Entrepreneurs in High Technology: Lessons from MIT and Beyond

By Edward B. Roberts | Go to book overview

Strategic Conclusions

Companies that historically show product strategic focus perform substantially better over extended periods than companies that implement multiple technologies and/or seek market diversity. A quick telephone follow- up with the sampled firms shows that this hypothesis is still on target. The ten top companies in terms of product focus have an average product- related sales level of approximately $56 million. This contrasts sharply with the bottom ten companies, again ranked in terms of product focus, whose average sales are approximately $3 million. The research demonstrates that managing wide-scale product diversity is, at the least, a most difficult endeavor for the small- or medium-sized technology-based company. Conceivably, larger firms or less technology-dependent ones might be better able to handle greater product-line diversity, although the strategic advice of "stick to your knitting" ( Peters and Waterman, 1982) and earlier studies of diversification ( Rumelt, 1974) and acquisition strategy ( Ravenscraft and Scherer, 1987) also generally support the importance of focus for large companies.

The data do evidence, however, an "inside limit" to the strategic focus concept. Not surprisingly, companies that show a total lack of technological aggressiveness, undertaking only minor improvements to their core technology, do not perform as well as companies that over time make major enhancements to their core capabilities. This is true also in regard to better performance being achieved by firms that seek market expansion through steady introductions of new functionality, moving toward related customer groups, and adding distribution channels to exploit fully the available marketplace.


Notes
1.
The mathematical formulae used for calculating the three focus measures are shown here, as calculated for each company. First, the focal point for each dimension and their combination are calculated. Next, the variance for each dimension and their combination are computed. Finally, the overall strategic focus index are determined for each dimension and for their combination.

Focal Point Variance

-306-

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Entrepreneurs in High Technology: Lessons from MIT and Beyond
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Acknowledgments ix
  • Contents xi
  • Chapter 1 High-Technology Entrepreneurs 3
  • References 30
  • Chapter 2 an Environment for Entrepreneurs 31
  • References 45
  • Chapter 3 the Makings of an Entrepreneur 47
  • Summary and Implications 94
  • Notes 96
  • References 97
  • Chapter 4 the Technological Base of the New Enterprise 100
  • Summary and Implications 121
  • References 123
  • Chapter 5 the Financial Base of the New Enterprise 124
  • Summary and Implications 156
  • Chapter 6 Evolving Toward Product and Market-Orientation 160
  • Notes 186
  • References 186
  • Chapter 7 Finding Additional Financing 188
  • References 215
  • Chapter 8 Going Public 217
  • Summary and Implications: Sizzle or Steak 242
  • References 244
  • Chapter 9 Survival Versus Success 245
  • Chapter 10 Product Strategy and Corporate Success 281
  • Notes 306
  • References 308
  • Chapter 11 Super-Success 309
  • Notes 336
  • References 338
  • Chapter 12 Technological Entrepreneurship: Birth, Growth, and Success 339
  • References 358
  • Appendix a Quarter Century of Research 359
  • References 375
  • Index of Founders and Firms 377
  • Subject Index 381
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