The attackers advantage
“The conclusion reached in the book was that
during technological discontinuities, attackers, rather than defenders, have
the economic advantage. Although they often lack the scope associated with low
costs, neither do they have the psychological and economic conflicts that slow,
or prevent, them from capturing new opportunities.” (Foster and Kaplan, 2001,
p.1). “Yet the attacker’s advantage did not seem to last. Once a company
attacked, it began to act suspiciously like a defender.” (Foster and Kaplan,
2001, p.1).
Surviving firms underperform
“Of the
original group (of companies in the Forbes index), 61 had ceased to exist” (Foster
and Kaplan, 2001, p.7).“ They (the other companies) survived. But they did not
perform. As a group these great companies earned a long-term return for their
investors during the 1917-1987 period 20% less than that of the overall
market.” (Foster and Kaplan, 2001, p.8). “the golden company that continually
performs better than the markets, has never existed.” (Foster and Kaplan, 2001,
p.9).
“Because
their control processes – the very processes that help them survive over the
long haul – deaden them to the need for change.” (Foster and Kaplan, 2001,
p.10). They suffer from cultural lock in: “the fear of cannibalization of an
important product line, the fear of channel conflict with important customers,
and the fear of earnings dilution that might result from a strategic
acquisition.” (Foster and Kaplan, 2001, p.17). “As the corporation ages, the
bureaucracy begins to settle in.” (Foster and Kaplan, 2001, p.17). “Eventually
its performance deteriorates to the industry average, and the below.” (Foster
and Kaplan, 2001, p.47). “First, the original innovation that the entrant
brings is imitated or bested in the market, often by even newer entrants.”
(Foster and Kaplan, 2001, p.47). “the new entrant falls prey to cultural
lock-in and can no longer create innovation on the scale that brought its
original success.” (Foster and Kaplan, 2001, p.48).
“Often, as
we see a corporation beginning life as a result of a transformational
innovation. As it matures, it begins to focus more on operations. The focus on
innovations shifts, as we noted earlier, from transformational innovation to
substantial innovation. Most corporations do not begin to focus on their need
to destroy at this point.” (Foster and Kaplan, 2001, p.143). “But few do (…)
those few companies begin systematically break down the structures they have
just built.” (Foster and Kaplan, 2001, p.144). “While each destroyed its
current business, it was with some confidence that the new business was close
enough at hand.” (Foster and Kaplan, 2001, p.144).
The market beats the manager
“Because of
this lack of managerial control, the capital markets, when properly performing,
introduce new options and adaptations more quickly than do corporations.” (Foster
and Kaplan, 2001, p.5). “The answer is that the capital markets, and the
indices that reflect them, encourage the creation of corporations (…) and then rapidly – and remorselessly – remove
them when they lose their ability to perform.” (Foster and Kaplan, 2001, p.9).
“The essential difference between corporations and capital markets is in the
way they enable, manage and control the
processes of creative destruction. Corporations are built on the assumption of
continuity; their focus is on operations. Capital markets are built on the
assumptions of discontinuity; their focus is on creation and destruction.”
(Foster and Kaplan, 2001, p.10).
“The point is to let the market control
wherever possible. Be suspicious of control mechanism – they stifle more than
they control.” (Foster and Kaplan, 2001, p.23). “that is not to say that all
attackers are winners. That is certainly not the case. But it is the case that
most winners are attackers.” (Foster and Kaplan, 2001, p.47).
“The
message is clear: Only companies that change at the pace of the market can hope
to match or exceed the overally market’s performance.” (Foster and Kaplan,
2001, p.60).
“The answer (…) is that the capital markets
are naturally more robust and adaptable than our corporations. “ (Foster and
Kaplan, 2001, p.88). “Industries are more innovative than the companies in
them, since by definition the market consists of all the innovation and a
single company can lay claim only to their own.” (Foster and Kaplan, 2001,
p.106). “The markets have no sadness about destruction.” (Foster and Kaplan,
2001, p.136).
“John
Maynard Keynes identified the real problem within corporations more than half a
century ago: “The difficulty lies not in the new ideas, but in escaping from
the old one.” (Foster and Kaplan, 2001, p.136).
“one has to divorce the idea of company
failure from the notion of a business concept failure.” (Foster and Kaplan,
2001, p.218).
