INNOVATION. "SCHUMPETERIAN" CASES, ETC.
. Thomas K. McCraw. Prophet of Innovation. Joseph Schumpeter and Creative Destruction. Harvard University Press, 2007 [web] [prologue]

The most recent book on Joseph Schumpeter is the 2007 volume by Thomas McCraw. I've written a review, but sadly it's in ... Spanish! The rest of the post presents some documents that cover different aspects of Schumpeterian economics!

Document # 1
. Windows as a monopoly (*)

OneStat.com, today reported that Microsoft's Windows operating system has a global usage share of 97.46 percent. Microsoft's Windows still dominates the global operating system market. The global usage share of for Apple's Macintosh operating system is 1.43 percent and is the second most popular operating system in the world. The three most popular operating systems according to OneStat are: 1. Windows 97.46%, 2. Macintosh 1.43%, 3. Linux 0.26%.

(*) osnews.com, September 9, 2002
http://www.osnews.com/story.php?news_id=1706
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Document # 2
. Google is “after everything”! (*)

Google is after everything. Think $600bn (€ 500bn) or so: the size of the entire global advertising industry, across all media, from the signs in the subway carriages in Beijing to the help-wanted adverts at the back of your local paper. Sooner or later, Google aims to be in every nook and cranny ― if the adverts you see are not brought to you directly by Google, it will at least have a big hand in the process.

(*) Richard Waters. “Complete world domination beckons to King Google”, Financial Times, March 6, 2006.
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Document # 3
The size of the market for ED products (*)

Heavy advertising to consumers, totaling more than $400 million in 2004, has made Viagra and its newer competitors, Cialis and Levitra, among the best-known drug brands in the United States, and their combined global sales reached about $2.5 billion last year.

(*) Alex Berenson: “Sales of Impotence Drugs Fall, Defying Expectations”, New York Times, December 4, 2005.
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Document # 4
Dell Computer manages inventory in real time (*)

The inventory in a channel is determined by the variance in supply and the variance in demand. Unless these variances are reduced, channel inventory can only be moved around, not eliminated. Through its use of profitability management, Dell matched supply and demand on a daily, weekly, and monthly basis. It sharply reduced the variance, and the need for inventories simply disappeared. As inventory disappeared, the company's returns grew disproportionately. Not only did Dell avoid carrying costs and obsolete stock, but importantly, it was saving enormous amounts of money on purchasing components because the component prices were dropping 3 percent per month.

(*) Jonathan Byrnes. “Dell Manages Profitability, Not Inventory”, Harvard Business School Working Knowledge, June 2003.
http://hbswk.hbs.edu/item.jhtml?id=3497&t=dispatch
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Document # 5
Chart. The amazing “Inventory to Sales” ratio (*)

(*) Federal Reserve Bank of St. Louis’s FRED database.
http://research.stlouisfed.org/fred2/series/ISRATIO/1
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Document # 6
An ambitious South Korean cosmetics company (*)

Having revolutionized South Korea’s crowded cosmetics market, The Face Shop hopes to branch out into the US and Europe. The company, which reported sales of $162 million in 2005, is trying to replicate its success in overseas markets. Jung Woonho, the company’s president, opened the first Face Shop store in Seoul’s bustling Myongdong district at the end of 2003. Now, he has 400 franchised shops in Korea and 100 in 12 other countries. The Face Shop is already accelerating its push offshore, especially in Asia. The company aims to open 2,000 shops abroad in the next five years, and hopes eventually to derive 90% of its sales from overseas.

(*) Song Jung: “Face Shop to export Korean beauty”, Financial Times, April 7 2006
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Document # 7
Gas-to/Liquids Technology (*)

A novel way to create an ultra-clean fuel for cars that uses natural gas instead of oil is on the verge of rapid growth, analysts say, driven by soaring oil prices and a thirst for alternative fuels.
Oil companies are investing billions of dollars in the nascent technology, called “gas-to-liquids” or GTL, which can be used to produce quality diesel and a range of other products normally derived from crude. Frank Harris, an analyst at Wood Mackenzie, the Scotland-based international oil consultancy, believes the next 10 years will see more than $40bn invested in GTL plants.

(*) Thomas Catan. “Oil giants look to gas alternative. Billions invested in gas-to-liquids technology”, Financial Times, March 6, 2006.
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Document # 8
Innovation and the credit market: interest rate on Moody’s Baa 10-year corporate bonds (*)

End of Quarter Yield
October 1998: 6.95% - December 1998: 7.18% - March 1999: 7.61% - June 1999: 7.90% - September 1999: 8.22% - December 1999: 8.18% - March 2000: 8.35% - June 2000: 8.71%

(*) Source: Federal Reserve.
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Document # 9
Attitudes towards monopolies: Microsoft and the EU (*)

The European Union’s top antitrust regulator has warned Microsoft that the next version of its flagship Windows operating system, Vista, due out next year, may run foul of competition rules.
Neelie Kroes, the EU’s competition commissioner, wrote to Microsoft last week to express her concerns over plans to integrate an internet search facility and several other programmes into Vista. The Brussels regulator believes such moves may end up crushing providers of competing products, and violating a precedent set in the Commission’s landmark March 2004 decision ruling against Microsoft.

(*) Tobias Buck. “New Brussels warning to Microsoft”, Financial Times, March 30, 2006.
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Document # 10
Attitudes towards monopolies: Apple and the French parliament (*)

The French legislative chamber on March 21 passed a bill that would force Apple to make its downloads work on all digital music players and not just on the iconic iPod. Analysts said Apple would have to choose between sharing the secrets of the exclusive online music technology that has helped make it a market leader -- or, more likely, stop selling music downloads from the iTunes store in France. Supporters of the French legislation argue it will better protect the rights of musicians and other artists whose work is sold online. But Apple has condemned the French bill, which has yet to be passed by the upper house, as no more than "state-sponsored piracy". "If this happens, legal music sales will plummet just when legitimate alternatives to piracy are winning over customers," it said.

(*) Physorg.com: “US commerce chief backs Apple over French law”, March 24, 2006.
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Document # 11
Innovators: a touch of madness? (*)

Most innovations are introduced not by the regimented R&D of established corporations, but by scrappy new firms, twin-born with the invention itself. Willian Baumol, who has been laboring for years to create more space for entrepreneurship and innovation in economic theory, ventures that most breakthroughs arise this way ¾ the offspring of independent minds not incumbent companies …

Revolution is a risky endeavor. Of 1,091 Canadian inventions surveyed in 2003 by Thomas Astebro, of the University of Toronto, only 75 reached the market. Six of them earned returns of 1,400%, but 45 lost money. A rational manager will balk at such odds. But the entrepreneur answers to his own dreams and demons. Mr. Baumol thinks a “touch of madness” is probably one of the chief qualifications for the job.

(*) The Economist. “Searching for the invisible man”, March 17, 2006.
http://www.economist.com/displaystory.cfm?story_id=E1_VGDTRJD
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Document # 12
Innovators: a bunch a maniacs? (*)

The typical traits of an entrepreneur:

• He is filled with energy.
• He is flooded with ideas.
• He is driven, restless, and unable to keep still.
• He channels his energy into the achievement of wildly grand ambitions.
• He often works on little sleep.
• He feels brilliant, special, chosen, perhaps even destined to change the world.
• He can be euphoric.
• He becomes easily irritated by minor obstacles.
• He is a risk taker.
• He overspends in both his business and personal life.
• He acts out sexually.
• He sometimes acts impulsively, with poor judgment, in ways that can have painful consequences.
• He is fast-talking.
• He is witty and gregarious.
• His confidence can make him charismatic and persuasive.
• He is also prone to making enemies and feels he is persecuted by those who do not accept his vision and mission.

(*) John Gartner. “America’s Manic Entrepreneurs”, The American Enterprise Online, 2005 http://www.taemag.com/issues/articleid.18583/article_detail.asp

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Document # 13
Steve Jobs (*)

Rocketed heavenwards by Toy Story, floated Pixar, became billionaire, rejoined Apple, took credit for predecessor's work, basked in glow, screwed up a bit, realised error of ways, saw potential of music, bought iTunes, produced iPod, survived cancer (so far), basked some more in new glow. Now sitting pretty on intriguing nexus of computers, animated films and digital music. Has ambitions to do something that will be the terror of all mankind, though none shall know what.

(*) Charles Arthur: “Steve Jobs: smoke and mirrors or iCon?”, The Register, May 2005.
http://www.theregister.co.uk/2005/05/20/jobs_biography/
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Document # 14
Technology, Talent and Tolerance (*)

Profesor Richard Florida’s research found has found an important link among three factors he calls the “Three Ts” ¾ Technology, Talent and Tolerance. Why this link? Because talented technology workers want to live in places where talented individuals feel immediately comfortable, find other creative people in many fields, and have the opportunity to make an immediate contribution ¾ places that value and welcome people of every kind.

(*) Memphis Talent Magnet Project. Technology, Talent and Tolerance: Attracting the Best and Brightest to Memphis, 2006.
http://www.colettaandcompany.com/public/talentmagnet/Final_TalentMagnetReportv4.pdf