Morris Chang is affectionately known as “The Godfather of Taiwan’s chip industry”. His comments about the industry are frequently taken as gospel. But before he founded TSMC in 1987 and helped lead it to become the 9th largest public company in the world (by market cap; in 2022), Chang was an employee at Texas Instruments (TI).
Comparing this case to the Ford Case and taking this in a slightly different direction, but a similarity not necessarily related to scale. Benjamin Grahm asserts: ''You can get in way [more trouble] with a good idea than a bad idea, because you forget that the good idea has limits.”
In the case of Texas Instruments with learning curve pricing applied to its Consumer Division and Ford’s insourcing of rubber costs with its Fordlandia project are instances of a good idea taken too far.
This was a great observation.
I think, to be fair to both Ford and Chang, they invented the specific forms of scale economies that they employed. If you invent something, you don’t truly understand how it works compared to someone else who comes along decades later, with all the benefit of history and hindsight. (Putting myself in their shoes, I can’t for the life of me see how I could’ve prevented these overreaches from happening in medias res). And so it’s somewhat understandable, I think, that they overstretched!
Well said, I am plowing those these cases and sorting similarities and differences is interesting but I haven’t found an organized way to do it yet. I haven’t read the final observation piece yet.