Regulatory fiat cannot create a market at a technologically interdependent interface. And by the same token, regulation and so-called monopoly power rarely prevail at modular interfaces between stages of value-added technology.

Regulatory fiat cannot create a market at a technologically interdependent interface. And by the same token, regulation and so-called monopoly power rarely prevail at modular interfaces between stages of value-added technology.

If I know what to spec, and I can measure it, and there are no unpredictable interdependencies between what you do and what I must do in response, then an economist would say that is sufficient information for a market to emerge between you and me.

It is when the product is not good enough that proprietary integration gives you a competitive edge. You cannot outsource and be competitively successful in this situation. But at the other end, where standard components assembled in standard ways can yield acceptable performance, you must outsource.

Core competence, as it is used by many managers, is a dangerously inward-looking notion. Competitiveness is far more about doing what customers value than doing what you think you're good at.

The only useful information about the market will be what I create through expeditions into the market, through testing and probing, trial and error, by selling real products to real people who pay real money.

Because these firms listened to their customers, invested aggressively in new technologies that would provide their customers more and better products of the sort they wanted, and because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their positions of leadership.