Video Transcript: Lecture 7
Oh, hello, hello. So today we are talking about innovation, and innovation is awesome, and it's, it's just, you know, and we're going to get into this, but if a company does not innovate, it dies, right? So certainly, Kodak is an example that you hear a lot, and they failed to innovate, they failed to recommend, recognize trends, and they suffered for it, and this is an iconic company, and they disappeared seemingly overnight. So innovation is important. So I figured we would start off by looking there are different lists. Everybody does one. Forbes does one. But I kind of liked fast companies because they kind of gave a reason. So before we even jump into the lecture, before we even start talking about what innovation is, or any of that, I just want to frame us by talking about some innovative companies. So here are fast companies, top 50 most innovative companies, the world's most innovative companies. So number one, number two is Moderna and Pfizer, and that is the you can see the reasons here related to COVID 19. You know, it's so interesting to think about how we change as as a nation, and this year's most innovative company can be next year's loser, right? It could. It could not be even on the list. But certainly, Moderna, certainly Pfizer, certainly Johnson and Johnson, which is not listed here, had innovated in powerful ways, Shopify, SpaceX, which we've talked a lot about Epic Games, Spring Hill, Netflix, talk Microsoft and graphica. Notice that. Notice that Apple is on our list. Microsoft are firing on all cylinders. I think that's kind of funny, but Microsoft really has been coming on strong with some of the innovative, innovative innovations that they've been doing. In fact, I want to show you just something that they have that's that's just so cool. So if we go to their surface line, oh, I guess I could have clicked on here, right? That would have been easier. But if we go to their surface line, I mean, they have their small, little surface go, which is kind of like an iPad Mini, but it works as a computer. It's great. They have the laptop, they have their Surface Book, they have their pro x Surface Pro X, 13 inch. But this is like, what a cool little product, this surface duo, which is kind of like a computer a cell phone. It has a foldable screen. It's, it's, it's doing some it does some really, really cool things. So they have their computers, so Microsoft makes the list being an innovative product. I want to see if they have I'm just going to play this for just a couple seconds just to show you, there you go. That is enough, but you can see why they have made the list, and certainly firing on all cylinders. Ping a good doctor out school, the NBA has made the list. Asana, Nike, Ben and Jerry's C gene Corning, there's anyway you can go on and on and on and on. Panera, which I think is interesting that they made the list. Credo, TelaDoc health, which I personally use that's pretty good, Swift anyway, all these people have have found that they need to innovate, and by innovating, they have been able to stay in business, meet projections and even exceed projections in very, very challenging times. So certainly I can see why they made fast Companies list. As I said, there are other lists as well, but, but that's that's one. So remember that a businesses
philosophy, how they approach innovation that is that's going to impact their business level, their competitive strategies, all these strategies that they put together. So as we talked about, what kind of strategy do you want to have? Do you want to be a cost leader? Do you want to be a focus? Do you want to be general? Do you want to go a differentiate, differentiation route. Do you want to be focused? Do you want to be general? You know, innovation is part of all that. Certainly, Tesla has a very has a lot of innovation, and we will be talking about them and SpaceX quite a bit over the next over next few minutes. So I really like this idea that's talked about in the textbook about entrepreneurial orientation, and that is a product of innovativeness, which is to pursue novel ideas. It's about proactiveness as well, and it is about risk taking. So if you think about companies, and you think about certain companies, would you call them willing to take risks? Would you call them innovative? Would you call them proactive. So there's examples of companies that have that have embraced this strategy, and it's paid off for them. It's been very successful. So, you know, certainly what I would say is that we need to understand the role of entrepreneurship and the role of the entrepreneurial spirit, you know, kind of, in some ways, it's the small business spirit. Everybody works together, blinds, organizational lines are blurred, and you get things done, and you're able to be proactive, you're able to be innovative, and you're able to take some risks. All these things are needed to find success. So there's a lot of value to that. Obviously, we can think of people like Oprah Winfrey, who has been very successful in our company, Harpo. We can think of Elon Musk, Jeff Bezos, certainly with Amazon, has been entrepreneurial, Mark Zuckerberg, and then I the book mentions Kylie Jenner as well. I do not want to use her as example. So I will use that gentleman that I talked about earlier in an earlier lecture, Mark Rober, as somebody who takes risk is innovative and entrepreneurial. So remember that that that passion is a major part of being innovative. It's coming up with an idea. It's being able to take the risk, it's being able to go forward, it's being able to do things. So one of the things that is that is apparent, is you have to be innovative, and you have to constantly adapt to the environment all the time. So you have to, as part of that, as part of your strategic plan planning, you have to be able to look off in the horizon and kind of notice trends and see what's happening, and to be able to respond to those trends and come up with solutions. So I'll give you, I'll give you an example in the education space, the nature of education is changing. Certainly, COVID has accelerated. The need for virtual learning and distance learning and those kind of options, as more schools come online with that as that's what the consumer wants. Then then traditional campuses will will begin to decrease enrollments. Obviously, there's always a need for the traditional campus experience, but certainly an online presence is important as soon as as soon as some of the giants Stanford and Harvard and and some of those begin to offer fully integrated online experiences, that's going to shift the nature of
education even further. So in an earlier lecture, we talked about, you know, if you are a leader in an organization like you're one of the big tech firms or something like that, then people are going to tend to follow what you do So sustainability is a real big thing. If you begin to focus on sustainability initiatives, then everybody else will follow suit and will begin to think of those as well in the education space once Harvard and Princeton and Dartmouth and all those Ivy League schools in the United States or even overseas, Oxford is a great university. Once they start beginning to offer fully integrated online learning opportunities, then that is going to shift education even further. So knowing that, knowing the trends where there are less high school individuals entering traditional education tracks and and the population for education is decreasing. Being able to come up with solutions and find solutions and to pursue solutions is very important, and you got to innovate, or you're going to die with that. You also have to understand that you have to have multiple funding sources. So in education, a lot of funding source comes from tuition, and is tuition driven. So people pay for classes, and that's what where people's funding comes from. But there are other things, and you need to diversify. You need to have grants coming in, you need to partner with companies, you have to do all these different things, and you have to have innovative practices to approach education and keep people's attention and do these things, because if you don't, you're going to lose the students, especially as more competition comes online. So you can see through that example, not only the importance of innovation, but hopefully you can see the importance of long term forecasting, and you can see the importance of doing things like SWOT analysis and understanding what those opportunities are, but also what those threats are, as well as your strengths and your weaknesses. So having that entrepreneurial mindset is critical is a critical component to crafting strategy. So you're sometimes, and the book talks about it, but you'll sometimes hear the form, the, I'm sorry, the term entrepreneurial orientation, and that's, that's organizations level, that's stacked up against those three things that we talked about, which was innovative, proactiveness and risk taking. And you can, you can monitor that at the organizational level, but also at the individual level as well. And what is, what is interesting about that is, there's actually measures that exist that you can take that will tell you if your entrepreneurial mindset, and then, as an individual, what kind of organization you should be in. So should you be in a startup that that is, is in risk taking, or should you be an organization that's risk averse, you know, those kind of things. So my orientation places me in mid level organizations that are little, little a little risk adverse, and that's their culture. And that makes sense, because as as somebody who's not a big risk taker when it comes to finances and things like that, that makes a lot of sense to me, because I though I like innovation. I like entrepreneurial spirit. I'm very uncomfortable if a company is constantly changing and constantly radically changing like that. That's
something that makes me uncomfortable. So so my career, and the way I've kind of structured my career, and the direction I've taken, I've taken a more conservative approach with companies that would probably have a little bit of a lower EO score. I say that from a company perspective, but I would say that my specific division within my organization is very, very, very innovative, very entrepreneurial, and that is the expectation. So I'm comfortable operating within that framework at a micro level, but not a macro level. So that's that's just one example of how that affects individuals, and how you can measure somebody's entrepreneurial orientation, not only at the organizational level, but the individual level, and then how that relates to fit everything else. So when we, when we have the module, the last module on strategic leadership. We can talk a little bit about about how to motivate employees with that kind of orientation. So why do you want to innovate? I mean, what is what is important about innovation. Why? Why do you want to do that? And the reason is, is because, well, there's a few reasons, but one of the reasons is, is that you want to you in order to maintain your market share, in order to maintain your competitive advantage, in order to maintain that 92% customer base, if you're talking about Apple, you want to do things that are going to make people want to continue to buy your product. So you know, every year, Apple does these big launch events where they talk about all their new innovations. And maybe you have seen those videos. If you haven't, I will bring one up for a second, and we'll just play a couple, a couple seconds of one. Yeah, here we go. So this is the, this is the Apple iPhone, 12, where? Here they are talking about some of the things that are different. So of the innovations. Look at that camera. It has three instead of two, isn't it better? Look at that. Yeah, you can swipe easier. I will provide commentary, but anyway, certainly, Apple does a good job of continuing to innovate and continuing to talk about about why innovation is important for their products. I'm going to turn this video off, because otherwise I will sit here and watch it. So moving, moving right along. So innovation is strategy. It's certainly a strategy. So Apple strategy is we're going to make incremental improvements to our iPhone and our watch product line every year, we are going to make improvements to our computer line every year, and these, this is Apple strategy. Now, one of the things that's really interesting is this year Apple is and there's quite a bit of excitement about it. The rumors would indicate that Apple is going to completely redesign their computer and their laptop, their MacBook Pro line, so we will see if that happens, and what that looks like. Certainly, some people are excited, because they're talking about going back to some of the older features that they used to have. Right now, I don't want to lift this computer up because I have a lot of plugged into it, but right now they kind of have like these four USB C ports, so they're actually talking about going to things. So you don't have to have this dongle anymore, like you could actually do an HDMI connection or whatever. So people are excited because they're innovating and they're going to come out
with a new chassis. But what's what? What I find kind of funny about it, and I haven't seen the product, so I don't know what it looks like. What I find kind of funny about it is they're innovating by going backwards and bringing back some of the features that they had before. So, you know, whatever so innovation is important. You know, something else is, is there's this idea of a blue ocean strategy, which is creating new and untapped, untapped market, rather than competing with rivals in an existing market. So so Nintendo is person is a company that's highlighted in the book, and they are, are, are going after this blue ocean strategy by bringing in people who've never played a game and have never done things. So let's look at some examples, besides Nintendo. And again, I think the book provides some great examples here. What'd I do? I think, I think, because I was messing around, I unplugged this one. Let's see if it works now. Yeah, there we go. So here you go. So Nintendo coffee shops. You know, Starbucks has reinvented them, so they followed a blue ocean strategy. Henry Ford made his his car so everybody could afford them. And by the way, Ford continued and continues to innovate. And Ford decided a couple years ago to go with a basically to transform most of their most of their products, into the electric car market, or the electric vehicle market. And they came out with an electric pickup truck recently, which is pretty cool, but they they got a lot of flack on because they got rid of a lot of their old cars and a lot of a lot of things that they had before. So they they certainly have kind of felt some pressure about that. But you can see here that that the first thing they talked about is SUVs and crossovers. And they innovate there, obviously, with trucks and vans. They're innovating by offering this all electric truck. Then they have some electric vehicles as well. I will say that, though this is true right here, that this is an F word, 150, it's all electric, and it is pulling an Airstream, and it can pull an Airstream. What I will tell you is the battery life on this, because it's fully electric, you're only going to be able to go about 70 or 80 miles pulling this Airstream. So, you know, this is kind of a cool picture, but it's not realistic for anybody who would want to go any appreciable distance and they want to pull some stuff, this electric vehicle will not work really well for them. If anybody from Ford's watching this, I'm sure they would agree with that statement and acknowledge it as well. So though this is cool picture, Airstream is obviously a brand as well in the trailer space that innovates and is known for high quality products you will not see, I would argue that you will see unicorn before you see somebody with an all Electric Ford f1 50 pulling an Airstream in real life. So that's a little bit of editorializing for you, but, but certainly they focus on innovation with with their their strategy. So there's advantages to first mover strategy. I'm sure you've heard of first mover strategy. Again, the table here, I think does a good job personal personal computers. Apple was one of the first movers that did a user friendly interface. They invented the mouse and then transistor radio, Sony obviously has been a first mover, but web browsing is, in fact, I was in a robust
discussion with somebody recently about web browsers and why Google succeeded where others have not. Internet Explorer has been successful as well. Well, one of the things that, and the reason I pulled up this table, actually, when we're talking about first mover advantage, is not all of Apple's first moves were triumphs Newton computers or Newton, I'm sorry, it's digital assistant Newton was, was not successful. It actually led to the firing of then CEO Steve Jobs, as well as some other clunkers, like Lisa, which was a computer, and some other things that they did. But, but Apple has had very success. Very been very successful with what first mover strategy. So just thought I would mention that, remember that there are different types of innovation. There is incremental, there is disruptive, there's architectural, and then there is radical. So so the type of the type of innovation that you want to bring to market is dependent on a couple things, the market. Does it address an existing market, or does it create a new market and then that technology? Does it use new technology? Or does it do existing technology? There are certainly things that I would love to invent right now, and there are certain ways that I would love to innovate, but I cannot innovate because the technology does not support it. So going back to that, that wonderful little hybrid Ford f150 being pulled by an Airstream, you know, certainly Ford as part of their strategy. I mean, they could do it, but they probably shouldn't do it, which is to get rid of their gas powered trucks and go with an all electric lineup for people that are going to be towing things, because people need to be able to tow all day long. And as you can see here, certainly they have some stuff in a hybrid space, but I would not see them getting rid of their Super Duty lineup for quite a quite a while, because people use these to tow things, and the technology does not support major towing over hundreds of miles when you're towing something with an electric vehicle, as I as I said, like 60-70 miles in that Airstream, maybe that is not a lot, and that's why I would that's why I can confidently make the statement that you will never see somebody using a fully electric. A vehicle pulling a trailer like this, especially where this looks like, which is in the Pacific coast. So anyway, that's that's an example of how the technology has not caught up to the innovation yet, but certainly is heading that way. Remember that anchor incremental innovation is making improvements on an existing product. So one of the criticisms with the Apple iPhone is that Apple used to make more radical innovations when they came out with the iPod, when they came out with the iPhone, when they came out with those products, they were making more radical innovations. Now they're making very small, incremental innovations, and their customer base is frustrated because they want to see more radical products coming out of Apple. Then, you know, some people also say that I was gonna grab it, but I decided not to. People might also say that products and the innovations that they're doing that they're turning too much when there's technology that's out there that's even further than what they're doing. Apple has never, has not. Often have
they been did they come up with something that somebody hasn't done before, but normally what they do, they do is they improve upon it, they show a need, and then they do incremental innovation along the way, there are things such as disruptive innovation tablets, certainly were, was a disruptive innovation because of their burst of utility and portability. What is kind of funny about the tablet space is now tablets are kind of taking on the look of computers. So, so that's kind of interesting, that this is 12.9 inch tablet, and it's kind of like a computer. And in fact, there's not much difference as far as weight and things like that between this computer I have here and this. So that kind of makes it interesting that as the tablet market, which came out, was so disruptive to computers. Now tablets, like surface is really good at this. It's a tablet and a computer. But tablets are now, you know, one of the things that they're they're trying to say, is, because of their portability, they can be laptop replacements, but that is an example of a disruptive technology moving on architectural peloton. You know that what they did was they packaged stuff together, for those of you that know and do not know what peloton is, they kind of bring in communication. They bring in the internet and technologies, and then exercise bikes, and kind of bring it all together. And I will bring one up, and my computer will work. Just give me one second. Here we go. So we will look at the peloton plus. So anyway, you can see here that it's bringing together various forms of technology and allowing people to do things with that technology. I will say that I know few people that have peloton and they are quite fanatical about it, and feel that it's really helped transform them, helped them to lose a lot of weight. And then I I've seen other people tried a few times, and now it holds their laundry. So it's all, it's all, how you use it, I guess, but, but certainly that would be an example of an architectural innovation. And then there's radical innovations, such as air pods, that was considered a radical innovation and and and, and when people stopped using wired earphones, that that was significant. Again, there was a lot of people that made fun of the AirPods because you have this, you know, this whole thing hanging out of your ear. And a lot of people made made comments about that and how that was not a good way to do things, but certainly this is considered a radical innovation, or. And moving on. So when you implement innovation, I I was going to bring this chart up the product life cycle. Certainly, this is something we've talked a little bit about, we will be talking more about. But remember, when you introduce something, generally, there's going to be a high cost of the customer, there's going to be low sales. There's going to be a few not allotted competitors, and there's going to be some innovative customers that are called early adopters, or first adopters, and they're going to buy your product day one. Apple sees that a lot when their new phone comes out, at least in the United States, you can see people are clamoring to get it, and standing in very long lines waiting to get the new product, the new phone, the new whatever. Then you have a growth model where there's increased sales.
Profits are rising. There's increasing number of customers, but they're starting to become more and more and more competitors. So that's that's something that you have to be aware of. The maturity model is when the sales peak, when the profits are the highest, when there's the mass market, there's a stable number of competitors, and then there's the decline phase. Now what Apple is really good at, and Microsoft so many others, is every year they offer little tweaks, little innovations and little changes. And by doing that, then what they're doing is they're extending this product life cycle. So the iPhone is a product that's been around for a long time, but certainly the first iPhone and the one I'm holding in my hand, which I said, is a few years old, that is a big difference. There's a big difference between those phones, and that extends that model, that introductory growth, maturity and decline model, a little bit. So Apple is one product, but certainly not the only product that that does this. And you're and you're going to see this like, like when Ford changed their strategy. They decided that most people were buying SUVs and crossovers that they wanted, electric vehicles, that they wanted things like this. So they greatly declined their, their car market. In fact, if we, if we look at them, I don't, I know they offer a Ford Mustang that's electric, but they do not offer even a lot of cars at all. Yeah. In fact, here, yeah, that's it. Their their car choices are, are the fusion, which is being, is being that will not be offered in the future. You can see her 2020 fusion, and then 2021 Mustang. So it's a, it's a it's a very, very, very different market than it was. You can see here that they're focused on a lot of that's interesting. It's focused on a lot of trucks and cars. I mean, a lot of trucks and SUVs, and they certainly have a lot of crossovers for their product line. I will tell you that I've never seen that, that that performance vehicle section before. So that is, that is interesting. Oh, yeah. So this is so I can, I just let me bring that up. Back up for one second. You can see their future vehicles. You don't see a car on there. So, you know, you can see, it's f150s, the Maverick, which is their new truck, the whitening, which is, like I said, you're not going to really pull anything with that, their new transit. And then their Bronco these, these performance vehicles are not, you know, there's there. They've gone they've gone away from cars, is the point I'm trying to make. So as they innovate, they have taken a different strategy. We just talked about this. When you do a product extension, when you innovate, when you offer new innovations, that extends the model, and it extends the maturity model. Apple iPhone is really good at doing this. So are some car manufacturers, like Ford, like I just showed you, but you can see here the introductory the growth and maturity phase, and then product extension extends that phase quite a bit, so that that's just a representation of what I was just talking about. One of the other things to think about is the role of sales. And you know what happens with your adoption and your sales? So if you look at this chart, you can see that there your sales. The reason your sales do not start off really great is because really, you only have about 16% of people that are
innovators and early adopters. Then you have that break, and then you and then that's when people really start to buy your product, either the early majority or the late majority. And then as you're starting to decline, then you're going to pick up some people as well. So this is the technology, technology adoption life cycle but keep in mind that and not everybody's going to go out and buy products day one, not everybody's going to update you the latest update on their products on day one, either they kind of want to see what happens, and then they will get on the train. Okay, so some, sometimes, when you are innovating, it is important to do things like, like cooperate. So you can do that through joint ventures, mergers and actual acquisitions, where you can buy another company, or you can do a strategic alliance, where you align with another organization. You saw that a lot with the rollout of COVID. You saw strategic alliances and joint ventures with some of the drug manufacturers as they were developing products. So in manufacturing you see that a lot, but, or I'm sorry, in pharmaceuticals, you see that a lot. But I just wanted to mention that. And with that, I am going to just say that when it comes to innovation, remember, we talked about how you have to innovate or die. We talked about the importance of innovation, certainly using Apple as a primary example, but certainly Tesla is known for their innovation as well as well as other brands. So spent some time going through the resources. There's quite a few this week. And I really hope you enjoyed our time talking about innovation next we're talking about corporate level strategies, diversification, getting smaller, portfolio, planning, those kind of things. So that should be that should be a lot of fun before we get there, let us close in prayer, Heavenly Father, thank You for this class. Thank you for the opportunity to come together today. Lord, I pray that class is learning a lot from this material, and they're finding this class fruitful. You know, not for me, not for some selfish need on my end, but But for you, Lord, and that they will be able to apply these principles, even the principles of innovation, in their churches, in their homes and their in their place of work, and be able to do your work, Lord. So I pray, as we continue throughout this class, we're about halfway through it now, I pray that you will you will help individuals to be able to be fully focused on what you're having them learn that you will help remove distractions and this kingdom work will continue in Jesus name. We pray. Amen. Thank you, everybody. Have a wonderful day, and we'll see you back here for lecture number eight.