Pendulum Swing

I love reading the business classics, the ones by Henderson, Drucker, Reeves, Bower, Aaker, Kottler and even Marx & Adam Smith. I am intrigued by the swing of the pendulum and of vertical business integration followed by a strategic divestiture only to identify and create new and ever different offerings to integrate again.

What particularly fascinates me is an understanding of the inflection points that stimulate the actions. A study of the industry closest to my heart is telling.

Consumer product manufacturers started the strategic outsourcing of services like selling through retailers, advertising and even manufacturing in many cases. Some of these key suppliers soon embarked on their own strategies of vertical integration to enhance the value addition to the clients and personal growth to evolve into competitors to these same clients (most retailers today are customers and competitors to consumer products companies).

The recent acquisition of Doubleclick by Google and Microsoft's acquisition of aQuantive is along those same lines a vertical integration into the advertising and measurement.

Learning Curve is by far the most interesting and exciting literature on the topic of business evolution and inflection points. Some of the early writing by Bruce Henderson are quite fascinating.

>> Update: What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns (Harvard Working Knowledge)