Link:
http://online.wsj.com/article/SB10001424052748704476104575439723695579664.html?mod=googlenews_wsj
TL:DR:
Large, vertically integrated companies miss innovative new trends - even when they listen to their customers, do market research, etc. Since it seems new trends replace old at a quicker rate now, will large scale management as we have known in cease to exist, or at least scale back considerably?
My Take:
I am very intrigued by a future of more contract like work and less career like work, but I think a more robust social service network then we have in the US is required. And thus if the US does not continue reforms we could be left in the dust.
However, I am not certain that this will happen to a large scale since the larger companies can simply buy up (and of course destroy) the smaller.
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Nah. Larger corporations simply buy up the smaller companies which innovate some new idea, and either absorb them, or make them into a new division of themselves. This results in slightly slower new innovation, but greater deployment of the things that are innovative.
One of the things you also have to remember is that those smaller leaner companies don't tend to innovate more than one thing. Thus, it's not like we lose innovation in this process. Someone else out there will form a new small company and come up with a new idea, which will in turn get absorbed in some way. There's nothing wrong with that sort of feeder system. In fact, it arguably works better. The independent guys who want to just come up with ideas and don't want to be tied to a desk would end out there if their own companies had to deploy and market those ideas. This way, they can leave with a big fat check, and go on to join some new small venture for the next idea.
One of the things you also have to remember is that those smaller leaner companies don't tend to innovate more than one thing. Thus, it's not like we lose innovation in this process. Someone else out there will form a new small company and come up with a new idea, which will in turn get absorbed in some way. There's nothing wrong with that sort of feeder system. In fact, it arguably works better. The independent guys who want to just come up with ideas and don't want to be tied to a desk would end out there if their own companies had to deploy and market those ideas. This way, they can leave with a big fat check, and go on to join some new small venture for the next idea.
King Nobby wrote:
More words please
gbaji is actually correct. For once.
In some ways yes, in some ways not. Certainly I agree that smaller companies tend to specialize, and therefore the range of innovations is limited. Larger companies typically have more money to spend on R&D.
They also have, or tend to have, huge bureaucratic processes in place that can actually impeded innovation and development if they're not managed correctly.
Once you get past that point, though, and an idea gets into development they have a clear advantage.
They also have, or tend to have, huge bureaucratic processes in place that can actually impeded innovation and development if they're not managed correctly.
Once you get past that point, though, and an idea gets into development they have a clear advantage.
In a time of universal deceit, telling the truth is a revolutionary act.
Samira wrote:
In some ways yes, in some ways not. Certainly I agree that smaller companies tend to specialize, and therefore the range of innovations is limited. Larger companies typically have more money to spend on R&D.
They also have, or tend to have, huge bureaucratic processes in place that can actually impeded innovation and development if they're not managed correctly.
Once you get past that point, though, and an idea gets into development they have a clear advantage.
They also have, or tend to have, huge bureaucratic processes in place that can actually impeded innovation and development if they're not managed correctly.
Once you get past that point, though, and an idea gets into development they have a clear advantage.
Absolutely. The tricky stage is always navigating a course between "we've got a neat idea" and "we've got a neat product to sell". And the process of a larger corporation buying up the smaller company with the idea/patent in order to bring that idea to market can slow things down. However, you also have to compare that to the rate of success bringing a product to market yourself. One of the hardest things for a business to do is shift from being investment driven to being product driven. It kills more innovative ideas than you might think.
While I don't have any hard numbers handy, my gut from seeing the process myself and working with people who've seen even more of this, is that more innovations ultimately get to market faster via the feeder system than if each individual business attempted to bring stuff to market on their own. You simply would not believe the number of engineers I know who have worked on some really really really neato technology that worked just fine, but failed because the owners of the small company that came up with it had no clue how to make it a marketable product.
Heck. I know a lot of guys who worked for small companies where the owners didn't want to market the product. There's nothing more frustrating than being an engineer, building something really really cool, but working for a couple of guys who are more interested in milking the investors of money for as long as possible, then going bankrupt and doing it over again than taking the risk of attempting to bring said cool thing to market. The ideal vision we often have of small innovative businesses fighting against the "big corporate machine" to try to bring innovative products to market on their own terms is somewhat of a myth. While there are certainly examples of unfair practices used to pressure those guys to sell their ideas to the big guys, there are just as many (but often not heard outside the industry) of the little guy ******** things up so bad that said neato product takes 20 years longer to reach the market than it should.
Edited, Aug 23rd 2010 2:28pm by gbaji
King Nobby wrote:
More words please
Let me take up the argument in a slightly different way:
-Companies used to have to vertically integrate since communication was difficult.
-The internet
-Now companies can be smaller and outsource more.
Let's say you are Apple and you want to develop a new mouse, for some reason, say with two buttons instead of one. Why use in-house resources instead of hiring people who just do mice (and make all kinds of mice for games, perhaps for the disabled, whatever)? It is not something like software which you'll continue to update constantly, just a one off thing. Further, why manufacture it yourself? (They probably don't).
-Companies used to have to vertically integrate since communication was difficult.
-The internet
-Now companies can be smaller and outsource more.
Let's say you are Apple and you want to develop a new mouse, for some reason, say with two buttons instead of one. Why use in-house resources instead of hiring people who just do mice (and make all kinds of mice for games, perhaps for the disabled, whatever)? It is not something like software which you'll continue to update constantly, just a one off thing. Further, why manufacture it yourself? (They probably don't).
The feeder system is essentially just second wave venture capitalism, with the larger organization buying out the intellectual property for a solid profit for the initial group. A contact of mine has flipped 2, almost 3 companies this way, and it's a very viable strategy.
Just as Planned.
Timelordwho wrote:
The feeder system is essentially just second wave venture capitalism, with the larger organization buying out the intellectual property for a solid profit for the initial group. A contact of mine has flipped 2, almost 3 companies this way, and it's a very viable strategy.
Sure, if you don't care about the state of your immortal SOUL!
BALLS,
Internet tiger.
Samira wrote:
Once you get past that point, though, and an idea gets into development they have a clear advantage.
Alma wrote:
I lost my post
Elinda wrote:
Samira wrote:
Once you get past that point, though, and an idea gets into development they have a clear advantage.
Sure. As TLW correctly points out, there are lots of smaller businesses that exist pretty much solely to come up with an idea that they think some corporation will want to buy just so they can sell the business to them later. This can lead to those guys trying to do what they think the corps want, which could be undesirable, but honestly I've yet to see a lack of small startups doing whatever the hell they want just to see if it will work, either.
King Nobby wrote:
More words please
yossarian wrote:
Let me take up the argument in a slightly different way:
-Companies used to have to vertically integrate since communication was difficult.
-The internet
-Now companies can be smaller and outsource more.
Let's say you are Apple and you want to develop a new mouse, for some reason, say with two buttons instead of one. Why use in-house resources instead of hiring people who just do mice (and make all kinds of mice for games, perhaps for the disabled, whatever)? It is not something like software which you'll continue to update constantly, just a one off thing. Further, why manufacture it yourself? (They probably don't).
-Companies used to have to vertically integrate since communication was difficult.
-The internet
-Now companies can be smaller and outsource more.
Let's say you are Apple and you want to develop a new mouse, for some reason, say with two buttons instead of one. Why use in-house resources instead of hiring people who just do mice (and make all kinds of mice for games, perhaps for the disabled, whatever)? It is not something like software which you'll continue to update constantly, just a one off thing. Further, why manufacture it yourself? (They probably don't).
Apple probably has people that specialize in mouses. I get what you're saying, Im trying to wrap my head around how speeding everything up (rapidly changing technology) changes the equation. Intuitively, I'd think it would be more efficient to hire mouse-engineers knowing that next year the technology will demand, yet another, new mouse.
It's not Apple wanting a new mouse. It's some mouse-inventor that goes to a trade show and shows off his their new super-mouse and Apple decides they must have it. Do they hire the mouser, or contract with the mouser for exclusivity or just buy some of the mouses. I suppose that's the decision point.
If it's just customers complaining that their mouse is teh suck, then it seems Apple would take care of that in-house and re-do it.
Alma wrote:
I lost my post
gbaji wrote:
Elinda wrote:
Samira wrote:
Once you get past that point, though, and an idea gets into development they have a clear advantage.
Sure. As TLW correctly points out, there are lots of smaller businesses that exist pretty much solely to come up with an idea that they think some corporation will want to buy just so they can sell the business to them later. This can lead to those guys trying to do what they think the corps want, which could be undesirable, but honestly I've yet to see a lack of small startups doing whatever the hell they want just to see if it will work, either.
Funnily enough, I've seen more or less the exact same company (Same product type, same production team) being sold multiple times. When you get to the point where you can sell the same company over and over again to different buyers you know you've struck gold.
Just as Planned.
Timelordwho wrote:
gbaji wrote:
Elinda wrote:
Samira wrote:
Once you get past that point, though, and an idea gets into development they have a clear advantage.
Sure. As TLW correctly points out, there are lots of smaller businesses that exist pretty much solely to come up with an idea that they think some corporation will want to buy just so they can sell the business to them later. This can lead to those guys trying to do what they think the corps want, which could be undesirable, but honestly I've yet to see a lack of small startups doing whatever the hell they want just to see if it will work, either.
Funnily enough, I've seen more or less the exact same company (Same product type, same production team) being sold multiple times. When you get to the point where you can sell the same company over and over again to different buyers you know you've struck gold.
Sure, if you don't care about the state of your immortal SOUL!
BALLS,
Internet tiger.
Kavekk the Ludicrous wrote:
Timelordwho wrote:
gbaji wrote:
Elinda wrote:
Samira wrote:
Once you get past that point, though, and an idea gets into development they have a clear advantage.
Sure. As TLW correctly points out, there are lots of smaller businesses that exist pretty much solely to come up with an idea that they think some corporation will want to buy just so they can sell the business to them later. This can lead to those guys trying to do what they think the corps want, which could be undesirable, but honestly I've yet to see a lack of small startups doing whatever the hell they want just to see if it will work, either.
Funnily enough, I've seen more or less the exact same company (Same product type, same production team) being sold multiple times. When you get to the point where you can sell the same company over and over again to different buyers you know you've struck gold.
Sure, if you don't care about the state of your immortal SOUL!
BALLS,
Internet tiger.
Is this a new and improved Jehovah's witness Kavekk?
Just as Planned.
Didn't Apple first popularize the mouse as a mainstream computer tool, way back in the Stone Age of the 80s?
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