[HN Gopher] Schumpeter on Strategy (2019)
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Schumpeter on Strategy (2019)
Author : Brajeshwar
Score : 34 points
Date : 2023-12-27 15:19 UTC (1 days ago)
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| 082349872349872 wrote:
| > _Those that make money, an entrepreneurial profit, do so by
| breaking the status quo. They innovate. They either get their
| inputs for less or they sell their outputs for more._
|
| A third possibility: they went all-in on a bet everyone else
| thought was bad, but happened to pay out.
| plastic-enjoyer wrote:
| But that only applies for a while, right? Today's big tech
| companies continue to make profits, but without great
| innovations. They are mostly iterations where the product is
| only marginally improved or even made worse.
| classified wrote:
| They went from product building to rent seeking.
| lo_zamoyski wrote:
| Product development is not synonymous with providing
| economic value.
| 082349872349872 wrote:
| TFA's notion of entrepreneurial returns is in contrast to the
| innovation-free profit rate
| baxtr wrote:
| How is this a third option? Input/output is exhaustive by
| definition.
|
| Your possibility sounds like the overarching theme of "breaking
| the status quo".
| 082349872349872 wrote:
| The system is not closed: due to the presence of lots of
| other peoples' money sloshing around, it is very possible for
| moonshot entrepreneurs to personally make substantially more
| than employees/lifestyle entrepreneurs, even (I'd hazard
| "especially") at times when their underlying business is
| losing money.
| aj7 wrote:
| "Most people start businesses simply because they don't like
| working for someone else."
|
| But they stay in business, long term, for the 'tax advantages.'
| By that, I mean the numerous ways to pass personal expenses off
| as business expenses.
| bionsystem wrote:
| Depending on the country this can be highly risky. In France
| accountants are very conservative as to what can pass as
| expenses.
| fritzo wrote:
| Confirmatory data point here.
| denton-scratch wrote:
| > 81% of founders have no desire to grow their business
|
| I think that's probably true. I think the bosses of most small
| businesses are scared of growing bigger than about 10-15
| employees, because they're terrified of delegating.
| hef19898 wrote:
| Not terrified, but maybe satisfied with running a stable 10-15
| people shop? There is no _need_ to grow each and every business
| into a unicorn.
| noneeeed wrote:
| I have friends who have done exactly this. They grew a small
| agency to about 15 people and are happy with it. They enjoy
| what they do, it's a nice place to work, they make plenty of
| money from it and have no desire to be rich.
| hef19898 wrote:
| The mist valuable thing money can buy you is time. If you
| make enough for a comfortable living, with a good work life
| balance and great people, _and_ your own gig, I would
| consider you very rich in deed!
| AlbertCory wrote:
| > terrified of delegating.
|
| this is an uncharitable description of a rational decision: "I
| don't want this to be a soulless corporation run by bean
| counters. I'd rather keep it as a family-run business for my
| kids."
| porompompero wrote:
| Schumpeter is great and systematically underrated. Another
| problem: his insights are often cherry-picked.
| Animats wrote:
| By him, or by others?
|
| The article says "Interestingly, these are the only strategies
| to create excess profit that Schumpeter's model allows." The
| article doesn't mention going into a business with strong
| network effects and establishing a de-facto monopoly. See
| Thiel's "Zero to One". Schumpeter was writing in an era when
| railroads were trying to do that. They hadn't quite succeeded;
| there were still many small railroads.
|
| The big change has been the development of businesses that
| scale really, really well, along with the management techniques
| to run them. The former is well known in Silicon Valley. The
| latter is less widely realized.
|
| Big companies used to have a huge administrative problem. There
| were giant corporate headquarters buildings full of people
| literally pushing paper. "The World is Run on Tracks of Printed
| Paper" - Moore Business Forms slogan. Railroads had trouble
| keeping track of their freight cars. Auto companies had trouble
| keeping track of where their cars were in transit. Plants had
| to be self-sufficient and carry big inventories. These problems
| got worse with scale, for combinatoric reasons.
|
| That was the real win of the era of mainframe computing. The
| problems of bureaucratic scale were gradually overcome. This
| removed old natural limits on the size of companies. At last,
| burger chains could be expanded to planetary scale.
|
| With the administrative problems out of the way, any industry
| which had marketing or supply based network effect began to
| tend towards a very small number of players. It took a while,
| but now we're there. Today, the US has two major drug store
| chains, two major hamburger chains, three big banks...
|
| Schumpeter didn't have examples that to look at. Railroads have
| a network effect, but that's because they _are_ a network, and
| they were regulated, or, in many counties, state-owned.
| Telephone, telegraph, and electric power companies were
| recognized as natural monopolies, so they were regulated
| utilities. Perhaps the closest example of his era was The Great
| Atlantic & Pacific Tea Company ("A&P"), once the largest
| grocery chain. They operated grocery stores from 1863 to 2015.
| But they were not strongly dominant in Schumpeter's day; that
| came a few decades later.
| petra wrote:
| I can accept that you need a competitive advantage to have above
| normal profits.
|
| But that does not mean innovation at VC scale.
|
| It's enough to be a good technician of some sort who'se good at
| relationship building and doing some successful marketing(a bit
| of luck helps) and slowly build a list of regular clients and
| with time you could make a lot of money, well above an hired
| technician.
| dang wrote:
| Related:
|
| _Schumpeter on Strategy (2019)_ -
| https://news.ycombinator.com/item?id=30840210 - March 2022 (9
| comments)
|
| _Schumpeter on Strategy_ -
| https://news.ycombinator.com/item?id=18958406 - Jan 2019 (4
| comments)
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