Corporate transparency

Dave Long dl@silcom.com
Mon, 07 Jan 2002 10:09:02 -0800


> ... in this case it's "first they ignore you, then they laugh at you,
> then they copy you, then you go out of business." If you're lucky,
> maybe they buy instead of copy you.  If you're really, really lucky,
> maybe you get to a critical self-sustainable mass first.  The number
> of companies that have managed that is very, very small.
>
> In a world with no secrecy, they can go straight from ignore to copy,
> and there's no way for the innovator to profit.

You are not a beautiful & unique snowflake.

A) In a world with secrecy, they can
effectively duplicate without having
to copy.  (what is 2+2?  did you copy
my answer?)

B) In a world with no secrecy, why
would they go straight from ignore
to copy?  After all:
> It's true that the status quo player shouldn't *invest* in innovation
In a world with no secrecy, others
would go straight to laugh at you.
(there would be no hiding behind
bushels of buzzwords)

The way the innovator profits is
exactly the same as in this world:
if they are really, really lucky,
by the time everyone realizes that
the idea isn't so stupid after all
and has moved from laugh to buy or
copy, they have critical mass.

-Dave

> ... defending against innovation (DISCREDIT / COPY /
> BUY-AS-LAST-RESORT) is a valid investment --- it's *protecting*
> the core business.

It may be a valid investment from
management's viewpoint, but likely
not from the shareholders'.  Here
is the quick sketch:

In a world with proven business P,
and two possible innovations, Q+R,
investors can weight their holdings
according to their beliefs about
the potentials of Q and R relative
to P.

If P's management parochially acts
to protect their core business by
investing in projects Qp and Rp, the
investors have no way to make a pure
play in any of the businesses; if the
resources which P devotes to Qp and
Rp are also kept secret, they will
even find it difficult to hold any
combination of P, Q, and R that can
accurately reflect their bets about
the innovations' prospects.