Page 133 - ENTREPRENEURSHIP Innovation and entrepreneurship

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126 THE PRACTICE OF INNOVATION

One major reason for this is the need to plow more and more
money back into research, technical development, and technical serv-
ices to stay in the race. High tech does indeed have to run faster and
faster in order to stand still.
This is, of course, part of its fascination. But it also means that
when the shakeout comes, very few businesses in the industry have
the financial resources to outlast even a short storm. This is the rea-
son why high-tech ventures need financial foresight even more than
other new ventures, but also the reason why financial foresight is even
scarcer among high-tech new ventures than it is among new ventures
in general.
There is only one prescription for survival during the shakeout:
entrepreneurial management (described in Chapters 12–15). What
distinguished Deutsche Bank from the other “hot” financial institu-
tions of its time was that Georg Siemens thought through and built the
world’s first top management team. What distinguished DuPont from
Allied Chemical was that DuPont in the early twenties created the
world’s first systematic organization structure, the world’s first long-
range planning, and the world’s first system of management informa-
tion and control. Allied Chemical, by contrast, was run arbitrarily by
one brilliant egomaniac. But this is not the whole story. Most of the
large companies that failed to survive the more recent computer
shakeout—G.E. and Siemens, for instance—are usually considered to
have first-rate management. And the Ford Motor Company survived,
though only by the skin of its teeth, even though it was grotesquely
mismanaged during the shakeout years.
Entrepreneurial management is thus probably a precondition of
survival, but not a guarantee thereof. And at the time of the shakeout,
only insiders (and perhaps not even they) can really know whether a
knowledge-based innovator that has grown rapidly for a few boom
years is well managed, as DuPont was, or basically unmanaged, as
Allied Chemical was. By the time we do know, it is likely to be too
late.

THE RECEPTIVITY GAMBLE

To be successful, a knowledge-based innovation has to be “ripe”;
there has to be receptivity to it. This risk is inherent in knowledge based
innovation and is indeed a function of its unique power. All other