Entrepreneurial Strategies 133each stage and the timing of the stages are highly variable and difficult to predict. The
same is true for product and organizational life cycles. Entry and competition take on
different forms, depending on the stage of the life cycle.^36 Figure 4.2 presents a diagram
of the industry life cycle. It follows the familiar s-curve of many economic phenome-
na.^37 The shape of the curve shows that emerging industries are characterized by
increasing rates of growth. Transition occurs as growth continues at decreasing rates.
In the mature stage, growth rates approach zero. A declining industry is characterized
by no growth or negative growth rates, whether measured in total units of production
or in dollars.
Emerging Industries
Emerging industries are the newly created networks of firms launched to exploit a new
technology, a new market configuration or set of customer needs, or other changes in
the macroenvironment.^38 Emerging industries experience high levels of uncertainty,
rapid change, and a growing number of organizations (high rates of births). Recent
examples of emerging industries are biotechnology and life sciences, the electric auto-
mobile industry, products for use on cellular telephones, and the interactive television
industry.
Individual firms and entrepreneurs can create or reconfigure entire industries through
vision, creativity, and innovation. An innovation strategy can create a customer where
none previously existed.^39 How can this be done?
- By creating utility. The entrepreneur can change something that is hard for
people to do into something that is easy for people to do. For example, there
had been “mail” since Roman times, but the mail industry arose with the creation
of a postal service in Great Britain, making it easier for people to pay for and
send a letter. - By creating value. The entrepreneur can change something that was expensive
into something that is inexpensive, and thereby create value through creative
pricing. King Gillette did so when he unbundled the razor from the razor
blade. Xerox did so when it realized it did not have to sell copiers, just the
use of the copiers. It changed a relatively large capital-investment decision
into a small operating expense to gain acceptance. - By changing the customer’s reality. The entrepreneur can help customers buy
products through creative distribution and financing, and help customers use
products by simplifying operation and providing training. Entrepreneurs help
customers solve problems by selling systems instead of products.
Structural Uncertainty. Even for ventures on the verge of revolutionizing the market,
however, entry into emerging industries imposes certain structural conditions and con-
straints. The most imposing structural condition is uncertainty. There are no traditional
ways of doing things, rules of thumb, standard operating procedures, or usual and cus-
tomary practices. There is only the unknown future and the entrepreneur’s will to suc-
ceed. Technological uncertainty means that the final configuration of resources, especial-
ly technological resources, is still unsettled. Firms, like laboratories, are trying new com-