Why?
Markets are more efficient. They throw non performing companies out. Corporations are based on continuity. Their focus is on operations. Markets are built on discontinuity; their focus is on creation and destruction.

Cultural lock-in inability to change corporate culture even in the face of obvious threats e.g For half a century Bayer drove the growth of Sterling Drug until J&J introduced Tylenol. Out of fear of cannibalizing it’s aspirin drug leadership it failed to introduce its non-aspirin drug Panadol. Failure led to its acquisition by Kodak.Three great fears:

Cultural lock-in inability to change corporate culture even in the face of obvious threats e.g For half a century Bayer drove the growth of Sterling Drug until J&J introduced Tylenol. Out of fear of cannibalizing it’s aspirin drug leadership it failed to introduce its non-aspirin drug Panadol. Failure led to its acquisition by Kodak.Three great fears:

Dominant design :By definition, the design that wins the allegiance of the majority of the marketplace. It’s a satisficer. When a new product comes to market, the characteristics of innovation are molded by forces of competition, invention and customer use until they crystallize into a product with a certain standard form, set of features and technical capability.

A dominant design embodies the requirements of many classes of users though not optimizing any. They become what the product is. Nobody sells a PC on the strength of the fact that it has a DISK! British built tramways from carriage jigs and they colonized the US. The jig size came from the Romans who built most major roads. Wheel spacing came from a roman chariot which was the width of two horses. Think of Intel -the entire memory market all but 31 computer manufacturers in 1970 was concentrating on core. 7 including Intel AT&T and IBM were looking at semiconductor memory. Most were startups. Monitoring new firm formation a guide?

Edison’s first lamps were made by hand/. Generally as the rate of product innovation decreases the rate of process innovation increases. The number of steps used in making an electric light bulb went from 200->30 between 1880 and 1920. There are parallels here in the formation of innovative/entrepreneurial firms. Loose organic structures give way to formal controls and often the original entrepreneur leaves Jobs at Apple, Noyce at Fairchild. Shift in the basis of competition from performance and technological considerations to price and cost considerations

•By 1885 four new competitors breaking Remington’s monopoly. •Underwood Model 5 in 1899 See what you were typing -had a tabulator •By 1940 there were only 5 firms of any standing left in the market : Royal, Underwood, Remington, Smith (20% share each) and IBM with 10%

From 1894 to 1918 60 firms entered,. Peaked at 75 firms in 1923. In the next two years nearly 1/3rd of the industry 23 firms left.

Markets tend to grow around these innovations. In the early stages it’s not clear who the target is or what products will best serve their interests. In the early stages R&D is diffuse, firms have no idea where to put their bets. It’s fluid process innovation takes a back seat to product innovation. 10 years ago the market hardly existed. Now more than half the phones worldwide are mobile.. In Nordic countries 10 cellulars being added for each ground line.Make money two ways: cellular nets and access to ground nets. Cell technology originally implemented in 1984. A duopoly set up by the FCC in 734 markets. One to local line carrier, other auctioned. Cellular companies are each granted 25 Mhz of the spectral division in the 800-900 MHz region, each split between the two directions of communications. Typical analog systems such as AMPS employ FDMA schemes that divide the spectral allocations into uniform frequency channels in the range of 25-30 kHz wide. Applying simple algebra shows the approximate number of channels to be around 416. This number, although appearing somewhat large, is rather small with respect to data communications. The GSM (Global System for Mobile Communications) system, which was launched as the European digital cellular standard in 1992, continues to spread rapidly and currently has over 25 million subscribers (as of the end of 1996). It makes available a range of attractive services such as data communications and messaging which continue to enhance its popularity.

Interesting quirk her,. The people who develop the first product and those that develop the broad based application are not necessarily the same people. Ampex: In the 1950s before anyone had succeeded in inventing a popular VTR RCA and Ampex in the US and Toshiba in Japan were developing it. Ampex was first and took the broadcasting market by storm. JVC Sony and Matshuishta sustained technical effort until the mass market emerged in 1975. Sony introduced the Betamax in 1975. JVC introduced VHS in 1976. By 1977 seven other Japanese firms were making VCRs under license By mid 80s 30 million units annually.

Several times in the century of automotive history, materials revolutions have triggered major shifts in design and manufacturing, such as vanadium steel in the Ford Models N and T in 1907-08 or steel to replace wood autobodies in the 1920s. The next such shift, from metals to sophisticated synthetics, has already transformed the boatbuilding and aerospace industries. Cars next The automotive industry and associated sectors represent directly and indirectly about one-tenth of U.S. employment and consumer spending, and one-seventh of GNP. Cars now use about 70% of the United States' lead, 60% of its rubber, carpeting, and malleable iron, 40% of its platinum and machine tools, 34% of its total iron, ~20% of its aluminum, zinc, glass, and semiconductors, 14% of its steel, 10% of its copper, and 3% of its plastics. Americans alone buying a new 1.4-tonne car about every two seconds. The extremely high-quality, -strength, and -cost class of carbon fiber used in special aerospace applications (typically "aerospace-grade prepreg") would not be used in cars: it requires manufacturing methods wholly inappropriate for high volume and low cost, and the sort of fiber used in, say, rockets is so strong that it is probably too brittle to work well in autobodies. Intermediate-stiffness structural carbon in a wide range of formats is both far cheaper and better suited to autobodies' needs. •Carbon-fiber is dropping by 30% with each cumulative doubling of production. The carbon fiber suitable for cars costs 97% less in real terms today than aerospace-grade fiber (then the only kind available) cost in 1968. Structural carbon's real price fell by more than one-third just in the past three years. In early 1996, published bulk "creel" (giant spool) prices for 48k-tow structural carbon fiber reached $18/kg ($8/lb); moreover, a major manufacturer, based on its established technology and production plans, published plausible plans to sell for $7/lb or less by the end of 1997 and for only $11/kg ($5/lb) in 2000, both in current dollars. This would require no breakthroughs, but only the next stage of a rather well understood process for changing carbon-fiber production from a boutique into a commodity business--just as glass fiber, whose production volume is now two orders of magnitude larger, did decades ago.

We saw in the video game industry that it was done by running a loss leader on the hardware and money made on the software

By the time we went to electricity came down to GE, Westinghouse and Philips.