How can we get out of the current mess we’re in? It has to be innovation and technology. I’m starting a new series on innovation — so far my blog has been very much focused on "playing defense" against Depression 2.0. But, we need to start thinking about "offense" as well.
To start the series on Innovation, I’d like to share with you something I read today from Dr. Clayton Christensen, the famed Harvard Business School Professor who wrote The Innovator’s Dilemma: The Revolutionary Book that Will Change the Way You Do Business
"In the next two years, I think the answer will hinge quite a bit on the role that hedge funds play in driving stock prices. By now, 95 per cent of all trades on the stock exchange are executed by hedge funds, mutual funds or pension funds that you could not call shareholders. They’re share owners, but they don’t even hold the shares long enough, on average, to vote the proxy. And long-term shareholders are always better for innovation than the short-term people are."
"And there’s another business model toward which more and more companies need to move. It’s a business model you see with Li & Fung in Hong Kong, Tata in India, and Cox Enterprises in Atlanta. In this model, the holding company is privately held, and then some of the subsidiary companies that have the right characteristics take their shares public on the market.
What that allows those companies to do is, when they have a disruptive innovation that they need to launch, they can just do it under the private umbrella of the holding company, and not have it reduce the near-term performance of the publicly held subsidiaries."
Very interesting observations. Read the full article.