Diario

CASE 2.

Aspectos Legales de la Tecnología.

Distinctive Technological Competences.
Case II
Advent Corporation
R. S. Rosenbloom
Reference:
Buegelman, Robert A., Maidique, Modesto A., and Wheelwright, Steven C. (1996).
“Strategic Management of Technology and Innovation”, pgs. 12 -19, Second
Edition, Irwin, ISBN 0-256-09128-5.
Early in November 1970. Henry Kloss was reviewing theprogress Advent
Corporation had made in the preceding months. The September profit and loss statement
had registered a net profit of almost $30,000, against a cumulative loss of nearly
$165,000 in the preceding 10 months. The new Advent cassette recorder, Model M200,
had just completed its third month on the market. The M200 recorder, with its
sophisticated circuitry, was felt to represent realpotential as a replacement for the
phonograph as the central element in any home entertainment system. With the financial
turnaround, Mr. Kloss felt confident that a sales level of $40 million to $50 million was
achievable by Advent within five years. His problem was how to organize for continuing
innovation.

Introduction
Mr. Kloss was a well-known figure in consumer electronic product designand
manufacturing. Prior to Advent, he had participated in the founding and operation of
Acoustic Research, Inc (AR), and later, KLH Corporation. He had been the mind behind
the products at KLH, an organization that was renowned for its very high quality, slightly
oddball electronic products. He left KLH in 1967 after 10 years as president.
The formation of AR had originated during theKorean crisis. While stationed in
New Jersey, Mr. Kloss was able to attend the City College of New York, where he was a
student of Edgar Vilchur. He and Vilchur had mutual interests in an acoustic suspension
speaker because of its immense reproductive advantages over conventional mechanical
speaker systems and its small size. With Mr. Kloss providing some capital and a garage,
Acoustic Research,Inc, was formed. Financial guidance of the business was provided by
Anton (Tony) Hofmann, who was later to become a principal of KLH, and then treasurer of
Advent.
Mr. Kloss and other active management sold their share of AR, Inc., after
irreparable disagreements with Vilchur over company policies. KLH was initiated shortly
thereafter with $60,000 in capital and Mr. Kloss as president, MalcolmLow as manager of
sales, and Mr. Hofmann as financial manager. After seven years and a series of innovative
audio products that were producing a $4 million level of sales, KLH was sold because of
sheer tiredness of the managers and uncertainties associated with KLH's growing size.
With the sale, Mr. Kloss agreed to remain as president for three years, and he left in
1967.
Mr. Klossincorporated Advent Corporation in May 1967 for the purpose of
manufacturing specialized electronic products for home entertainment use. The actual
justification for forming the company was to do work in television, especially to create an
organization, which would support the R&D and marketing of a large screen (4' X 6') color
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CASE 2.

Aspectos Legales de la Tecnología.television system. Formal development work on the television system had been suspended
in 1970.
With the formation of Advent Corporation, Mr. Kloss embarked on a plan to see
what a big company could do. He felt that growth was always a primary goal, always
desirable, but that one had to think in terms of what was realizable without beating one's
head against the wall. Mr. Kloss sought to retainstrong financial control of the company,
having sold his share of Acoustic Research, Inc., under duress and his share of KLH
Corporation with mixed feelings. He had this to say to the case researchers about
financial policies:
The size one desires is really only limited by the dollars available for working capital.
There's a firm intention to reach the middle tens of millions of dollars...