Saturday, December 19, 2015

Entrepreneurship quotes from Drucker ..

Entrepreneurs, by definition, shift resources from areas of low productivity and yield to areas of higher productivity and yield. Of course, there is a risk they may not succeed. But if they are even moderately successful, the returns should be more than adequate to offset whatever risk there might be.
DuPont, for 130 years, had confined itself to making munitions and explosives. In the mid-1920s it then organized its first research efforts in other areas, one of them the brand-new field of polymer chemistry, which the Germans had pioneered during World War I. For several years there were no results at all. Then, in 1928, an assistant left a burner on over the weekend. On Monday morning, Wallace H. Carothers, the chemist in charge, found that the stuff in the kettle had congealed into fibers. It took another ten years before DuPont found out how to make Nylon intentionally. The point of the story is, however, that the same accident had occurred several times in the laboratories of the big German chemical companies with the same results, and much earlier. The Germans were, of course, looking for a polymerized fiber—and they could have had it, along with world leadership in the chemical industry, ten years before DuPont had Nylon. But because they had not planned the experiment, they dismissed its results, poured out the accidentally produced fibers, and started all over again.
In the early thirties IBM built a high-speed calculating machine to do calculations for the astronomers at New York's Columbia University. A few years later it built a machine that was already designed as a computer—again, to do astronomical calculations, this time at Harvard. And by the end of World War II, IBM had built a real computer—the first one, by the way, that had the features of the true computer: a "memory" and the capacity to be "programmed." And yet there are good reasons why the history books pay scant attention to IBM as a computer innovator. For as soon as it had finished its advanced 1945 computer—the first computer to be shown to a lay public in its showroom in midtown New York, where it drew immense crowds—IBM abandoned its own design and switched to the design of its rival, the ENIAC developed at the University of Pennsylvania. The ENIAC was far better suited to business applications such as payroll, only its designers did not see this. IBM structured the ENIAC so that it could be manufactured and serviced and could do mundane "numbers crunching." When IBM's version of the ENIAC came out in 1953, it at once set the standard for commercial, multipurpose, mainframe computers. This is the strategy of "creative imitation.
The creative imitator looks at products or services from the viewpoint of the customer. IBM's personal computer is practically indistinguishable from the Apple in its technical features, but IBM from the beginning offered the customer programs and software. Apple maintained traditional computer distribution through specialty stores. IBM—in a radical break with its own traditions—developed all kinds of distribution channels, specialty stores, major retailers like Sears, Roebuck, its own retail stores, and so on. It made it easy for the consumer to buy and it made it easy for the consumer to use the product. These, rather than hardware features, were the "innovations" that gave IBM the personal computer market.
The companies that refused to make hard choices, or refused to admit that anything much was happening, fared badly. If they survive, it is only because their respective governments will not let them go under.

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