Innovators Mean Business
By Bill Adams
What a weird combination.”
That’s what I thought as my friend pulled in to get gas and to buy milk on the way home from work.
“Selling milk, bread and other staples at a petrol station – that would never fly in America,” I mused.
It was the early 1970s just outside London, and I was heading out to the home of an English colleague. I could not conceive that people would want to buy convenience items where they filled up their gas tanks. Now Sheets, WAWA, Tom’s and most other chains make more money from those items than they do at the pump.
To get a package overnight from Scranton to Boston, you used to send it by courier over the roads. Then along came a guy named Fred Smith who said, “I’ll pick up that package in Scranton, fly it to Memphis and then back to Boston and guarantee delivery by 10 o’clock in the morning.” He called his company Federal Express.
Those are two examples of how innovation often rides right over preconceived notions about how business should be done. Pete Kelleher founded Southwest Airlines by breaking the mold of common practice. One of his mantras: “We make money only when the planes are in the air. So we will cut the turnaround times for flights to the minimum, without compromising safety or customer satisfaction.”
Stand by a gate and watch a Southwest plane unload and load passengers. As the incoming passengers are filing out, the flight attendants are cleaning up the cabin. They are well-paid, motivated and nonunion, so there are no restrictions on their doing this kind of work. Other airlines usually have a separate cleaning crew.
The passengers waiting to board do not have seat assignments. They have cards that entitle them to A, B or C priority in choosing their own seats, with numbered priority within each category. Boarding is faster and passengers are generally pleased to be able to choose their own seats. I once timed this procedure. It took only 21 minutes from when the first passenger deplaned until we were all in our seats. We fill those seats because Southwest offers lower fares, which it can do with lower operating costs per air mile.
How do you create a wine that is so good that it commands a premium price? Vintners around the world have had to rely solely on experience, judgment and a lot of guesswork. Most new premium varieties fail or have to be sold at lower price points. Now Enologix employs mathematical algorithms, culled from a database of 70,000 vintages, to mimic the chemistry of wines ranked highly by leading critic Robert B. Parker. That is a game-changing opportunity for savvy vintners.
The Internet has broken a lot of old business molds. Sometimes it actually works to the advantage of businesses that feel threatened by the Web. The old mold for the independent bookstore was to open the shop for up to 50 hours a week, and hope that seekers would walk through the door to browse or to ask for a certain used, rare or out- of-print book. Predictions were dire for these bookstores, which were already under pressure from the national chains. Now they can list their titles on the Internet. Bookfinder.com claims to have listings for 150 million new and used books for sale. Look up “Murder in Paradise,” the story of the local 1950 killing by Edward Gibbs, and you will be shown 12 pages of where to buy that book and others with the same title.
Preconceptions about how business will always be done either open the door to innovation or block it. It’s tough to spot threats from outside your industry that could put you out of business if you have a huge investment in making a product or delivering a service. Even those who spot threats are often in reasonable denial. If you were a strategic planner at Smith-Corona in the 1970s, could you have believed that the market for typewriters would collapse within 15 years? What were the odds in the mid-1980s that within 15 years there would no longer be a viable market for Armstrong inlaid vinyl floors? How fast did the Internet collapse the sales opportunity for printed encyclopedias? How long will it take Netflix to put Blockbuster out of business?
The best strategists in business ask all the time, “What change from outside our company, our geographical area or our industry could seriously threaten our business?”"What changes do we have to make if we identify a serious threat?” And, best of all, “What new offer to the market can we create that changes the playing field in our favor?”
We consumers will reward those who come up with the best answers.
Bill Adams is a former president and chairman of Armstrong World Industries. E-mail him at sunnews@lnpnews.com.
(c) 2008 Intelligencer Journal. Provided by ProQuest LLC. All rights Reserved.