Who Innovates?


Schumpter first suggested that small entrepreneurial firms were the sources of most innovations. Later he changed his view and suggested that large firms with some degree of monopoly power were more likely to be the sources of technological innovation. He argued that large firms have the production and other complementary assets that are necessary to commercialize an invention; have the size to exploit the economies of scale that are prevalent in R&D; are more diversified and therefore more willing to take the kind of risk that is inherent in R&D projects; have better access to capital that smaller firms; and, as monopolists, do not have competitors ready to imitate their innovations and therefore are more likely to invest in them. By shifting the focus to the type of innovation, however, whether incumbents or new entrants are able to introduce and exploit innovation is a function of whether the innovation is incremental—a function of how new knowledge and the new product are.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Learning from Market Leaders


  • Customer Market: We believe our first responsibility is to the doctors, nurses, and patients, to mothers, and all others who use our products and services. (Johnson & Johnson)
  • Product Service: AMAX’s principle products are molybdenum, coal, iron ore, lead, zinc, petroleum and natural gas, potash, phosphate, nickel, tungsten, silver, gold, and magnesium (AMAX)
  • Geographic Domain: We are dedicated to total success of Corning Glass Works as a worldwide competitor (Coming Glass)
  • Technology: Control Data is in the business of applying micro-electronics and computer technology in two general areas: computer-related hardware and computing-enhancing services, which include computation, information, education, and finance. (Control Data)
  • Concern for Survival: In this respect, the company will conduct its operation prudently, and will provide the profits and growth which will assure Hoover’s ultimate success. (Hoover Universal)
  • Philosophy: We are committed to improve health care throughout the world. (Baxter Travenol)
  • Self Concept: Hoover’s universal  is a diversified, multi-industry corporation with strong manufacturing capabilities, entrepreneurial policies, and individual business unit autonomy. (Hoover Universal)
  • Concern for Public Image: Also, we must be responsive to the broader concerns of the public, including especially the general desire for improvement in the quality of life, equal opportunity for all, and the constructive use of natural resources. (Sun Company)

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Role of Diversification


Corporate diversification is everywhere. Virtually all of the Fortune 1,000 (the largest 1,000 corporations in the US) are diversified, many of them to a great extent. Some corporations consist of dozen—even hundreds—of different businesses. Besides such corporate giants, many smaller firms, some with only a handful of employees, also diversify.

What is the strategic role of diversification? Popular answers to this question have changed dramatically over the last several decades. During the 1960s, diversification fueled tremendous corporate growth as corporations bought up dozens of businesses, regardless of the good or service sold. Managers based this diversification on unrelated businesses on the assumption that good managers could manage any business, allowing the formation of huge conglomerates of completely unrelated businesses. In the 1970s, managers began to emphasize diversification based on balancing cash flow between businesses. Corporate managers attempted to diversify so that the resulting portfolio would offer a balance between businesses that produced excess cash flows and those that needed additional cash flows beyond what they could produce themselves. The 1980s brought a broad-based effort to restructure corporations, as managers stripped out unrelated businesses and focused on a narrower range of operations. Restructuring usually also involved downsizing, and the largest corporations shrank in relation to the rest of the economy. In the 1990s, corporations have once again taken an interest in using diversification to grow. But unlike the unrelated diversification that took place in the 1960s, the trend in the 1990s is to diversify into related businesses, or at least into businesses in which the strengths of a popular managerial team fit the needs of the new business being added to the corporation.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Threat of Entry


New entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources. Companies diversifying through acquisition into the industry from other markets often leverage their resources to cause a shake-up.

The seriousness of the threat of entry depends on the barriers present and on the reaction from existing competitors that the entrant can expect. If barriers to entry are high and a newcomer can expect sharp retaliation from the entrenched competitors, he or she obviously will not pose a serious threat of entering.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight