1. See D. Mock, “The Qualcomm Equation: How a Fledgling Telecom Company Forged a New Path to Big Profits and Market Dominance” (New York: Amacom, 2005) for a very helpful, in-depth study of the company. Mock had access to key leaders in the company, including those who were there at the beginning and have since retired.
2. A very recent book — G.P. Pisano, “Science Business: The Promise, the Reality, and the Future of Biotech” (Boston: Harvard Business School Press, 2006) — shows that the biotechnology industry in which Genzyme participates has had very few companies that could make a profit. Genzyme is one of only three companies (the others being Amgen Inc. of Thousand Oaks, California, and Genentech Inc. of San Francisco) out of more than 100 biotech firms that have demonstrated the ability to sustain profits in this treacherously difficult industry.
3. The story behindChicago originated with Maurine Dallas Watkins, a Chicago-based journalist who covered the crime beat in that city when the murder of Walter Law occurred. Watkins reported the subsequent trial and afterwards she wrote a play,Chicago, about those events. The play was performed on Broadway in 1926 and made into a silent movie in 1927. It was revived by Bob Fosse in 1975 and revived again by Harvey Weinstein in 1997. The 2002 movie version ofChicago won six Academy Awards. Sources: Wikipedia, http://en.wikipedia.org/wiki/Maurine_Dallas_Watkins (last accessed April 26, 2006) and interview with Richard Kromka, Silicon Ventures investor event, Santa Clara, California, March 16, 2004.
4. The ideas in this paragraph are inspired by D. Teece, G. Pisano and A. Shuen, “Dynamic Capabilities and Strategic Management,” Strategic Management Journal 18, no. 7 (1997): 509–533. This article is both a critique of academic scholarship into business strategy and a presentation of a concept calleddynamic capabilities that describes how firms adapt their strategies to changing markets and technologies.
5. A. Arora, A. Fosfuri and A. Gambardella, “Markets for Technology: The Economics of Innovation and Corporate Strategy” (Cambridge, Massachusetts: MIT Press, 2001).
6. L. Huston and N. Sakkab, “Connect and Develop: Inside Procter & Gamble’s New Model for Innovation,” Harvard Business Review 84, no. 3 (March 2006): 58–66. This article provides an in-depth look at P&G’s innovation process, with some tantalizing anecdotal evidence of business results.
7. Gerstner’s own account of his years at IBM can be found in L.V. Gerstner, Jr., “Who Says Elephants Can’t Dance?: Inside IBM’s Historic Turnaround” (New York: HarperCollins, 2002).
8. Interview with Joel Cawley, IBM vice president of corporate strategy, at his office in Armonk, New York, on October 7, 2005.
10. Larry Huston’s remarks were made in a talk he delivered at the Mack Technology Center at The Wharton School, the University of Pennsylvania, on May 14, 2004.
11. Collins’ quote and the information on nanotechnology at Air Products are taken from J. Teresko, “From Confusion to Action,” Industry Week (Sept. 1, 2005) available at www.industryweek.com/ArticleID=10650.
12. Other people at Procter & Gamble who deserve credit for this insight include Nabil Sakkab, who preceded Gil Cloyd as P&G’s CTO, and Durk Jager, who preceded A.G. Lafley as CEO.
13. It is ironic but true that companies blessed with significant internal R&D capabilities that routinely conduct tremendously complex experiments running into many millions of dollars have little or no capability of conducting even simple experiments on the business model that supports that internal R&D. A great introduction to these issues is contained in S.H. Thomke, “Experimentation Matters: Unlocking the Potential of New Technologies for Innovation” (Boston: Harvard Business School Press, 2003). If companies became more capable of experimentation with their business models on a routine basis, there would be less need for a crisis to trigger the experiments that companies like IBM or P&G made.
14. Although both Ford and General Motors have been creative in developing sales incentives (such as employee pricing, zero-percent financing, Keep America Rolling and so on) or long-term research projects (including hydrogen vehicles), neither company seems to be any stronger relative to its competitors, even after many years of cost-cutting. The companies’ market shares have declined dramatically, and Toyota is poised to become the largest automotive company in the world in 2008. There was a reprieve during the 1990s, thanks to the innovations of the sport utility vehicle and the minivan, which temporarily boosted United States manufacturers’ margins and sales. But these innovations were soon copied, and the underlying weaknesses of the United States auto industry were again exposed. As of this writing, it is likely that the financial condition of these mainstays of United States industrial strength will weaken much further before any lasting improvement is made.