Converting Ideas into Value
Edited by Claudio Petti
Chapter 7: Using Innovation, Research and Finance to Build a Company with a Multi-Option Strategy
Roberto Siagri, Andrea Barbaro and Nicola Buttolo BUSINESS IS A RISKY BUSINESS Giving birth to a firm is a hard enterprise. Transforming an idea into a business is a risky job. As Arie de Geus points out in his book The Living Company (1997), if we take a look at a firm’s average life expectancy we find that it is around 12.5 years, regardless of its geographical location.1 If we focus on multinational corporations, the average life expectancy goes up to about 45 years: this can give us an idea of how a company’s life can be extended by expanding the company itself outside the national borders; as we would say today, by globalizing it. Furthermore, Christensen and Raynor (2003) remind us that 75 per cent of new products launched by existing firms, including the best established, does not succeed on the market; with reference to investments, 80 per cent of the ones made by venture capitalists give no return; and if we look at how many firms are able to sustain an above-average growth rate for more than a few years, we count just one out of ten. The challenge is then to find a development model able to create growth and sustain the company in the medium and long term. There is no need for companies to grow to be big come hell or high water, but there is the need to create a sort of ecosystem able to sustain both small and big companies, an ecosystem in...
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