“All people are vain” – Salomo 13 verse 1

We expect from top-managers that they have a rational overall view of the situation, and that they use information in an impartial way. This impartiality and objectivity will never be attained for 100% because strategic decisions or strategic intentions are not only based on available information but also on skill, past experiences, hunches, intuition, creativity and last but not least emotions and personal motives. Thank God we are only human!

These personal motives are an important factor; they influence the manner in which people process information within themselves. One of the phenomena governing all human information processing is that many people avoid using information that will arouse strong negative emotions in themselves or in others. People often use information selectively to avoid embarrassment, conflict or hurting their self-image or reputation. For instance the case of the Battle at Spionkop, where stubbornness and vanity resulted in a disaster for the British Army.

Another such example is the “not-invented-here” syndrome which we illustrate with two cases (Geox and Dyson Vacuum Cleaners).

Two cases:

Geox Breathes!!

The origin of Geox shoes of Italy is closely linked to its founder Mario Moretti Polegato (1952) who, being bothered by perspiring feet, invented a sole with a unique membrane that allows the foot to breathe. This membrane allows moist to get out but not to get in. Protected by patents Mr. Polegato first approached several well known shoe manufacturers like Fila, Adidas and Timberland and convince them that his invention was fulfilling a latent consumer need. But nobody was interested. At last with the help of his parents and some friends he set up his own manufacturing plant in 1990. Geox shoes became a resounding success. Geox now has 150 shops in Italy and is distributed to 68 countries with sales of more than six million (2005). Many manufacturers now try to copy this success by marketing shoes with small holes so that they
can breathe but, alas, without the unique Geox membrane which is well protected by patents.

Conclusions:

Even in a mature market Mr. Polegato – an inventive entrepreneur – managed to find an unattended consumer need, a weak spot. But the established shoe manufacturers refused to believe that this was a golden opportunity. Mr. Polegato persisted in the viability of his idea and started manufacturing the ‘breathing’ shoe himself, with great success. His Critical Success Factor was the membrane that Mr. Polegato had invented. It often happens that the significance of new inventions are not understood, sometimes with detrimental results like the following story, Japanese Radar development during World War II.

The Bagless Vacuum Cleaner invented by James Dyson

As a lone inventor Mr. Dyson (1947) of the UK could raise no interest from big manufacturers in his bagless vacuum cleaner, which uses centrifugal force to spin out dust while maintaining suction. “It was most depressing” he says “going round to discuss licensing hoping that they (Electrolux, Hoover, Philips etc.) would see the light. One by one, slowly they said no.” The City then refused to invest in Dyson when he set up a manufacturing business in the UK. Mr. Dyson and his family own now all of the very successful and profitable business (to the chagrin of financiers). Keeping the headquarters in Wiltshire, he moved production to Malaysia in 2002.

Mr. Dyson argues that the (successful) decision was forced upon him by rising labour cost and the refusal of planning authorities to let him expand. The scale and speed of his success in the US has been extraordinary, proof of which is the lawsuit he won against Hoover, the largest US manufacturer of vacuum cleaners, when he discovered that his technology was copied by Hoover. Dyson has overtaken Hoover in the race to clean America. In 2003 the group had only 4.5 % share of the US market. It has now 20.7 per cent of the $ 2.3 bn. market in just two years, leaving Hoover trailing in its wake with 15.6 per cent share at the end of 2004. The average vacuum cleaner retails in the US for $ 150 while Dyson start at $ 399.

Conclusions:

In the mature market of vacuum cleaners a lone inventor found the weak spot, the paper bags which have to be regularly replaced (at that moment a billion dollar business!) and which gradually reduce the suction power as they fill up. He did not compete on price but he introduced a well designed high-quality product and in 1996 Dyson even launched a limited edition model DC02, ‘De Stijl’ , in homage to the Dutch design movement and the groups radical use of bright colours to highlight function.

The Dyson vacuum cleaner competes with a combination of several features (tactics):

1. A technological invention;

2. A distinguishable design;

3. A high quality;

4. Based on efficient manufacturing.

The Dyson story is also an object lesson in how companies who overlook the value of design do so at their peril. Not withstanding the refusal of his invention by the big manufacturers Dyson persisted in his revolutionary idea. Again we meet the “not-invented-here” syndrome prevalent in many big corporations. The acceptance of real inventions is often a fight against conservatism and suspicion.

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