Thomas Edison stated that “invention is taking old ideas that can be used in new places.” His Menlo Park Research facility was one large room where all his staff worked without walls and secrecy. His technicians were encouraged to view and contribute to any project that was underway.
At the end of World War II, the Allies appreciated the importance of getting the defeated powers back on their economic feet. As a consequence, Germany and Japan were each provided with resources to rebuild their industrial infrastructure. In doing so, the two former aggressors were no longer military threats, because these countries now built cultures in which the key driver for success was economic prosperity and not military prowess. Their success would now be measured by Gross Domestic Product (GDP) improvement, not territorial conquest.
Japan, led by the efforts of General McArthur, brought in a resource that had hitherto been ignored in the USA. That resource was an industrial professor from MIT, Dr. Edward Demmings, who subsequently came to be regarded by the entire world as the foremost authority on all aspects of industrial quality and productivity.
In Japan, his name is honoured and emblazoned on the “Demmings Award”. This is the most prestigious honour a Japanese company can receive. Given out yearly, the recipient of the Demmings award is judged based on two criteria alone. The winner is the company that has most improved its quality and production outputs.
One of the best examples of how innovation can achieve spectacular results is in the way the Japanese automobile industry has progressed from the outmoded days following WW II to the colossus it has become today. As a result of a strong commitment to innovation, by 2010, Toyota, which was already larger than Ford, usurped General Motors’ position as the world’s larger supplier of automobiles.
The Japanese created this spectacular growth as a new player in a mature market, where the major competitors had:
Superior brand recognition,
Almost insurmountable protection by the US government,
Deep, deeper, unbelievably deep pockets to sustain unprecedented marketing campaigns,
And price competitiveness.
How did the Japanese manage this spectacular growth? Well, it is because of Demmings’ ideas. His beliefs have been given Japanese names that we now use: Kaizen, Kanban, JIT (Just in Time), Quality Circles and the list goes on. His resolve to have them invent nothing and improve everything is what created a culture driven toward market dominance. Demmings knew that improved processes might help sustain price wars, but product quality must be the first metric used.
For innovation to be effective, the first objective is to improve the product quality and then reduce the costs to improve profits.
The Japanese model is:
Let’s look at what has been done,
See how we can improve it,
Then build the processes that will deliver that quality at a competitive price.
Philips Electronics is a prime example of a company that leads the world in terms of its ability to come up with new inventions and yet Philips has been constantly left behind by its competitors. Why should this be?
Take a look at a standard cassette for audio or videotape and you will most likely see the Philips patent registration. Fortunately for them, it was the royalties from this patent that became one of Philips’ greatest sources of revenue.
Most people know that Philips invented the rotary shaver, but they may be surprised to learn that it was Philips’ engineers who invented audiotape cassettes. They also invented a video system that, in its day, was considered to be technically far superior to either Sony’s Betamax or Matsushita’s VHS.
Japanese ingenuity took the form of a simple device called the “Walkman.” As one of the stories about the creation of the Walkman goes, it was the idea of the President of Sony, Mr. Akio Morita. After travelling with his children in a car and hearing them squabble about which music they would listen to, Mr. Morita went home and told his engineers to put together a device that could be powered by batteries but remain small enough to be carried easily by his children. Note this is a very clear mandate.
There are other myths about this invention. A second one is that Mr. Morita personally wanted a device that would allow him to listen to music while he played golf. A third story is that he wanted it to use while travelling on airplanes to the United States for business.
Whichever version you choose to believe, none of them is true. In a recent court settlement, the actual inventor of the Walkman concept was recognized as a German inventor by the name of Andreas Pavel. Nothing was invented with the introduction of the Walkman. The Play, Record, Stop and Pause buttons were already known symbols. Philips had created the tape management systems. All Sony engineers did was improve and miniaturize existing technologies to create a device for personal, portable listening and then later add the ability to record as a product enhancement.
Sony, not Philips, controlled the flow of music and music delivery systems. Still today Sony engineers invent nothing; they take old ideas or ideas that have not been applied and apply them to current user needs. Sony does not waste resources inventing, but they create profits by solving customer-driven problems. This is a great example of Problems presented as Projects that evolve Opportunities to improve, resulting in increased Profits (PP0 = P$), thus the i2P formula at work.
So, what do the Sony and Toyota successes tell us? Innovation is only successful when applied to the right need.
The Theodore Levitt quotation from Chapter One rings true and clear again and should be restated: “There is an important difference between being innovative and being an innovative enterprise. The former generates lots of ideas and the latter generates a lot of cash.”
The Japanese, still today, let others waste their time trying to create new disruptive solutions. They believe their customers want things that can be used now and that have great value to the user. The best products come from the application of innovative ideas, not invention. The “Technology Adoption Curve” is well described in two famous books by Geoffrey A. Moore: “Crossing the Chasm” and “Inside the Tornado.” i2P mentors often suggest that clients read and share these books with their staff if they honestly believe they are undertaking the introduction of disruptive technology, or as Mr. Moore calls it, “discontinuous innovations.”