Page 131 - ENTREPRENEURSHIP Innovation and entrepreneurship

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124 THE PRACTICE OF INNOVATION

one “market” for any new knowledge-based industry, whether
computers or modern banking—the world market.
The number of knowledge-based innovators that will survive
when an industry matures and stabilizes is therefore no larger than it
has traditionally been. But largely because of the emergence of a
world market and of global communications, the number of entrants
during the “window” period has greatly increased. When the shake-
out comes, the casualty rate is therefore much higher than it used to
be. And the shakeout always comes; it is inevitable.

THE SHAKEOUT

The “shakeout” sets in as soon as the “window” closes. And the
majority of ventures started during the “window” period do not sur-
vive the shakeout, as has already been shown for such high-tech
industries of yesterday as railroads, electrical apparatus makers, and
automobiles. As these lines are being written, the shakeout has begun
among microprocessor, minicomputer, and personal computer com-
panies—only five or six years after the “window” opened. Today,
there are perhaps a hundred companies in the industry in the United
States alone. Ten years hence, by 1995, there are unlikely to be more
than a dozen left of any size or significance.
But which ones will survive, which ones will die, and which ones
will become permanently crippled—able neither to live nor to die—
is unpredictable. In fact, it is futile to speculate. Sheer size may
ensure survival. But it does not guarantee success in the shakeout,
otherwise Allied Chemical rather than DuPont would today be the
world’s biggest and most successful chemical company. In 1920,
when the “window” opened for the chemical industry in the United
States, Allied Chemical- looked invincible, if only because it had
obtained the German chemical patents which the U.S. government
had confiscated during World War I. Seven years later, after the
shakeout, Allied Chemical had become a weak also-ran. It has never
been able to regain momentum.
No one in 1949 could have predicted that IBM would emerge as the
computer giant, let alone that such big, experienced leaders as G.E. or
Siemens would fail completely. No one in 1910 or 1914 when automo-
bile stocks were the favorites of the New York Stock Exchange could
have predicted that General Motors and Ford would survive and prosper