The Thin Proprietary Fabric

To get my NORTH RIVER MANAGEMENT GRADE A and ensure profitable growth, more companies are using a “thin” propritary fabric that turns the Edison Model on its head.

 

These firms have adapted to market forces by rethinking the Edison model in
their favor. They are reaping above-industry sales and profit growth and many are cementing dominant market positions that will last for then next quarter century, or longer. As a result, for the first time in history, U.S. industrial R&D expenditures are falling.

 

More important, many Thin Fabric firms have come from nowhere, like Google, or, like Apple, appeared to be on the rocks. They scale rapidly, inhale all the operating free cash flow in their markets and quickly achieve Brand Superiority, affecting outcomes for every one of their competitors and even for firms that do not yet see them on the horizon.

 

A “thin” proprietary fabric leverages a wide range of process innovations across all business functions from product design to sales and service, making technology innovation ever more effective: more bang for the R&D buck.

 

This fabric answers industry’s growing conundrum: there is no demonstrable relationhip between R&D as a percent of sales and sales growth. Money is not an answer.

 

The thin fabric enables winners to move quickly, profitably, and with minimal cash and capital wait states. Many actually get negative working capital, making them superior cash engines.

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