Alchemy: Turn Knowledge Into Gold, by Soundview Executive Book Summaries, Soundview Executive Book Summaries, March 1991.

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Redefine Recession
School for Life
Will Japan Bury the West?
 

Use Technology to Lower the Price
     Sure, anything will sell if it's priced cheaply enough.  But will the seller make a profit in the process?  The economist will answer, "not necessarily."  The Alchemist, knowing that technology is the driving force of an economy, will answer yes.  That's because of the power of technology to lower the expense of materials and labor that go into production of a product.
     Production costs are a relatively small component of the total cost of making finished products today.  Fixed expenses are far greater; they remain the same whether you produce one item or a thousand.  So, the more items you produce, the lower the cost of each unit, and the lower price you can charge.  And the lower the price, the more demand there will be for your product and the greater the likelihood that you'll be able to sell the huge quantity of items you produced.
     An example demonstrates the validity of this approach.  In the early 1960s, Fairchild Semiconductor tried to build demand for its 1211 transistor.  To compete with RCA's nuvistor tubes, which were selling at $1.05 each, Fairchild chose a rather unconventional approach, slashing the price of its newly invented transistor from $150 per unit to $1.05 per unit at the very beginning.  Fairchild was betting that the enormous cut would spur a huge demand to justify raising production levels so unit costs would fall low enough to make the effort profitable.  It worked.  In 1965 Fairchild commanded 90 percent of the UHF tuner market in the United States, and production levels were so high that the price dropped to fifty cents each.  As one Fairchild employee said, "We were selling into the future."
     All of this is standard practice

Lessons in Demand
     The Alchemic entrepreneur knows that today's consumers most likely won't want tomorrow what they want today.  Consumer needs and wants have always been flexible, but in recent years the rate of change in the marketplace has begun to accelerate.  Products evolve, mutate, and change at speeds undreamed of in the past, partly because consumers learn about new products at the speed their television sets provide the information.  It's easy for them to decide they want something now.
     Those who make a good product and have a steady market are, paradoxically, at risk in this new world--either someone will come up with a better product at a lower cost or a new product may obliterate demand for what's available.  Blazing new trails has always been harder than improving old roads.  But in the Alchemic future, the people most likely to prosper in business will be those who devote themselves to developing new products.
     Take the record business, for example.  Despite great improvements in the price and quality of vinyl records and stereo turntables, the industry is well on its way to extinction.  The reason is the coming of compact-disc technology.  By 1989, just five years after their debut, CDs were outselling vinyl records by a hefty margin and the demand for CD-players had almost completely replaced the demand for conventional turntables.
     Alchemists recognize that, regardless of the product being sold, they are in the business of change.  The nature of demand is infinitely plastic, the level of demand is unlimited, and there is no end to what people can, will, and must have.

THE TECHNOLOGY GAP
     When President Kennedy announced in 1961 that the U.S. would land a man on the moon by the end of the decade, the technology to perform this feat didn't exist.  But as
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