Stealth, Innovation, and Strategy: Becoming a Monopoly

We see Mr. Hosokawa in chapter 10 making his trip up to Roxanne each evening. It says that he is invisible, stealthy, and has a strategy when he maneuvers his way through the house completely unseen. That is the essence of why he is successful, and doesn’t ever get caught by anyone. Even those who see him don’t really see what he is doing. Could this tactic be used within business? Could a business slide under the radar, be a little secretive about what they’re doing, and in return become extremely successful?

The Co-Founder of Paypal, Peter Thiel talks about this in one of his books, Zero to One. He shows how he and his partner, Elon Muskwere able to take their company silently to the top which then created a massive disturbance in the environment they were doing business in. If you are able to be quiet while creating a start-up, and the product/service  is something that can disturb the marketplace, then you will create what he refers to as a monopoly. A monopoly in business terms is a company that has exclusive control of some area within a particular marketplace (sometimes it can be complete control of the entire industry). Once they establish this control they have extremely high power that allows them to manipulate prices, and completely change that industry (Nader and Taylor).

How is this practically done though? How are companies able to go quietly through the marketplace and then reach their end goal just as Mr. Hosokawa did?  Strategy is extremely important. Mr. Hosokawa had a strategy as he walked through the house, he didn’t blindly sprint through the house and hope for the best. No, he made strategic maneuvers that allowed him to go undetected for as long as he wanted to.  It’s the same with businesses, strategic maneuvering allows us to make our way through all the other businesses right to the top and become a monopoly. Making the right moves and counter moves that will align us for success in the future is what makes a business a powerhouse. You can’t be a conventional business, always on the offense, or always on the defense, you have to go against the grain to be set apart and that is what creates present day monopolies (Webster). Going against the grain means innovating, being a business that prides itself on innovation and creating demand for innovative products and services.

Old monopolies in America were created so much differently than the ones that we have now. When our country was starting to become a global powerhouse in terms of economics, monopolies were created just by being the first person to hit an industry and have the capital to drown any competitor out of the industry (Worcester). Why doesn’t that still work today? Technological change seems to be the greatest attributor to the overall change in how monopolies of today are formed. (Hubbard and O’Brien). Look at all the giants within our marketplace today, they all are innovators. Facebook for instance came in and connected the world through a global online platform, not through the use of a new phone, but through innovation in something that had never been created. Now they are so huge that they continuously buy up any start-up business that seems to be creating disruption in the social media marketplace through innovation. Partnerships are another key piece to becoming a monopoly in today’s economy. Aligning yourself in the market with partners that will help you grow, and compliment your product/service. Just like Mr. Hosokawa did with Carmen. They were a team, had separate agendas, but were able to be successful by forming a partnership.

Why is innovation so important in particular? In the entrepreneurship community, technological change has become a massive topic of discussion. Why though? People often times don’t like change, so why is it that change is what creates so much demand and allows companies to be successful? It’s not fully known why technological change creates so much economic influence, but it does. Technological change, innovation, is actually proven to shift many areas of the economy. It takes what is possible now and shifts it to a new place of possibilities. What we can produce now is shifted to great possibilities when technology increases, this concept is referred to as a shift in the production possibilities frontier (Hubbard and O’Brien). As companies continue to innovate, our economy has grown exponentially. Real GDP, what we produce on a yearly basis, has continued to increase at exponential rates as companies continuously become more and more innovative.  What are our limitations within economy if we continue to be an innovative people. Will everyone one day be wealthy? Can we create a ton of monopolies if everyone is innovating, and actually forming new industries that never existed?

-Bryson Allen

Works Cited

Hubbard, R. Glenn., and Anthony Patrick. O’Brien. Economics. Upper Saddle River, NJ: Pearson Prentice Hall, 2008. Print.
Nader, Ralph, and William Taylor. The Big Boys: Power and Position in American Business. New York: Pantheon, 1986. Print.
Thiel, Peter A., and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. N.p.: Crown Business, 2014. Print.
Webster, Thomas J. Introduction to Game Theory in Business and Economics. Armonk, NY: M.E. Sharpe, 2009. Print.
Worcester, Dean A. Monopoly, Big Business, and Welfare in the Postwar United States. Seattle: U of Washington, 1967. Print.
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2 thoughts on “Stealth, Innovation, and Strategy: Becoming a Monopoly

  1. Michael Pedersen says:

    Its been said that information is the new oil. Companies like PayPal, Facebook and Google have been built around this idea. The key innovation that has helped these companies disrupt their respective industries is the focus on data and software innovations.

    I would argue that the reason stealth is such an important factor in establishing a new startup is because it allows the company to gain momentum in their target industry before anyone else has a chance to exploit it. This I think is the main differentiating factor between the old first mover’s advantage you mentioned about capital and the current momentum that startups need to have by quietly yet quickly gaining an audience.

    Interestingly enough, I find that the very same technology that can enable these stealthy startups to be developed so quickly is also one of the key factors making it so difficult to remain on top. A lot of technology that is being used in the startup scene is what software developers call “open source” or software that is freely usable and modifiable. Due to the low margins startups have they leverage open source software in order to stay competitive. This same software however also lowers the bar for all other individuals from creating similar products because the foundation has already been built. To put it in other terms, “a rising tide lifts all boats” (Ted Sorensen, John F Kennedy’s speechwriter). This might be an interesting aside to research.

    Overall, your blog post exposed some very interesting aspects of startup culture and the way technology has influenced the modern day perspective companies must have on innovation in order to stay competitive.

    Like

  2. annawallace003 says:

    Bryson,
    I found your topic this week to be very interesting because I think that you question about whether or not businesses are able to slide under the radar is an extremely valid question. It has been seen before but typically we are only aware of those who are caught not the ones who are able to just slip by.
    I know that having the ability to just slip to the top is no coincidence and that it takes a high level of skill and determination to do such a thing. However, I have never been aware of exactly how business are able to get away with doing something like this so your blog post was able to answer a lot of those questions.
    I definitely agree that technology has really raised the bar for business to achieve making it to the top. The competitive environment that we live in today is becoming more and more complicated so I am think that this is definitely a main contributor to how the environment has changed over the years.
    I couldn’t of said it any better in regards to innovation. It is so crucial in order to satisfy todays consumers.
    I can tell that you are really passionate about what you researched this week, which makes for an even better research post. I know that you have experience with being an entrepreneur so with what you have found, it look like you are making the right decisions for the future. Great job this week!!

    Like

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