the experience and reinvented itself in the early 2000s as a business services firm. It is no longer as dependent on selling computer hardware, and it is a major provider of business consulting and analytics.

IBM was thus able to move ahead of the next curve, bypassing the disruption that claimed HP, Dell, Sun, and other competitors. In contrast, Apple remains dependent on an array of well-designed products that are beginning to lose some of their luster and cachet.

IBM’s recipe for transformation was what we call the ambidextrous organization. The company learned how to lead in core markets, like those for computer hardware and software, even as it created disruption in emerging markets.

It did this with a series of carefully designed experiments led by Emerging Business Opportunity units (EBOs). For example, IBM Life Sciences was set up as a quasi-independent unit with the goal of making the company central to the emerging fields of genetic and proteomic research. At its core is much of what IBM now calls Watson.

The EBOs were separated from IBM’s management system and its focus on driving short-term profits. With EBOs, the mission was to test the market, learn what value proposition worked, and then establish IBM’s market position as quickly as possible. Leaders of new EBOs, however, were free to find new ways of working, changing IBM’s typical approach when necessary and recruiting deep specialist skills appropriate to solving the customer’s problem, not simply to selling IBM technology.

By 2006, EBOs alone had contributed more than $15 billion in incremental IBM growth and were a more effective growth instrument than acquisitions. One senior executive estimates that 45% of IBM’s current profits derive from these initial EBOs. IBM learned how to grow through experimentation.

IBM continues to transform itself today. While CEO Ginni Rometty is under pressure to deliver results, she is leading a firm that knows how to manage these major pivots. Its DNA is different from the firm that arrogantly ignored the threat of Microsoft msft and others in the early 1990s.

Apple’s challenge is that it may not have learned the same lesson from its own past. Its rapid rise was based on some fundamentals about product experience, speed of innovation, and a dedication to be the leader in any product category.

Unfortunately, these great strengths may have become toxic. Its culture has become highly secretive. Suppliers may only refer to Apple by a specially assigned code name. They win new contracts without knowing why and what Apple plans to do with their technology and then lose them again without knowing what they did wrong.

For these reasons, Apple risks become inwardly focused, cutting itself off from the lessons that IBM’s experiments were able to teach it. It is suffering the curse that comes with being the inventor of a whole new product class—an environment in which organizations begin to believe their own propaganda.

Apple’s new $5 billion “spaceship” headquarters is just one indicator that they too are gripped by the “success syndrome.” Let’s hope that in years to come it does not stand next to the Sears Tower as an expression not of success but of hubris.

 

Charles O’Reilly III and Michael Tushman are professors at the Stanford Graduate School of Business and Harvard Business School, respectively, and authors of Lead and Disrupt: How to Solve the Innovator’s Dilemma (Stanford Business Books, 2016).

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