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Thursday, June 13, 2002

History of the business giants

Good review of Alfred Chandler's book 'Inventing the Electronic Century: the epic story of the consumer electronics and computer industries'. It's on the Strategy & Business site run by Booz Allen Hamilton, which is free but requires registration.

Chandler is an 83-year old Professor at Harvard Business School, who has spent his entire career writing about the history of firms, mostly the large corporations that have come to dominate the modern world.

From the article:

'Success, Professor Chandler argues, comes to companies that cultivate an “integrated learning base,” as he calls it: the capabilities needed to lead in a particular business niche.

'An integrated learning base is not just core competence. Sony, for example, maintained the center of a network of Japanese production plants, testing laboratories, components developers, and suppliers “all within a three-hour train ride,” close enough to continually experiment and learn from each other.

'A company that masters its integrated learning base has an almost natural ability to monopolize its niche. To Professor Chandler, that explains why companies like IBM, McDonald’s, Procter & Gamble, Microsoft, and DuPont stay dominant for decades. “That base, for those who get there first, becomes the barrier to entry for competitors,” he says.'

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