I am haunted by the cautionary tale that is illustrated by the chart above. It was first pointed out to me by Dan Wallace of Launchpad Partners during his discussion of the post-recession economy. The chart compares the fortunes, approximated by share price, of two American computer companies, Dell and Apple, for the last dozen years or so.

In the fall of 1997, during a Seybold conference, Dell Computer CEO Michael Dell was asked what Apple should do about their weak market position. His answer was very direct, “What would I do? I’d shut it down and give the money back to the shareholders.”

His statement reflected most of the conventional wisdom in the computer industry at that time and was based on the recent lackluster performance of Apple after a series of disappointing innovations such as the Newton PDA. It was a reasonable, if harsh, assessment of Apple’s prospects.

Apple, of course, had been quite innovative in its early years, and had invented several breakthrough products, such as the personal computer. The Apple II, then the MacIntosh and laptop computers led to explosive growth. But in the 1990’s, Apple became a “status quo” company. Their visionary and, at times eccentric, founders were replaced by professional managers who focused on their core customers, drove incremental change, and avoided riskier innovation. After an extended period with little meaningful change or innovation, their market share steadily shrank, their share price stagnated, and there was real question about their continued survival.

But a few years after Mr. Dell’s comment, after Apple once again embraced innovation as a way of life, then introduced iPods, iTunes, iPhones and iPads, there is less doubt about their continued financial success.

If you look closely at the first 20 years of Apple, it is oddly similar to the first 20 years of Dell Computers. Started twelve years later by Michael Dell in his college dorm room and based on a powerful and distruptive innovation, the company managed to change the entire production and distribution process of the computer manufacturing business – with direct sales to customers. For ten years, after that fundamental change, Dell experienced phenomenal growth – as can be seen in the following stock chart:

This fantastic growth curve was the context for Michael Dells seemingly arrogant comment regarding Apple Computers in 1997. Dell had changed the entire market for computers with their innovation and was reaping the rewards.

The only problem was, direct sales of computers may have been Dell’s first and last innovation. After 2000, instead of finding new areas to innovate or new changes that could transform their customers’ businesses and lives, the company decided, just as Apple had in the 1990’s, to focus on consolidating their winnings, incrementally improving their product and distribution network, and establishing themselves as the status quo of their industry. They wisely decided to play it safe.

And just like Apple before them, once Dell stopped innovating, they began to stop growing. Look at their stock performance in the following ten years:

Innovation is a risky pursuit. It takes more time, more money, and more humility than anyone really wants to risk. It can cannibalize existing businesses, it can threaten existing power structures, and it can destroy careers. And yet, as illustrated by the haunting chart at the beginning of this article, playing it safe may be even more dangerous.

Every time someone makes the decision to avoid change for now, to perfect process, to avoid cannibalization of existing products, are they engaging in risker strategy than they realize?

Change is hard – but the alternative may be worse.