established business vs. innovation

Jeff Bone jbone@jump.net
Wed, 09 Jan 2002 12:38:12 -0600


Dave Long wrote:

Great comments, most of which reveal the similarity in argument while
making the differences in conclusion rather less obvious.

> What is important is that scale-up on
> other dimensions does not affect the
> ability to innovate as much as it does
> the desire.  Basically:
> > the guys *with* the [existing business] are often considered to
> > "not be hungry enough" to make interesting things happen.
>
> The hungry guys try interesting things.
> The fat guys laugh at them.  (and do
> profitable things instead)

Here's what I think is a relatively important point:  Not all hungry
guys are created equal:  inexperienced etc. hungry guys try interesting
but more risky / less potentially profitable things, while more
experienced etc. hungry guys may try less interesting but also less
risky / more potentially profitable things.  And it's important to
consider the resources that fat guys burn on activities other than
building profit, namely activities *defending* current profit.

(Ask Russell to run his rant about advertising in the cola market for
you sometime.)

> Most of the time, the interesting
> thing fails, and LAUGH succeeds.
> Some of the time, the hungry guys
> LAUGH last.

Let's please get our terminology consistent with each other, so that we
know we're talking about the same things;  "laugh" was part of the
quote, there are only three strategies we're considering for the dom
player (i.e., laughing per se is not a strategy in my ontology, it's an
effect) --- DISCREDIT / COPY / BUY.

> If this model is not consistent with
> both history and common sense, I will
> drop the entire argument, otherwise
> we can continue...

This is entirely consistent with both history and common sense.  Where I
fall away is when you start trying to use this historical / common
sensical context that we share to support the notion that innovation can
occur in a world where the innovator's activities are completely and
immediately available to the dom player.

> quick summary
> =============
> established players are not innovators
> - establisheds play stable strategies
> - innovators play risky strategies

With you so far.

> so even in a transparent world, they
> will choose different niches
> (lions/hyenas)

Strategy doesn't imply niche.

> current objection
> =================
> 500 lb. gorillas will occupy both
> their own and innovators' niches.

You got it.

jb