April 15th, 2013, 6:52 am
QuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnQuoteOriginally posted by: Traden4AlphaQuoteOriginally posted by: CuchulainnAnother issue: what were the captains of industry doing during the 1970's? Did they take their eye of the ball? Did they fail to see the rise of the Japanese auto industry??Is it too early for an official history of that period?Clayton Christensen's Innovator's Dilemma -- I've seen him talk on this topic -- has a pretty convincing explanation for why incumbents so often fail to counter the rise of upstarts. Those early Japanese cars were small and crappy so it was easy for incumbents to dismiss them. But then Toyota et al got better or something like the first energy crisis hits to flip customer's preferences for the "inferior" product.When the threat becomes more obvious, the threatened company often first reacts by focusing on what they do best, what provides the highest profits, what made them successful in the first place, and how they can best use their existing assets (factories & workforces) to compete. But the nature of disruptive innovations is such as historical strategies and historical assets are entirely wrong for the new environment.And it doesn't help if the captains of industry have bad relationships with their workers such that it impedes changes in work practices and workforce reductions. In the US, both the steel and auto industries created a self-imposed death spirals -- they paid for very large and expensive labour forces (both in factories and pensioners) that made their products too expensive. The more they lost marketshare, the worse the labour_cost/unit_production became, and the more uncompetitive they became.Maybe it was a form of lethargy. The same thing happened in the 80's when Europe started to outsource manufacturing to countries with cheaper countries. And a sense of hubris maybe that things would remain the same as in the 60's economic miracle.Yes, it's the curse of success. The incumbent leader simply can't see how the inferior upstart will beat the superior incumbent. And if the upstart does win a few battles in some niche markets, the leader dismisses it as a fluke and retrenches to their "core markets". But pretty soon, the upstart just get better and better and the core shrinks to nothing. Sometimes a company's greatest asset becomes their greatest liability. There's also the issue of sycophants in the company -- the leader believes their own propaganda.It's happening right now with Nokia/Blackberry/Microsoft vs Android/Apple, Intel/AMD vs. ARM, as well as Japan vs. China.Japan thought it was a great strategy to become the "engineering department" of east and south-east asia - 70s/80s - they did not understand the littlest about the wants leading to post-indutrial movements.