From the top 23 August 2016

Lessons in innovation from four entrepreneurial greats

Travis
Travis Kalanick filed for bankruptcy following the failure of his first startup, before founding Uber in 2009

If we can follow the ideas and thinking of great entrepreneurs, then maybe we can experience their successes too. Here, author Paul Sloane identifies what we can learn from four great innovative minds.

In 1954 the British government auctioned licences for commercial TV stations. These would be regional operations which could offer advertising on TV for the first time.

Various companies were interested in this opportunity and they naturally focussed on the regions with the best demographics. Richer regions should generate more advertising revenue.

Sidney Bernstein

Sidney Bernstein was the managing director of a cinema chain in the South of England.  He wanted to bid for a region, but decided not to bid for the richest region and instead bid for the ‘wettest’ region in the UK, the North-West.  He was successful, and established Granada Television based in Manchester and serving the North of England.

He surmised that if it was sunny outside people might want to be in their gardens or go for a walk, whereas If it was pouring down with rain, they were more likely to stay inside and watch television.

Lesson one –When everyone else is facing in one direction, deliberately look in another.  The other companies bidding for franchises were asking: “Which is the wealthiest region?” – Bernstein asked, “Which is the wettest?”.

Jeff Bezos

Jeff Bezos developed a keen interest in computers as a boy. He graduated from Princeton in 1986 with a degree in computer science and electrical engineering. He then worked for an investment firm in New York before quitting his well-paid position in 1994 to start Amazon, just as ecommerce was beginning to take off.

He started the company in his garage where he wrote the first ecommerce software systems. He opened his “virtual bookstore” in 1995.

The success of the company was spectacular.  Within two months of opening, sales were running at $20,000 a week, and they continued to escalate. In 2016, his personal wealth is estimated to have reached $60bn, making him one of the five richest people in the US.

Lesson two – Disrupt your own business before someone else does. Offering second hand books at low margins threatened Amazon’s higher value new book sales, but it didn’t bother Bezos. He wanted to own that segment of the market too and prevent competitors seizing it.

Bezos also knew how to anticipate his customer’s needs. Amazon sold conventional books, but Bezos could see that some people would want to read electronic books on computers.  He stole a march on competitors by developing Amazon’s proprietary e-book reader – the Kindle. It was attractively priced and scooped the market.

Travis Kalanick

Travis Kalanick was born in Los Angeles in 1976.  He enrolled at the University of California, Los Angeles, to study computer engineering but in 1998, he and some colleagues dropped out of UCLA to found a startup which subsequently filed for bankruptcy.

In 2009, Travis Kalanick and Garrett Camp founded Uber – an app that connects passengers with drivers of vehicles for hire and ridesharing services. The company started as a two-car operation in San Fancisico and then rocketed upwards.

By 2016, Uber had over one million drivers, was delivering over three million rides a day in 66 countries, and was valued at $62bn. It became the fastest-growing startup in business history.

Lesson three – Innovate with other people’s resources, especially if they are under-utilised.  Uber does not own any cars. It is, fundamentally, an app which links people who want rides with people who are prepared to provide them. How can you harness the so-called “gig economy” to help other people provide a service which customers will value?

Find something broken, and fix it. Kalanick had the idea for Uber when he was in Paris in 2009 and could not get a taxi. Most people would just complain or take the bus, but Kalanick thought there must be a better way. He thought: “Why not harness the capacity of all the drivers in Paris who would be happy to give me a ride for a fee?”.  Wherever there is a constraint on supply, there is an opportunity for an innovator to find a new way to meet the demand.

Anita Roddick

Anita Roddick opened the first Body Shop store in Brighton in 1976 to provide an income for herself and her two daughters. The Body Shop was remarkably different from conventional cosmetic stores. It offered quality skin care products in plain refillable containers and sample sizes, with little advertising or marketing.

Roddick created a range of products based on natural ingredients at a time when people were increasingly anxious over the use of chemicals – appealing to her customers’ concern for the environment. She even offered discounted refills to customers who brought back their empty containers. This fresh approach proved a storming success.

Lesson four – Do the opposite. Swim against the tide. Anita Roddick deliberately did the reverse of what the industry leaders and experts did.

She saw that cosmetic stores were stuffy places that sold toiletries, perfumes and medicinal creams in expensive packaging and pretty bottles. She swam against the tide by packaging goods in Body Shop stores in cheaper plastic bottles with plain labels.

Paul Sloane is the author of Think Like an Innovator – 76 inspiring lessons from the world’s greatest thinkers and innovators.

Read Olympian Sally Gunnell’s exclusive tips for small business owners.

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