1. Development costs and initial production costs drive high initial consumer costs. Therefore, it goes to reason, that the “leader,” has done the hard R&D and creative work for their competitors. Fast follower can be a more powerful strategy…but not always. I look at Accenture, where I worked. We never developed anything new. Back in 1992, business process re-engineering became the buzzword. In a matter of months, we created a methodology and trained thousands of people. Within 18 months, we captured over 35% of the market and grow our business significantly. The same concept of fast-follower can be true for technologies and economies. The US R&D tends to be the leader. But maybe that just is not the best use of investment money in the long-run. Maybe fast followers will rule.

2. Your point about American car companies is spot on – certainly from a cost basis. They are definitely on the right side of the bathtub. Unfortunately, high costs do not always imply better products! If you are going to have high costs, you had better have a clear differentiator. That does not appear to be the case with Big 3.

Thanks everyone for your comments!

I’m not sure how this applies to global economies, but American automakers are looking for handouts to continue unprofitable businesses iwht high union labor costs; perhaps they are at the right side of the bathtub. And some of the new start up economies in alternative fuels and energy conservation may fall on the left side of the bathtub with high initial costs.

Thanks for the intelligent and thought provoking discussion.

One economist I saw speak in Thailand predicted this mess (and I know many others did too). He suggest the reason for it was that people were spending too much in general. If the average American has nearly $20,000 credit card debt, in addition to mortgage payments, the system breaks down when people can’t pay their bills.

Therefore, if when we come out of this mess, people learn (maybe) to reduce spending, the ability to provide accessible solutions will become increasingly valuable. Of course, this is in addition to the more traditional innovation.

It will be interesting to see how things evolve.

From Europe it still seems like the states has enough Entrepreneurial drive to make a go at it. Some things need to change to make you guys competitive in the 21st.

My guess is that you need to free up the capital that politically locked into plans/companies that should stand/fail on their own merits. There’s too many bailouts and subsidies and distort the market. The money then doesn’t go to the little innovator but to the biggest lobbyist.

Innovation is facet of a free economy. Its actually that simple. Compete with low cost producers? Simply step back, stop having a plan and let people do their thing and you’ll find its all good

Be new, novel, and simple. Then let the competition come in and fight with each other to make improvements while they also squeeze each other’s margins.

On another note, I guess it’s a good thing I bought that crappy/cheaper American brand car instead of the German or Japanese one.