Transformative Entrepreneurs: How Walt Disney, Steve Jobs, Muhammad Yunus, and Other Innovators

205 Pages·2012·1.47 MB·English

by  Jeffrey A. Harris (auth.)

T ransformative
Entrepreneurs
T ransformative
Entrepreneurs
H ow Walt Disney, Steve Jobs,
Muhammad Yunus, and Other
Innovators Succeeded
J effrey A. H arris
T RANSFORMATIVE ENTREPRENEURS
C opyright © Jeffrey A. Harris, 2012.
A ll rights reserved.
F irst published in 2012 by
P ALGRAVE MACMILLAN®
i n the United States—a division of St. Martin’s Press LLC,
1 75 Fifth Avenue, New York, NY 10010.
W here this book is distributed in the UK, Europe and the rest of the world,
this is by Palgrave Macmillan, a division of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire RG21 6XS.
P algrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
P algrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-0-230-34026-8 ISBN 978-1-137-51231-4 (eBook)
DOI 10.1007/978-1-137-51231-4
L ibrary of Congress Cataloging-in-Publication Data
H arris, Jeffrey A., 1955–
Transformative entrepreneurs : how Walt Disney, Steve Jobs,
Muhammad Yunus, and other innovators succeeded / by Jeffrey A. Harris.
p. cm.
Includes bibliographical references and index.
1. Businesspeople—Case studies. 2. Entrepreneurship—Social
aspects—Case studies. 3. Technological innovations—Social aspects—
Case studies. 4. Success in business—Case studies. I. Title.
H C29.H35 2012
6 58.4⬘21—dc23 201031583
A catalogue record of the book is available from the British Library.
D esign by Newgen Imaging Systems (P) Ltd., Chennai, India.
F irst edition: January 2012
1 0 9 8 7 6 5 4 3 2 1
F or Shirley and Merle
C ontents
I ntroduction 1
1. C hanging the Landscape 1 3
2. C reative Construction 2 9
3. T rue Grit 4 3
4. N ew Horses for Old Courses 6 1
5. N ext-Mover Advantage 7 5
6. F ailure Is an Option 8 9
7. B ad Boys 1 03
8. E nterprising Enterprises 1 21
9. T he Epitome of Innovation 1 31
1 0. V enturesome Capital 1 41
1 1. N oble Endeavors 1 53
1 2. E ntrepreneurial Government 1 63
1 3. G overnment Matters 1 71
1 4. I nnovate or Die 1 79
A cknowledgments 1 87
N otes 1 89
S elected Bibliography 1 95
I ndex 2 03
I ntroduction
N ineteenth-c entury philosopher and writer Ralph Waldo
Emerson reputedly said, “ Build a better mousetrap and the world will
beat a path to your door .” It sounds great, but it’s not true. Success has
rarely been about building the better mousetrap. Commercializing the
better mousetrap is the key to success. Inventiveness is important and
wonderful, but unless you take that novel idea and make it useful, the
multitudes won’t seek to find your door. Invention and innovation are
not the same. Sometimes they go together, but only the true business
titans deliver both invention a nd innovation.
T he dictionary defines invention as “a new device or process devel-
oped from study and experimentation 1. ” Nowhere in that definition
do you find the words “useful” or “economic” or “solves a problem
experienced by many.” Only about 10 percent of patents granted in
the United States have any meaningful commercial importance that
benefits the average citizen, directly or indirectly. Invention is often
a precursor of innovation. Over time, innovation may lay the foun-
dation for future invention, providing a powerful regenerative engine
for progress in art, politics, business, and technology. Through this
building process, wherein invention begets innovation, which begets
more invention, which begets more innovation, society and the global
economy move ahead. As we have seen over the past one hundred and
fifty years, beginning with the Second Industrial Revolution, the rate
of change consistently speeds up, compressing the time span between
invention and innovation.
History is full of examples of great inventors who died broke and
scientists who held numerous patents but never attained volume sales
of their products. Alexander Graham Bell exemplifies the classic inven-
tor who was not an innovator. He developed an entirely new form of
communication when he patented his “speaking telegraph” in 1876,
2 T r a n s f o r m a t i v e E n t r e p r e n e u r s
but he lacked the desire and skill to build a business. Turning the
telephone into a practical device also meant having to develop auto-
matic switchboards, install telephone lines, and market the device to
enough other people that there was someone to take your call. As Bob
Noyce, co-f ounder of Intel and coinventor of the integrated circuit
said, “No businessman would have developed the telephone. It’s got
to be a maverick—s ome guy who’s been working with the deaf and
gets the crazy idea that you could actually send the human voice over
a wire. . . . A businessman would have been out taking a market survey,
and since it was a nonexistent product he would have proven conclu-
2
sively that the market for a telephone was zero.” Noyce’s comment
highlights that there are important but separate roles for inventors,
innovators, and businessmen, even when they are not wrapped into the
same person. Fortunately, Theodore Vail brought the business skills
to turn Bell’s exciting product into a business by creating American
Telephone and Telegraph (AT&T) and the nationwide Bell System.
Thomas Edison was an exception. With nearly 1,100 patents, mak-
ing him among the largest owners of U.S. patents in history, he said, “I
never perfected an invention that I did not think about in terms of the
service it might give others. . . . I find out what the world needs, then
3
I proceed to invent.” He came to prominence with his inventions of
private telegraph machines, stock tickers, moving pictures, the electric
chair, the phonograph, and a key breakthrough in amplifying sound
waves that made telephones readily usable. Edison understood that
the incandescent light bulb would be a mere novelty unless he could
find a way to integrate it with an economical and safe electrical distri-
bution system. He found ways to finance his ventures, create the orga-
nizations, develop the manufacturing processes, and build businesses
around his inventions. Edison invented, installed, and commercial-
ized the dynamos and generators to make and distribute electricity on
a grand scale so that consumers and businesses could enjoy the afford-
able electricity that enables our way of life. Together, Edison’s equip-
ment to produce electricity and the devices to use electricity made a
formidable combination which ultimately formed the cornerstone of
General Electric.
Joseph Schumpeter, the nineteenth- century Austrian- born econo-
mist who developed the concepts behind “creative destruction” said
that “it was not enough to produce satisfactory soap, it was also neces-
4
sary to induce people to wash.” There has to be a market for a product,
I n t r o d u c t i o n 3
service, or invention for it to gain any traction or a meaningful level
of acceptance. Without acceptance in the marketplace for products,
ideas, and technologies, they linger and die. It isn’t that many inven-
tions are not creative or useful to someone. It isn’t that most inventions
aren’t clever. Often, they are. But unless enough people care to employ
the invention in a way that makes a big difference in how we live and
work, then there isn’t much value created. Today, the world is awash in
new technologies that overwhelm our ability to use them. Only those
technologies that underpin products and services that people want
to purchase will gain acceptance, and the rest will be discarded until
someone develops the right business model to commercialize them.
I nnovation is about commercializing new ideas, new products, new
services, and new technologies. We foster innovation in many ways, but
there is not a “right way” or a “wrong way.” There is no proven cookie-
c utter innovation model or secret recipe that all of us can follow. While
some people develop a master plan after years of scientific investigation
and market studies, and others may have a “eureka moment,” most
innovation starts from a simple idea which gets modified and adjusted
over time as it comes face-t o-f ace with the real world—w ith competi-
tive responses, shifting regulatory environments, evolving managerial
talents, and fluctuating capital markets. We can cite common themes
and common denominators, which this book explores, but there is no
guaranteed formula for successful innovation, especially innovation
that is disruptive. Fortunately, we can learn from many great examples
of innovation flowing from those that understood how to make some-
one else’s invention or new idea popular and profitable.
The dictionary defines an entrepreneur as “a person who organizes
and manages any enterprise, especially a business, usually with consid-
5
erable initiative and risk.” Entrepreneurs are prepared to fail in their
attempt to create and implement new businesses, new ideas, new ways
of doing things, whether they are for- profit or social ventures, are in
start- up companies or large enterprises, and whether they are moti-
vated by wealth or not. Entrepreneurs take risk. They are prepared to
be wrong, but they don’t expect to be. As Henry Ford once said, “If you
think you can, you can. And if you think you can’t, you’re right. ”
H arvard’s famed business historian Alfred D. Chandler said, “t he
entrepreneur is an innovator who reshapes patterns of production and
distribution by developing new products and processes, by new mar-
6
kets and sources of supply and by devising new forms of organization.”
4 T r a n s f o r m a t i v e E n t r e p r e n e u r s
But, not all successful entrepreneurs are great innovators. For example,
Bill Gates is among the most accomplished entrepreneurs of all time,
but most people would never accuse Microsoft of introducing trans-
formative innovations. After dropping out of Harvard University in
1975, after his sophomore year, to move to Albuquerque, New Mexico,
Gates began to build Microsoft into one of the most lucrative busi-
nesses ever by pursuing a “fast-f ollower” strategy and “winner-t ake-
a ll” execution. We should applaud those achievements but not confuse
them with innovation. Similarly, Sir Richard Branson has brought us
a wide variety of products and services, ranging from cola to airlines
to music publishing to retailing and mobile phone communications to
developing his Virgin brand around the world. These have been superb
accomplishments reflecting tremendous business skills, but they have
hardly been transformative. And, perhaps the most successful entre-
preneur of all time, John D. Rockefeller, whose aggressive business
tactics in drilling, transporting, and refining oil built The Standard
Oil Company into a near monopoly in the United States in the early
twentieth century, created a personal net worth exceeding $1 billion at
a time when the entire country’s GDP was only $90 billion. He did not
base his success on invention or new technology; instead it came from
an astonishing ability to understand the benefits and power of indus-
trial scale and then devise and implement a strategy to consolidate the
fast-g rowing oil business.
R enowned author and management consultant Peter Drucker said,
“Innovation is the specific tool of entrepreneurs, the means by which
they exploit change as an opportunity for a different business or a dif-
7
ferent service.” These entrepreneurs/innovators had an instinctive
understanding of how to meet the need of customers, often before the
customers understand that they have the need. But to achieve commer-
cial success, they had to do more than identify the opportunity. They
had to attract outside capital, design and manufacture a cost-e ffective
product or service that could withstand competition, organize and estab-
lish distribution channels, build an internal organization, and some-
times, construct manufacturing facilities, all with sufficiently attractive
economics to generate and support a sustainable going concern.
A lthough most successful entrepreneurial enterprises never attain
luminary status, many usher in sufficiently powerful innovations
to make their mark: Ida Rosenthal and her Maidenform brassiere,
improving comfort while accenting women’s feminine shape for the