Comments on: When you lose your monopoly, business has to change http://www.philiphodgetts.com/2007/12/12/when-you-lose-your-monopoly-business-has-to-change/ Philip Hodgetts' random thoughts and items of interest on where the industry is at, and where it might be going today and into the future. Wed, 20 Aug 2008 23:13:58 +0000 http://wordpress.org/?v=2.5 By: Philip http://www.philiphodgetts.com/2007/12/12/when-you-lose-your-monopoly-business-has-to-change/#comment-19152 Philip Sun, 16 Dec 2007 21:45:50 +0000 http://www.philiphodgetts.com/2007/12/12/when-you-lose-your-monopoly-business-has-to-change/#comment-19152 Great reminder from history James, and I agree there are really only two ways forward for entrenched monopolists, as you note. Philip Great reminder from history James, and I agree there are really only two ways forward for entrenched monopolists, as you note.

Philip

]]> By: James Gardiner http://www.philiphodgetts.com/2007/12/12/when-you-lose-your-monopoly-business-has-to-change/#comment-19128 James Gardiner Fri, 14 Dec 2007 01:33:42 +0000 http://www.philiphodgetts.com/2007/12/12/when-you-lose-your-monopoly-business-has-to-change/#comment-19128 So true Philip, and if I can add to this, in my experience the biggest problems with companies that have become comfortable with a monopolistic position, is the reluctance of upper management to concede to the fact that foundations of the company on which the monopolistic business is based on, are crumbling away. An example of this. Many years ago I founded the SGI user group here in Melbourne Australia. We would come together and go over the new technologies and possibilities that 3D would bring. And how the $250,000 reality engine systems of the day would become a big part of the computer and wider industries. After a number of meetings, SGI became very involved, sending engineers and management people to take part. While working with them, it became apparent that they considered SGI was "King of High End Computing". Many engineers stated they would never sale a system under $50,000. Our group voiced the opinion that 3D graphics has to go main stream. Dominance grows from below, not from the top. I.e. A graphics card for $100 in every computer was the future (Which it is now). Our ideas revolved around this fact. It was this ubiquity that enables 3D graphics to have an effect on everyone. SGI engineers and management where completely against this. This dismayed me and others in the group. The group basically lost interest and was no more. The internal culture went completely against the passion that was in the hearts and minds of the group members. SGI had the dominance of 3D handed to them, but to them it was beneath them. Then of course, a group of engineers left SGI and formed Nvidia. The monopolistic culture of SGI held fast and, as we all know, it eventually went down chapter 11. Taking a lot of people’s money with them. Apart from the upper managements opinion that they where the aristocracy. This is one of many lesions I have learned about monopolistic practices and how the industry deals with them. One of the hardest areas for a monopolistic company is changing the culture of upper management. Two common methods exist. 1. Fire all upper management and start a fresh. (Usually very hard as they usually have large ownership.) 2. Purchase embryonic companies with new minds and culture suitable for the future of that industry. Then get it ready to replace the Old. (Philip, you’re so in tune with this one.. hehe) James So true Philip,
and if I can add to this, in my experience the biggest problems with companies that have become comfortable with a monopolistic position, is the reluctance of upper management to concede to the fact that foundations of the company on which the monopolistic business is based on, are crumbling away.

An example of this.
Many years ago I founded the SGI user group here in Melbourne Australia. We would come together and go over the new technologies and possibilities that 3D would bring. And how the $250,000 reality engine systems of the day would become a big part of the computer and wider industries.

After a number of meetings, SGI became very involved, sending engineers and management people to take part.

While working with them, it became apparent that they considered SGI was “King of High End Computing”. Many engineers stated they would never sale a system under $50,000.
Our group voiced the opinion that 3D graphics has to go main stream. Dominance grows from below, not from the top. I.e. A graphics card for $100 in every computer was the future (Which it is now). Our ideas revolved around this fact. It was this ubiquity that enables 3D graphics to have an effect on everyone.

SGI engineers and management where completely against this. This dismayed me and others in the group. The group basically lost interest and was no more. The internal culture went completely against the passion that was in the hearts and minds of the group members.

SGI had the dominance of 3D handed to them, but to them it was beneath them.

Then of course, a group of engineers left SGI and formed Nvidia.

The monopolistic culture of SGI held fast and, as we all know, it eventually went down chapter 11. Taking a lot of people’s money with them. Apart from the upper managements opinion that they where the aristocracy.

This is one of many lesions I have learned about monopolistic practices and how the industry deals with them. One of the hardest areas for a monopolistic company is changing the culture of upper management.

Two common methods exist.
1. Fire all upper management and start a fresh. (Usually very hard as they usually have large ownership.)
2. Purchase embryonic companies with new minds and culture suitable for the future of that industry. Then get it ready to replace the Old. (Philip, you’re so in tune with this one.. hehe)

James

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