128 ENTREPRENEURSHIP
Once these managers have learned the venture’s structure and systems, growth begins
again. This implies that “management is both the accelerator and brake for the growth
process.”^29 This rubber-band process, called the Penrose effect after the theorist who first
proposed it, suggests that fast growth in one period will be followed by slow growth in
the next period (that is, there is a negative correlation between period growth rates).^30Quality as a Strategy
In Chapter 1, we introduced the concepts of quality. Considerable thought, energy, and
money have been devoted to making quality a source of sustainable competitive advan-
tage. Hundreds of articles and books have been written on the subject. A prestigious
national contest, the Malcolm Baldridge National Quality Award
(http://www.quality.nist.gov/), is held each year. Many states now have programs to
help companies develop and improve their products’ quality. Although the concept of
total quality management (TQM) is not new, there are still many programs that empha-
size customer satisfaction (user-based quality discussed in Chapter 1). To some, TQM is
the number-one priority for the firm, and it has entered the language and curriculum of
top-rated business schools.^31 Companies that promote TQM programs are themselves a
fast-growing industry. Consultants sell “off-the-shelf ” TQM programs based on some
simple ideas that can be understood by using the analogy with playing golf:- Continuous improvement. This is the process of setting higher standards for per-
formance with each iteration of the quality cycle. In golf terms, yesterday
someone shot a score of 112, so today he or she will try to shoot 111.^32 - Benchmarking. This means identifying and imitating the best in the world at
specific tasks and functions. If one believes that Tiger Woods has the best swing,
he or she tries to swing like Tiger. - Quality circle. This is a loop of activities that includes planning, doing, checking,
and acting. Keep one’s head down, keep one’s eye on the ball, and don’t press. Now,
where did it go? - Outsourcing. This means procuring top quality from outside the organization if
the firm cannot produce it from within. If she can’t hit this shot, can somebody else
hit it for her?
The resource-based approach calls into question the efficacy of these quality programs
for long-term competitive advantage. If any firm can buy the principles of TQM off the
street (so to speak), then it is not rare. Benchmarking, which is neither more nor less
latest fitness gear. If Best Buy succeeds in
building customer loyalty through this prod-
uct-with-training approach, the company may
also have an innovative approach to building
switching costs.
SOURCE:Adapted from Steve Hamm, with Ian Rowley,
“Speed Demons,” Business Week Online, March 27, 2006.Retrieved from the Web March 21, 2006. http://www.busi-
nessweek.com/priont/magazine.content/06_13/b3977001.
htm?chan=gl, and Best Buy: Also see “How To Break Out
of Commodity Hell,” Business Week Online, March 27,- Retrieved from the Web March 21, 2006.
http://www.businessweek.com/print/magazine.con-
tent/06_13/b3977007.htm?chan=gl, and http://www.raving-
brand.com.