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These businesses have powerful disruptive potential because they can provide consulting at a fraction of the cost of traditional models, largely because they do not need to carry expensive fixedcosts like recruiting, training, consultant “beach” time, and expensive real estate. Consulting Disruptive innovation'
Hailed in the 1960s as bastions of sophisticated management, they used cheap financing to acquire, then rationalize, many family-owned firms. With GE’s recent announcement to split off its remaining finance operations , and Honeywell also considering divestment, the pressure on these groups remains in force.
If you are a growth-obsessed startup and venture capital financing dries up and buyers grow scarce, you can run out of money. If you are inside a big company, profit-draining ventures are typically early sacrifices in corporate cost-cutting exercises. A pure focus on growth carries risks. There are wonderful exceptions to this rule.
The costly and complex operations of transporting energy have made utilities natural monopolies, while regulatory barriers and the high fixedcosts of building and maintaining regional electrical grid infrastructure have also kept much competition at bay. This story of disruption should feel familiar.
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