I'm the author of the article, I'm working with Clay at the moment. Thanks for the comment.
It's subtle, but I think that most people outside of companies assume that decisions get made as you're describing above — separate questions of "will this product be successful", and "will we make money out of it". In part, the dilemma is borne out of the fact that for almost every company, those aren't separate questions at all. Think about it; you're the CEO, and someone comes along and says, "let's invest this money in new R&D for a product that may, or may not, work. if, by chance, it does work... it will take out our existing product, and we'll end up making less money on the new product than we do right now on the old one".
very few CEOs will put money down on that. they're using money from their cash cow to do what... to kill it?
the problem is one of perspective.
there's another famous example i love to quote when explaining: blockbuster and netflix. when netflix came along, blockbuster was this huge organization with massive margins and almost 100% name recognition. they looked at netflix, saw a new business emerging with a fraction of the margins that they had... why would they bother wasting their time on doing something like this? they could invest to create a netflix competitor, but if they did, it was going to cost them to do it, it may or may not be successful, and if it WAS successful, it would cannibalize their existing, high-margin business with one that was much less profitable. who would go for that?
the mistake that most companies make is that they assume that they're the only ones that are capable of challenging their existing business with a disruptive entrant. the problem is (and it sounds obvious, but so many successful companies have fallen into this trap): if they don't challenge themselves, then someone else will. from the perspective of blockbuster, with all these profitable stores dotted all around the country, the "DVD by-mail market" was not at all attractive. but to netflix, which was looking at the market from the perspective of "we don't have any business at all, so any business is great", the margins actually looked pretty good. blockbuster thought its choices were "stick with high margin business, or move to low margin business". but really, its choices were "move to low margin business, or go bankrupt".
that's the perspective thing i'm talking about; successful businesses have this tendency to view markets from the vantage point of where they stand right now. what's so noticeable about apple is that they never do that. they start from a fresh sheet of paper — what's best for the customer, not what's best from our bottom line. it's a mighty hard trick to pull off.
hope this helps. thanks to everyone for voting up the article.
cheers
-- james