Keeping it under your hat

15. April 2016

Date: 14-04-2016
Source: The Economist: Schumpeter

An old management idea gets a new lease of life

APPLE and Tesla are two of the world’s most talked-about companies. They are also two of the most vertically integrated. Apple not only writes much of its own software, but designs its own chips and runs its own shops. Tesla makes 80% of its electric cars and sells them directly to its customers. It is also constructing a network of service stations and building the world’s biggest battery factory, in the Nevada desert.

A century ago this sort of vertical integration was the rule: companies integrated “backwards”, by buying sources for raw materials and suppliers, and “forwards”, by buying distributors. Standard Oil owned delivery wagons and refineries in addition to oil wells. Carnegie owned iron-ore deposits and rail carriages as well as blast furnaces. In his 1926 book “Today and Tomorrow” Henry Ford wrote that vertical integration was the key to his success: “If you want it done right, do it yourself.” He claimed he could extract ore in Minnesota from his own mines, ship it to his River Rouge facility in Detroit and have it sitting as a Model T in a Chicago driveway—in no more than 84 hours. Read the rest of this entry »

Advertisements

Here’s How Nike Became a Platform Business

11. April 2016

Date: 11-04-2016
Source: FORTUNE

It followed Apple’s lead.

Platform BusinessPlatform businesses are disrupting the traditional business landscape in a number of ways—not only by displacing some of the world’s biggest firms, but also by transforming familiar business processes like value creation and consumer behavior and altering the structure of major industries.

And if they hope to fight the forces of platform disruption, entrenched companies need to reevaluate their business models. They’ll need to scrutinize what they spend on marketing, sales, product delivery, and customer service and imagine how those costs might be reduced or eliminated in a more seamlessly connected world. They’ll need to examine the individuals and organizations they interact with, and envision new ways of networking them to create new forms of value.

Nike has proven to be one of the most intelligent incumbent companies seeking new ways to survive and thrive in the world of platforms. Some of the competitive steps they’ve taken may seem obvious. They aren’t.

Platform Revolution: How Networked Markets Are Transforming the Economy—And How to Make Them Work for You

Pipeline businesses like Nike have traditionally scaled in one of two ways. Some expand by vertical integration, owning and integrating a greater length of the value-creation-and-delivery pipeline—for example, buying upstream suppliers or downstream distributors. Others expand by widening the pipeline to push more value through it. When consumer goods companies grow by creating new products and brands, it’s an example of horizontal integration. Read the rest of this entry »


Why are ‘innovative’ tech companies still struggling with diversity?

11. April 2016

Date: 11-04-2016
Source: The Guardian

Technology might like to think of itself as the antithesis of the stuffy east coast old boys’ network, but really it’s just a reimagined, west coast version of it

Will the industry follow up on public actions with a prolonged commitment to redressing the bias that exists?

The more diverse we are, the better we are at making smarter decisions. So why, oh why, is what should be our most innovative industry – technology – also our most homogeneous?

For decades, the research has been demonstrating the advantages of diversity. It isn’t just that people from a variety of backgrounds bring different kinds of information and ways of thinking to the table, it’s the fact that when we have to deal with people who aren’t just like us, we ourselves do better: we do our homework more rigorously, we bolster our arguments more thoughtfully, we may prepare ourselves for a more lengthy process of reaching a conclusion.

You’d have thought the tech set, of all people, would have seen the data. But even when technology companies do recruit members of minority groups, they find themselves still at a disadvantage. Read the rest of this entry »