SAP

The German software giant that maintained perfect apical dominance for 20 years - then nearly died because it couldn't prune fast enough.

SAP was founded in 1972 by five IBM engineers in Mannheim with monk-like discipline: single-trunk focus on financial accounting software (R/1), no acquisitions, pure vertical expansion serving large European manufacturers. For two decades, SAP demonstrated that apical dominance - concentrating resources on the main trunk - works when the environment is stable. Geographic branching (1992-2000) and product branching (2000-2010) came only from strength, driving SAP to $30+ billion in revenue and 77% of global transaction revenue touching an SAP system.

Then the ground shifted. Cloud competitors Salesforce (founded 1999) and Workday (founded 2005) had 7-13 year head starts while SAP remained 93% on-premise in 2010. The company faced a brutal choice: prune 40% of on-premise products and reallocate resources to cloud, or die slowly. CEO Bill McDermott's 2012 decision to sunset legacy products saved the company - cloud revenue grew from 7% (2010) to 45% (2024) - but the delayed pruning cost SAP the SMB market permanently.

Yet SAP demonstrates the 10% rule better than almost any company. SAP produces Level 1 infrastructure. But the ecosystem generates $100+ billion annually - 3x SAP's own revenue. Implementation partners (Deloitte, Accenture, IBM) capture $50-60B. Enterprises derive trillions in operational value. SAP doesn't fight this - it designs for it through partner certification, ISV programs, and open APIs.

The dual lesson: apical dominance works until the environment shifts - then delayed pruning is fatal. And in platform businesses, you don't capture the value - you enable it and harvest 10%.