Innovate or perish: A cautionary tale

Post war business has seen the emergence of a number of conglomerates that showed impressive growth in their early days. Recently, however, several of these conglomerates have entered into serious difficulties, sometimes resulting in complete company collapse. Of course many factors will have featured in these dramatic events, but it is felt that the neglect of innovation and a preoccupation with financial data may have been predominant in certain cases.In this paper a hypothetical conglomerate is constructed and the (fictitious) history is described which brought this conglomerate to the verge of collapse. The question posed is whether a sound rescue operation for the conglomerate in question is possible, and this question is answered in the affirmative. The strategy for this operation (apart from obvious short term measures) centres around a long term product innovation program. It is shown that if such a program is stringently adhered to a healthy company may emerge in the end, but the operation takes quite a long time (from 5 to 10 years) and the first 4 years of the program will be very difficult indeed. The necessary change in strategy is a very fundamental one and amongst the major problems in its execution will be finding an able top executive capable of managing such a long-term innovative program. The financing of such a program will require the utmost restraint on the part of the company with regard to its other expenditures and a suggestion is made to help solve this facet of the problem. The difficulties to be overcome will be tremendous, but success does seem possible. After all, there is hardly any alternative for the conglomerate that has to make an ultimate decision: innovate or perish.