By David B. Yoffie

The essays during this vital assortment exhibit that the major to good fortune for corporations competing within the new electronic international should not to engineer titanic technological breakthroughs, yet particularly to improve new services and products through creatively combining new and present applied sciences with leading edge managerial techniques. The publication positive aspects contributions from students at associations together with the Harvard company institution, Stanford, and MIT, in addition to senior managers at Intel, IBM, and Mercer administration Consulting. Drawing classes from their very own and different best businesses of the knowledge age, together with Silicon pics, solar Microsystems, and Microsoft, the authors discover the dynamics of the swiftly evolving electronic setting. those well timed essays deal with clients for convergence; establish fiscal, criminal, and managerial stumbling blocks to convergence; position the pc in old viewpoint; and consider the managerial demanding situations of the hot surroundings, in particular product and method improvement and the function of interfirm alliances.

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Too many companies have sought, and failed, to master digital convergence with a big technological breakthrough or grand acquisition. Instead, I suggest, success will emerge by adopting a strategy that I summarize in the acronym CHESS, which stands for creative combinations, horizontal solutions, externalities and standards, scale and bundling, and new production techniques, called system-focused development. A CHESS strategy means rethinking many traditional approaches to convergence. The entertainment business and telecommunications Page 3 industries, for example, have focused their strategies on huge infrastructure investments or big bets that will reorganize the hardware and software industries.

After all, the heart of Apple Computer was the Macintosh, which borrowed extensively from ideas developed almost a decade earlier at Xerox PARC. And Apple's biggest success in the early 1990s was another creative combinationthe Powerbook, which introduced Mac features, some software enhancements, and a new industrial design into existing notebook technologies. Creative combination strategies that focus initially on complementary products, services, and technologies have the further advantage that they generally try to offer some degree of compatibility with the installed Page 17 base.

In fact, history tells us that in similar industries characterized by many start-ups, survival rates tend to be low. 13 For example, several hundred firms entered the automobile industry in the United States around the turn of the century, but only three firms survived half a century later; and more than 150 firms entered the new television industry in its first decade in the 1950s, but no independent American players were left by 1995. Similar dynamics are likely in industries characterized by digital convergence: start-ups will pioneer a thousand niches, but we can anticipate a sea of red ink when the mania ends and the shakeouts begin.

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