Part of my Innovation and Design Management lecture series focuses on whether it is better to be first or best when bringing a product to market. A great example is the story of Coca Cola and Pepsi, arch rivals in the soft drinks business, who have been slogging it out for well over a century. The products are remarkably similar, and in blind taste tests Pepsi is often found to be the favourite, yet Coke is the undisputed market leader.
Despite recent concerns about sugar content, Coke shows no signs of losing its popularity and looks set to continue as the world’s favourite – even though Pepsi might taste better. This says much about the power of advertising and marketing. Coca Cola has strong branding which remains almost unchanged from the 1890s original, and consistently innovative, eye-catching advertising campaigns over the years have ensured that it remains ‘top of the mind’ in audiences all around the globe. One of the many things I learnt from my years as a creative – don’t mess with the logo!
These days, the fashion market seems to be a very crowded place to be. With so many choices for young buyers both on the high street and online, it must be difficult for many retailers to survive. I have always taken an interest in the rise of the Spanish chain Zara, which seems to have bucked the trend and enjoyed several years at the top, and so I chose to include it in my recent series of lectures on Retail and Merchandising as a company that has taken a slightly different approach.
Zara has cleverly chosen to house its stores in prime retail locations, with top-quality fittings and great merchandising, all disguising the fact that the product is very competitively priced and often mid-range on quality. However, their adoption of ‘fast fashion’ – the disruptive strategy that allows them to make rapid changes to their offering in response to buying patterns – means that they always have something new and stylish on show. And so Zara’s owner Amanico Ortega is now the richest retailer in the world, not least because of his huge holding in prime real estate – a great exit strategy, should he ever need it.
Considering the question of invention versus innovation in my series of lectures on Innovation and Design Management, I came across the fascinating story of the little-known Croatian-born inventor Nikola Tesla. The name Tesla has now become synonymous with the classy electric sports car that bears its name, a car that is enjoying remarkable success against all the odds, but the story of Nikola Tesla is even more remarkable.
Tesla made huge strides in the early adoption of electricity, developing the ‘AC’ system while the likes of Thomas Edison were still using the old ‘DC’ system. He even worked on wireless lighting and communication as far back as the 1890s. But, as is so often the case, Tesla lacked the necessary business skills to make a commercial success of his inventions, and others profited from his brilliance. How often, in recent years, have we seen great British inventions taken up and exploited by foreign companies to their obvious advantage?
It is possible that you are controlling your home heating system with the help of Nest, the brainchild of ex-Apple engineer Tony Fadell, who sold his 4-year-old start-up company to Google in 2013 for $3.2 billion. Why would a company like Google be interested in a device that regulates people’s central heating? (Oh, and there was also a smart carbon monoxide detector under the Nest banner.) I found the answer when researching my series of lectures on Leadership, Teambuilding and Managerial Creativity.
Tony Fadell is not just interested in user-friendly heating regulators. He is interested in total connectivity, or The Internet of Everything. And that is something that Google are very interested in. Imagine the sort of data gathering that can be achieved when a company has access to people’s total buying habits – whether it’s their domestic fuel consumption or the contents of their fridge. That equals power, and one amazing revenue stream. Fadell claims that he is not motivated by money – hence the sell-out – as he just wants to get on with making great products. He trusts the team at Google to look after our data. I only wish that I shared his confidence.
Very rarely does a creative rise to the position of CEO in an organisation. In my experience, it is rare to find creatives heading up creative companies, let alone commercial businesses. So Christopher Bailey of Burberry is a rare thing indeed, and an obvious candidate for inclusion in my lectures on Innovation and Design Management. Along with ex-Apple senior vice-president Angela Ahrendts, Bailey turned the tired old trenchcoat retailer into a world class brand, with a showcase store on London’s Regent Street that sets a new benchmark in retailing. How was all this possible?
There is no doubt that Bailey had extraordinary vision. As Creative Director, and later CEO, he repositioned the brand by bringing in the latest fashion trends and combining them with the famous Burberry check, and by exploiting the latest technology such as social media, video and online retailing he was able to transform the company into a world leader. Bailey exemplifies creative management at its most successful level, and I take my hat – or trench coat – off to him.
Following the financial crisis of 2008, the banking sector came in for its fair share of criticism. Already disliked in many quarters, the banking fraternity were vilified in the media and very little sympathy was extended to the likes of Lehman Brothers who were allowed to ‘fail’. All the more surprising, then, that Goldman Sachs has not only survived, but now competes with the tech giants in Silicon Valley for the very best graduates from around the world, and is known as a great place to work. How come? I attempted to answer this in my series of lectures on Leadership, Teambuilding and Managerial Creativity.
Despite its traditional values and some interesting quirks – it operates its staff canteen on a commercial basis, charging increased prices in periods of high demand – Goldman Sachs is surprisingly liberal in its attitude to staff and working conditions. Flexible hours are encouraged, and there are systems in place to encourage return to work after breaks. They have a great record on minority group issues, as well as philanthropy. Most surprisingly, in a tough, competitive environment with plenty of pressure, employees claim that there is ‘an overriding feeling of consensus’. Maybe in this bank, at least, all is not as bad as we think.
Aeronautics has always been a favourite subject of mine, and so it seemed an obvious choice when selecting a case study for my series of lectures on Innovation and Design Management. A classic example of whether it is better to be first or second to market with a product is the story of De Havilland’s ‘Comet’, the first civilian jet aircraft to enjoy commercial success in the 1950s. All was going well for the UK manufacturer until a series of fatal crashes led to concerns about the Comet’s long-term safety, and panic set in.
Enter their American rival, Boeing, who had been waiting in the wings while developing their own jetliner, the Boeing 707. With the advantage of a few years in which to study and improve on the engine, the body and the interior, it was almost inevitable that they would produce a superior plane. Over the years, there were more fatalities from Boeing crashes than De Havilland – but that was because Boeing had seized the market for all time. Bad news for the British aero industry, and bad news for a die-hard plane spotter like me.
Few toy companies win the kind of admiration that is enjoyed by Lego. Universally respected, and loved by generations of children – and many adults – since its first appearance in the mid 1950s, the Lego brick has always been associated with quality, creativity, and learning through play. With the company’s current high profile, courtesy of Lego’s move into film making, there seems to be no stopping them. But this has not always been the case, as I discovered when researching my series of lectures on Leadership, Teambuilding and Managerial Creativity.
In the early years of the new millennium, Lego began to lose its way. Theme parks mushroomed, and the range was extended to include clothes, books and dolls. Lego packs were filled out with pre-formed plastic pieces that had nothing to do with fixing bricks together, and profits plummeted. Enter a new CEO, the first non-family member in Lego’s history, and the company was turned around. How did he do it? By going right back to the brick – the thing that makes Lego unique. And they have been building on that success ever since.
Any chocolate lover will be familiar with the names Marathon, M&Ms, Twix and many more household brands that emanate from the Mars factory. This giant of the confectionery world – the third largest privately owned company in the US – also owns the Pedigree and Whiskas pet food brands, and Wrigley’s chewing gum, and has world-wide distribution. What fascinated me about Mars as a company, when researching my series of lectures on Leadership, Teambuilding and Managerial Creativity, was their extraordinary record on employee satisfaction and loyalty. What makes it such a great place to work?
One of the factors has to be their insistence on quality. None of their products is allowed to get through if it doesn’t meet the company’s exacting standards. And so employees take pride in their work, and they feel appreciated. Staff turnover is very low, and many employees are third generation Mars workers, or ‘Martians’, as they call themselves. Management encourage job-swapping and training, so there is plenty of opportunity for advancement. But maybe most important of all, Mars remains independent, which means no shareholders and no media interference. And that keeps Mars, and its staff, sweet.
It would be difficult to put together a series of lectures on Innovation and Design Management without the inclusion of the late Steve Jobs and Apple. And it’s hard to think of anyone quite like him in terms of vision and single-mindedness, but if anyone comes close, it must be Elon Musk of Space-X and Tesla. Both men were able to attract the very best designers and developers, as well as funding, for their projects, leading to extraordinary success in unlikely fields. But what singled them out for this success?
Many column inches have been devoted to the search for an answer to this question, and there are unique circumstances that apply in both cases that have played their part. Yet I believe that their understanding of how products work is absolutely key to their success in business. They share an understanding of the mechanics of their products just as much as an understanding of what the public wants, and this has given them a strategic advantage over both their competitors and their employees. Looking ahead, we would do well to place more emphasis on technical competence in education and less focus on academic success.