Initial Conditions For Successful Growth

include

- starting with a cost structure in which good profits can be earned at low price points and being able to later carry performance up-market

- being in a disruptive position relative to competitors so that they are motivated to flee rather than fight

- starting with a new set of customers who have not previously purchased in the marketplace so that they will be pleased with modest products/services

- getting beyond correlative assertions, such as "big organisations are slow to innovate", 'successful CEOs are promoted from within'

- targeting a job that customers are trying to get done

- moving to where the money will be, not where it is now

- assigning executives who have the right experience and putting them to work within processes and organisational values that are attuned to what needs to be done

identifying the performance-defining components or subsystems that are important to the customer and attract profits. For example, with personal computers it is the microprocessor, the operating system and its applications.

maintaining flexibility to respond as viable strategies emerge

- getting on board suppliers of capital who are patient with growth but want profit first

not blindly duplicating or copying the best practices of successful organisations without understanding the local circumstances and situations. Remember

"...replicating their success is not about duplicating their attributes; it's about understanding how to generate lift. Good theories are circumstance-based. They describe how managers need to employ different strategies as circumstances change in order to achieve the needed results. The use of one-size-fits all processes and values historically has made the creation of growth torturous. One of the most valuable contributions you can make in the growth-creation process, therefore, is to keep looking for changing circumstances. If you do this, you can understand when and why changes need to be made long before the evidence is clear......When managers ask questions such as ' does this apply to my industry?' or 'does it apply to service businesses as well as product businesses?' They really are probing to understand the circumstances......industry-based or product/service-based categorisation schemes almost never constitute a useful foundation for reliable theory......the circumstances that matter are not what industry you are in. Rather, there was a mechanism - the resource allocation process - that caused the established leaders to win the competitive fights when an innovation was financially attractive to their business model. The same mechanism disabled the established leaders when they were attacked by disruptive innovators - whose products, profit models, and customers were not attractive..."

Clayton Christensen et al, 2003

This highlights the need to understand under what circumstances the preferred framework needs to be modified based on changing conditions.

(NB satisfying these conditions will lay the foundation for successful growth)

 

Firms like Microsoft, Google, Apple, Xerox have similar stories around use of disruptive technology, using current technologies in different ways plus some luck. The Xerox story is less well-known than the others. In late 1930's, 2 inventors (Chester Carlson - a physics graduate of the Californian Institute of technology, and Otto Kornie - a German refugee physicist) started working on a 5 step process called electro-photography (sensitising a photoconductive surface to light by giving an electrostatic charge; exposing the surface to a written page to form an electrostatic image; developing a latent image by dusting the service with a powder that would adhere only to the charged surface: transferring the image to some sort of paper; fixing the image by the application of heat). Each of these used available technologies but had never been used in this combination. Xerography had little foundation in previous scientific research but this combining of a rather odd lot of phenomena resulted in the biggest thing in imaging since the coming of photography. A mistake resulted in one of the biggest breakthrough. The photoconductive surface was coated with sulphur but lost its qualities after a few copies and became useless. This was solved by experimenting with increasing amounts of selenium (a nonmetallic element used chiefly in electrical resistors and as a colouring material to redden glass) until it replaced sulphur completely.
Xerox spent tens of millions of US dollars on developing this process. It is of interest to note that the name Xerox was thought to be unsuitable by the firm's consultants, owing to difficulty in pronouncing it, the link with antifreeze, and its sounding like "zero"!!!!!! (see volume 5 under Po section for more on Xerox)
NB Xerox has donated around 1.5 % of its net income before taxes to not-for-profit groups like charities, educational organisations, etc and taken a controversial stand on public issues of major concern irrespective of the impact on customers, eg establishing the United Nations, etc

 

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