How Can Start Ups Grow?

HBS Working Knowledge writes:

Assistant professor Mukti Khaire believes that small companies can grow by developing intangible social resources such as legitimacy, status, and reputation. In an interesting twist, her research on this insight is that these intangible resources may be best acquired by following a road of conformity in how your company is organized and presented to the outside world. Conventional business titles such as Marketing Director are much better than Chief Evangelist. Organizationally, a hierarchical structure will be much better understood and accepted by outsiders than a flat, decentralized decision-making structure.

These social resources are acquired by mimicking the structures and activities of established firms, and by affiliating with high-status customers respectively, she wrote in the abstract to her recent paper, Great Oaks from Little Acorns Grow: Strategies for New Venture Growth.

TECH TALK: Peter Drucker: Managements Newton: Peter Drucker: Managements Newton: Profile

The Wikipedia entry for Peter Drucker gives a brief profile of his life: Peter Ferdinand Drucker (November 19, 1909 November 11, 2005) was a management theorist who created many phrases common in business today. Drucker, born in Vienna, Austria, fled from the Nazis to the United States in 1937. In 1943, he became a naturalized citizen of the United States. He taught at New York University as Professor of Management from 1950 to 1971. From 1971 to his death he was the Clarke Professor of Social Science and Management at Claremont Graduate University. He wrote thirty nine books, the first in 1939, and from 1975 to 1995 was an editorial columnist for The Wall Street Journal, and was a frequent contributor to Harvard Business Review. He continued to act as a consultant to businesses and non-profit organizations when he was in his nineties.

The Economist wrote:

Mr Drucker was born in 1909 in the Austrian upper middle classhis father was a government officialand educated in Vienna and Germany. He earned a doctorate in international and public law from Frankfurt university in 1931. In normal times this would have led to a distinguished, if predictable, academic career. But those were not normal timesand Mr Drucker was not a man to bow down to the confines of academic disciplines. He spent his 20s trying to avoid Adolf Hitler and drifting among a number of jobs, including banking, consultancy, academic law and journalism (his journalistic career included a spell as the acting editor of a women’s page).

Along the way, he became increasingly convinced that the best hope for saving civilisation from barbarism lay in the humdrum science of management. He was too sensitive to the thinness of the crust of civilisation to share the classic liberal faith in the market, but too clear-sighted to embrace the growing fashion for big-government solutions. The man in the grey-flannel suit held out more hope for mankind than either the hidden hand or the gentleman in Whitehall.

He finally found a home in American academia, teaching politics, philosophy and economics.

The Telegraph wrote:

An Austrian-born exile from Nazi Germany, Drucker made his name as the first modern management guru as a result of a groundbreaking study of the structures and practices of General Motors, which he embarked upon in 1943.
The resulting Concept of the Corporation (1946) looked at a large manufacturing company for the first time as a living social organism; and although GM tried to ban its executives from reading it, the book became an international bestseller.

It argued for treating workers as valued team members, rather than as mere assembly-line fodder, and developed the idea of management as a specialised skill, the aim of which is to make people capable of joint performance, like players in an orchestra under the baton of a conductor, but each responsible for his or her own instrumental part. This was the core of Drucker’s life’s work.

Tomorrow: Work

Continue reading TECH TALK: Peter Drucker: Managements Newton: Peter Drucker: Managements Newton: Profile

Microformats

Jeff Jarvis writes in the context of Google Base:

Imagine if you could go to a page that lets you put in your resume or house ad or job ad and it spits out tagged XML you could put on the web anywhere to be found by anyone.

Or imagine putting tags on restaurant reviews you post on your blog so anyone could aggregate or search for, say, all the cuisine=mexican restaurants in location=chicago. Well, you dont really have to imagine that. If you agreed on the tags, you could start doing that today via Del.icio.us and Technorati.

And imagine if you could go to Google or other services e.g., Indeed and SimplyHired for jobs or Baristanet for three Jersey towns and see the tags they use so you can swarm around those tags and find and be found. Thats the openness we need.

Content and Attention

Michael Parekh writes:

There’s no eBay like marketplace where content can find it’s own value as stocks do in the stock markets.

Sure, there are auctions on used books, music and videos and that tells you something, but it’s not a front and central price signaling marketplace. And there are always the consumer reviews and rankings at Amazon that give you some sense of what a piece of content might be worth.

And now of course, we have tags, be they from Del.icio.us and others, that allow folks to publicly display their favorite and not-so-favorite lists of content for all to see.

But there’s no online site that gives you a sense of what a piece of content is worth from a consumer point of view..

But there will be.

They may incorporate deeper implementations of Web 2.0 technologies like tags and RSS streams and the like, but at some point a marketplace will develop.

That would be the “Dream” scenario from a consumer perspective to counter the “dreams” of the music and content industries that Joel cites.

After all, Content ultimately seeks Attention, and Attention ultimately prices Content.

Single Chip for Cellphone

WSJ writes:

n their unending drive to pack more circuits into a smaller space, semiconductor makers have reached a new milestone: cramming the key parts of a cellphone onto a single chip.

This squeeze play is making mobile phones cheaper and smaller. It suggests that the under-$40 market, now driving the handset industry’s expansion in India and Africa, could prove profitable for cellphone makers as well as appealing to consumers. Cellphone makers see great promise in the developing world, with Nokia Corp. dubbing the opportunity as the “next billion” users.

Executives recently toured Asian cellphone manufacturers with working prototypes of phones that used the chip and just 58 other components packed onto a circuit board about one inch square. By contrast, one of Motorola’s low-priced mobile phones, using the older four main chips, has 245 components.

The VC’s Customer

Fred Wilson writes:

Many of the people I know in the venture capital business think their customers are their investors, called LPs in the industry vernacular. I’ve always thought that was dead wrong.

The entrepreneur is the customer and the LP is the shareholder. That’s the only way to think about the venture capital business that makes sense to me.

Entrepreneurs are really difficult customers to serve well. It takes a significant investment of time, energy, money, and intellect to satisfy them. But if you do it well, you will develop a reputation for great customer service that will keep the best ones lined up at your door.

TECH TALK: Peter Drucker: Managements Newton: Peter Drucker: Managements Newton: Tributes

I become aware of Peter Drucker quite late in life. For the most part of the first half of my entrepreneurial life, management came by walking around and doing the necessary firefighting to prevent things going out of control. When I started reading Druckers writings for the first time somewhere around 2000-1, I was fascinated by both their simplicity and depth. Since then, Ive tried to read and imbibe the spirit of what Drucker has written. The first principles thinking that Drucker brings seems so obvious in hindsight. Just like it required an Isaac Newton to discover the laws of mechanics, it needed a Peter Drucker to do the same for management.)

In the wake of Druckers death recently, most business publications have discussed his life and writings in great detail. In this weeks Tech Talk, I have attempted to compile together what theyve had to say along with excerpts of Druckers writings.

Steve Forbes wrote in a tribute in the Wall Street Journal:

Mr. Drucker’s genius for extraordinarily farsighted insights came from a combination of intense curiosity, right principles and deep understanding of the perfections and imperfections of human nature. He never went stale intellectually, which is why business journalists, executives, entrepreneurs, leaders of nonprofit institutions, students and the occasionally wise politician eagerly sought to pick his brains right up to the time he died.

What helped make Mr. Drucker so insightful was a profound understanding of economics, an understanding that still eludes most economists today. Not for him was the notion of “macroeconomics,” of seeing the economy as something of a machine that can achieve steady, stable growth. To him, traditional economic notions of “equilibrium” or Keynesian ideas of “aggregate demand” were nonsense. Innovation, constant change, and turmoil were the true constants of a progressing economy.

Geoffrey Colvin wrote in Fortune:

Drucker simply didnt care about the conventional view on any management topic, since he had thought them all through and knew where he stood. Yet I was still surprised by the vehemence with which he disdained the modern vogue for exalting leadership, as distinct from paltry old management. It infuriated him, though he was too polite to say so unless you asked him about it, which I did. His reasoning was extremely simple: The three greatest leaders of the 20th century were Hitler, Stalin, and Mao. If thats leadership, I want no part of it.

There were many things Drucker wanted no part of. Big universities, for instance. He scorned them all to remain at tiny Claremont Collegepayback, perhaps, for the scorn theyd heaped on him early in his career. Economists dismissed his work as cheap sociology. Sociologists had no use for business. And Drucker was dismissive of them all. No economists were interested in organizations, he explained in a 2001 interview with my colleague, Jerry Useem. The field was based on the asinine assumption that organizations act like individuals. They dont. Here, Drucker had sensed a huge opportunity. Like any great entrepreneursomebody who creates something new, as he once defined the termhe was raiding these older disciplines to create one that didnt yet exist. Physics sprang from Newton, economics from Adam Smith. And Peter Drucker became the undisputed father of managementthe discipline devoted to the study of organizations.

Tomorrow: Profile

Attention and Appreciation

Dave Pollard writes in the context of cultural anthropolgy:

I think what most of us want, male and female, human and other, is attention and appreciation. Everything else is derivative of those two things.

It’s really all about attention, and paying attention. The attention we pay to others, and that others pay to us, defines us, far more than our appearance or our name. And how can we appreciate what someone (a life partner, a business partner, a customer, an employee, a friend, a foe) is about and has to offer unless and until we pay attention to her, really listen and observe with (as much as is humanly possible) no judgement, no personal filters or frames impeding. And once weve paid enough attention that we really understand that person (or for that matter, that creature of any species), how can we not appreciate her?

Things are the way they are for a reason. Watch, listen, observe, pay attention, and you will know that reason. Most genius, most innovation, most emotion, I am convinced, stems from this ‘first-hand’ knowledge.

This is the skill, more than any other, that I need to learn.

Solar Energy

WSJ writes:

Ambitious plans to cover two big swaths of California desert with solar dishes could finally help the energy-producing technology make the leap to industrial-scale development.

Stirling Energy Systems Inc., of Phoenix, hopes to construct 20,000 solar dishes covering four square miles of the Mohave Desert near Victorville, Calif., each dish pointing skyward to collect the sun’s energy and convert it into electricity that would flow 80 miles south to power-hungry Los Angeles. The solar encampment, if eventually built, could produce 500 megawatts of electricity, enough to meet the daytime needs of 300,000 homes, doubling the state’s solar capacity. The project cleared a hurdle last month when state regulators approved a 20-year power-purchase agreement between Stirling and Southern California Edison, a unit of Edison International.

A second project, involving Stirling and San Diego Gas & Electric Co., a unit of Sempra Energy, awaits approval. It calls for the purchase of 300 megawatts of solar power from a Stirling project in the Imperial Valley, east of San Diego, with an option to expand to as much as 900 megawatts — the equivalent of two big gas-fired power plants.