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links for 2008-10-28 October 28, 2008

Posted by arikjohnson in Uncategorized.
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  • "The infield was tough. The ball would do funny things," Phillies second baseman Chase Utley said. "It was in bad shape. It was not playable."
    (tags: sports)
  • Capital is the reward the market gives to good designs. Interestingly, though, the nature of capital changes over the course of a company’s lifecycle. Early on, a company’s capital is tied up in cash and the visions of its founders—but later, capital can be equated with what some economists have termed “know-how.” In classical economics, the necessary economic inputs for production are land, labor, and capital, but know-how—the sum total of an organization’s ideas, plans, and production capabilities—eventually replaces all of them as the economic driver in a modern company. A big part of know-how is derived from customers. Having bought and used a product or service, the customer develops not just an understanding of that offering but, more important, the know-how for what its next iteration ought to be. To capture and leverage know-how, companies must find better ways to understand what their customers know.
  • Think of it in evolutionary terms. Innovation is really a form of competition. Why do companies innovate? They innovate for only one reason: to outperform their peers, to create something that their peers don’t have from which they can gain economic benefits. And because innovation is a form of competition, it’s subject to the laws of evolution. If you look at the CPG sector from the macro perspective, what you’ll see is lots of companies introducing lots of new innovations, and it will look like many random events. Those that really meet consumer expectations or change consumer expectations survive — those that don’t, die. Ultimately, the environment chooses which products work and which don’t.
  • Management fashion is full of stark choices: Centralize or decentralize? Global or local? Cost or growth? There’s a long-standing proverb in the system dynamics field: “You can have everything you want, but not all at once.” In the 1990s, many consumer products companies decided that they would give up growth in order to have the security of lower expenses. Now they are riding the pendulum back to growth. But in the end, those who succeed in growing their company will do so with all their frugality intact. With an organization design in place that balances the roles of the core, the business units, and the functional infrastructure, they should be able to have it all.
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