Hello, I'm Shlomo Maital. Welcome back to Cracking the Creativity Code, Part Two, Delivering Ideas. Thanks a lot for sticking with us and joining us for tool number five. Tool number five is about platforms. How to build a platform, not just a product. How to build a whole system that generates a whole range, or stream of great value creating products, not just a single product. So this is a difficult problem in the world of startup entrepreneurship. A brilliant entrepreneur has a great idea and builds a value profile, has the wow, raises some money, figures out the activity map, hires people, builds a team, gets a strategic partner, makes it all happen, and then the next step. What's the next innovation? I work with a lot of startup companies. Some of them are really successful, but many of them really struggle to move on from the initial innovation, the initial creativity to generating creative ideas every single day, retaining their focus, but keeping one step ahead of the competition, who are always behind them. Just like the antelope in the Serengeti, you have lions chasing you, and you gotta run faster than them, or you're out of business. How do you do that? On this slide I show the Queen of the Andes plant, kind of a cactus flower, and it blooms once, every 80 to 100 years, and the flower lives for just a few weeks and then it dies, and there are startups that resemble it. They have one idea in a lifetime, and they just never manage to deliver another. So what's the solution. The solution is to build a platform, make your flower of an idea not Queen of the Andes, make it into a perennial. In our garden we have perennial flowers, and they blossom every year, without my having to do anything. Can you make your startup into a perennial flower that blossoms with new ideas every single year? So, let me try to explain how one might do this and bring you an example. What is a platform? A platform is a collection of assets, assets are the foundation, the backbone that generates the value in your company that creates the products or services. Platforms are based on shared components. You have components that can go into a lot of your innovative products, shared processes, shared knowledge, you have knowledge nobody else does and you use that to create value in a range of services or products. Shared people, you have talented people, and you can use them to create a variety of innovative products, shared relationships and so on. So, a platform essentially is the backbone or the infrastructure, and you can use that to generate a wide variety of unique innovative value creating products and services. Some companies get it, others don't. So Fuji, which is still quite a successful company, made single use, quick snap, 35 millimeter camera. Kodak created something similar, the Kodak Max single use 35 millimeter camera. Fuji was clever enough to build a platform of single use cameras. Kodak essentially built one camera, and the rest is predictable. But here's a better example, an innovative company, a family company, called SC Johnson. By the way they brand themselves as a family company, rather than a multinational. They are multinational, but they're family owned. They discovered a process that uses aerosol spray to deliver value for their clients. It started with a product called Pledge, which is still a market leading product. A furniture polish, and unlike other furniture polish, this is an aerosol based spray furniture polish for home use, and it was successful. And Johnson was clever enough to figure out, [COUGH] wait a second, we can use this to deliver many of our products. We can deliver air freshener with an aerosol. We can deliver insect repellent with an aerosol. We can deliver shaving cream, called Edge, with an aerosol. So the Pledge product actually became a platform rather than a single product, based on the process of the aerosol spray. What do you have in your innovative idea as a startup entrepreneur that you can make into a platform? If you can use it to make a platform, you're more likely to build a sustainable growing business for a hundred years, rather than a single flower that blossoms, and then disappears and is no more. Alibaba is another example of a platform. Alibaba, a Chinese company, started by Jack Ma. One of the world's biggest websites, Alibaba does business to business marketing, and consumer to consumer marketing using e-commerce. So, Taobao is kind of business to business, but Alibaba has built a whole platform of companies. T-mall, consumer business, Alipay which is a system in which people pay for the product, and of course if you buy something online you have to pay for it, so Alibaba created a business that enables that to happen, with security AliExpress you have to deliver the packages. So, do you notice here Alibaba has managed to find all the sources of value creation, and create an integrated platform in all stages of the value creation process. Finding the product, selling the product, paying for the product, delivering the package and so on. A vast ecosystem that has proved highly profitable. Another way of creating a platform is to build a system. Many, many years ago, a century ago, Henry Ford built an ecosystem in Ford Motor Company. So, he assembled cars and then manufactured the components, and then had the rubber plantations that created the natural rubber that made the tires and steel mills that made the steel for the car. He vertically integrated the car business to produce almost everything that Ford Motor Company needed and wanted for its cars. Before we go on to discuss, a classic example [COUGH] of a platform, let me counsel you about the dangers of excessive platformitis. I've coined this term. It's a syndrome or an illness, and it can be quite dangerous. General Motors almost went bankrupt after the 2008 crisis, it was bailed out by the United States government, very controversial. The bailout turned out to be successful, saved a lot of jobs, but one of the problems that GM had is that through cost cutting, through platformitis, its cars came to look very similar one to another. Alfred Sloan built General Motors through acquiring a number of independent car companies. Chevrolet, Oldsmobile, Buick, Cadillac, and the cars were unique and distinctive, and Alfred Sloan let these independent units retain their independence and their designs, because he felt that was a great strength. Eventually GM began to build platforms and share components, and when you take that too far then all your cars begin to look alike, because they all have standard chassis and parts. So you can stick a different brand name on them, but the customer isn't stupid, and they can see that essentially this is the same car whether you call it Oldsmobile, Cadillac, Chevrolet, Pontiac, whatever. This wasn't the cause of GM's troubles, there were many others, but I think it was one cause. They lost sight of the fact that they needed to build beautiful, sexy, desirable cars that people loved to have, and that were unique and created distinct value. Sometimes a platform can be Creating a market of one. A former student of mine, B Joseph Pine, and his coauthor, wrote a wonderful book called Mass Customization, and talked about how today, customers want products that are tailored to their customs. Not [COUGH] the Model T Ford, and there were 15 million Model T Fords produced between 1909, and 1927 or 28, [COUGH] and these cars were all alike, they're all black, the same color. They were standard, that was the secret. They were mass produced and the cost fell rapidly. We call this a learning curve, and one of our tools is going to be creating learning curves and learning organizations. A young University of Texas student, named Michael Dell, discovered that he could build personal computers, which he loved more than his studies, better than IBM. How can a student build computers better than IBM? Well, he talked to his customers, like Exxon, discovered what PCs they wanted, and then built the PC using off the shelf components exactly to their specifications. He built computers that were mass customized, tailored to each customers preferences, and that was the basis of Dell Computer Company, which at one point was the largest computer company in the world, and the business model, the innovation was not the product. There were other laptops and desktop computers that were quite similar. The innovation was the business model, the platform. Dell managed to built a platform in which every computer they built was tailored precisely to what the customer wanted, because the customer ordered the computer and designed it himself, or herself over the phone, or by fax, or later using a website. Not an easy business model to do. You had to build a detailed activity map to do that. You needed integration with suppliers. Dell managed to do it and created a powerful value creating platform. So my question is, with your startup idea, with your discovery, can you now in delivery, focus on creating a platform that creates tremendous value without incurring excessive costs? Can you customize your product? Can you generate a range of products based on your shared assets, shared processes, shared knowledge, and shared skill? One more example, before we do some action learning. This is my old Sony Walkman. One of my favorite devices, this is the Sony Walkman radio, and I use it to keep up to date on all the things that are going on, and of course it has speakers that I stick in my ears. And the story of the Walkman is the story of a platform, and perhaps this is the iconic platform of all time. So, the Walkman is a Sony brand trade name, and it began as portable audio cassette players in the late 1970's, and evolved into a whole range of products. The prototype was built in 1978, it was a built by a Sony engineer in the tape recorder division, his name was Nobutoshi Kihara, and he built it for a co-founder of Sony named Masaru Ibuka. And Ibuka travelled across the ocean to do business in America, long trans-Pacific flights, they took a long time in those days, and he wanted to listen to his favorite music. He was a lover of operas, and so he asked his engineer to build a cassette player that was portable, with earphones, so that he could listen to opera during the long flights. Actually, at the time the tape recorder division of Sony was in trouble, because people were using fewer and fewer tape recorders, and it looked like the division might be shut down. So they created this innovation, the Walkman, and they were subject to ridicule, because they had a tape recorder that didn't record, had no recording heads. It simply played the music, it didn't record it. Wow, that's hilarious, a tape recorder that doesn't record. Nice going, guys! What are you gonna come up with next? And then, to make it smaller, they took the speakers out of it and added earphones. These weird things that you stick in your ears. Of course, today we accept this as natural, but in those days it wasn't natural at all. And when they did market tests, people looked at these weird things you stick in your ears and they said we wouldn't buy that, we don't want that, but the head of Sony at the time, Akio Morita, was very courageous. He had taken his family to live in America in the 1950's. Japanese people were not hugely popular in America in the 1950's. He knew that he had to do that. He had to live in America to understand the American psyche, the American consumer, because to survive, Sony had to be able to sell in the biggest market in the world, in the American economy. So Morita understood, despite the fact the Walkman failed market tests, he knew that this was a great product in America. He knew it would be successful. He knew that because Americans cherish privacy. So they want to be able to listen to music wherever they are, but they don't want to bother people by blasting it so that it disturbs other people. So the Walkman failed market tests, and was a huge hit, but my point is that the Walkman became a platform, and a great many devices were sold. Walkman, Discman, Pressman, Scoopman, Talkman. The name Walkman was applied to a wide range of portable devices. One estimate says that over 300 million of these Walkman devices of all kinds were created for radios, audio cassette recorders, disk players and so on. Ones that you put on your arm, ones that can go under water, a whole wide range of portable players. 385 million units sold up to 2009 when sales began to really, really decline in favor of other devices. So, these engineers and the Sony audio department, and the first engineer whom we mentioned Nobutoshi Kihara, who created this prototype, they were responsible for a platform that sold 385 million devices, and made Sony into a great company. Can you do this with your product? Can you create a platform? Action learning [COUGH] for your idea. Can you evolve it into a whole range of products or services sufficiently different so that each creates value in a unique way? Can you segment your market and create value for each market segment? Can you do this by sharing components, sharing processes, sharing design, sharing knowledge, sharing people and skills? All of these are platform techniques, and the whole idea of course is to continue to innovate, and create wonderful new products, and services again, and again, every single day to keep your company growing, and thriving.
