LET GO AT THE TOP

Big and small companies alike…

…have to deal with their new landscape. It’s often unclear whether a firm should strive to be on top of a mountain (for example, to be the world’s most reliable hard disk manufacturer), when the whole mountain range beneath that particular peak may sink in a few years (if everyone moves their storage onto large protein arrays). An organization can cheer itself silly on its way to becoming the world’s expert on a dead-end technology. (The nuclear power industry offers one example.)


Turbulent times mean that local success is not global success. A company may be at peak efficiency, but on the wrong mountain. The trick is to select a high-potential area to excel in.

Some of the most perfect technology was created just before its demise. Vacuum tube technology reached a zenith of complexity just before it vanished. As MIT economist James Utterback writes: “Firms are remarkably creative in defending their entrenched technologies, which often reach unimaginable heights of elegance in design and technical performance only when their demise is clearly predictable.” It’s relatively easy to arrive at a peak of perfection. The problem is that perfection can be local, or suboptimal, like being the best basketball player in your state, but unaware of national tournaments. While a firm is congratulating itself on creating the world’s fastest punch card reader–the fastest in the universe!–the rest of the economic world has moved on to the PC.

 

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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK