The art of innovation Guy Kawasaki TEDxBerkeley

Transcriber: TED Translators admin Reviewer: Queenie Lee Thank you. Yes, it is true that I am a Stanford graduate. Don't hold that against me, okay? My son goes to Cal, so I have some link to Cal. It is really an honor to speak at any TEDx, but to open one up is really, really special. So last night I told my wife, you know, of all places, in your wildest dreams, did you ever think that I would open up TEDxBerkeley? And she said, honey, you're not in my wildest dreams. (Laughter) So, welcome to my life. (Applause) You know, the theme of thinking and defining and creating is all about innovation, so my talk is about the art of innovation. I use the top ten format. That's because I've seen so many high-tech speakers, and I'll tell you, most high-tech speakers suck, so I figured out very early in my career if you use the top ten format, at least the audience can track progress through your speech, so if they think you suck, they know about how much longer you'll suck. So I have ten key points for you. I worked at Apple, I've been a venture capitalist, an entrepreneur, an advisor to Google, I've done a lot of things, and I've learned a lot about innovation, which I would like to pass on to you now so that you may go and change the world. Okay? This is my top ten of the art of innovation. It starts with the desire to make meaning as opposed to make money. Making meaning means that you change the world. And I think you'll notice that if you happen to change the world, you will also probably make money, but if you start off with the sole desire to make money, you probably won't make money, you won't make meaning, you won't change the world, and you will probably fail. So my first thought for you is: determine how you can make meaning. How can you change the world? Here are some examples. With Apple, Apple wanted to democratize computers. They wanted to bring computing power to everyone. That's the meaning they made. With Google, they wanted to democratize information, making information available to everyone. With eBay, they wanted to democratize commerce so that anyone with the website could stand toe-to-toe with any other large retailer. Examples of companies making meaning. And YouTube, finally, wanted to enable people to create video, to upload video, to share video. So this is an example of the company and the kind of meaning they made. And, as you know, they all made this kind of meaning and they've been highly successful. So what I noticed in my career is that if you truly want to make meaning, it's the first step towards innovation. The second step is to make a mantra: a two- or three-, maybe four-word explanation of why your meaning should exist. This is an anti-example. This is the mission statement of Wendy's. The mission of Wendy's is to deliver superior quality products and services for our customers and communities through leadership, innovation, and partnerships. I have been through Wendy's many times in my life - I've eaten at Wendy's; I've driven through Wendy's - and in every occasion, it has never occurred to me that "Guy, what you are participating in is leadership, innovation, and partnerships." (Laughter) You know, excuse me, but I thought I was just getting French fries, Coke, and a hamburger. This is the problem with mission statements. Don't make a mission statement. Make a mantra. Wendy's mantra should be "Healthy fast food." Three words that determine what Wendy's is trying to do. Somewhat oxymoronic - but "Healthy fast food." Nike. Nike has a great slogan: Just do it. That's a slogan. A mantra explains why you should exist, and the Nike mantra is "Authentic athletic performance." And finally, there's FedEx. When you absolutely, positively want something somewhere, what does FedEx stand for? It stands for "Peace of mind." So my second recommendation to you is that when you decide on the kind of meaning you make, try to find two or three words that describe why that meaning should exist. Not a 50-word mission statement, two- or three-word mantra. The third thing is a matter of perspective. The perspective is to jump curves. Not to stay on the same stupid curve that you're on. Not to try to do things 10% better. When we were creating the Macintosh, we were not trying to make a slightly better Apple II or a slightly better MS-DOS machine. We were trying to jump to the next curve of personal computing. The greatest example of this occurs in the ice business. Ice 1.0. In the late 1800s early 1900s, there was an ice harvesting business in the United States. This meant that Bubba and Jr., during winter, would go to a frozen lake or pond, cut blocks of ice. Nine million pounds of ice was harvested in 1900. Their idea of innovation was: bigger horse, more horses, bigger sleigh, sharper saw. But it was fundamentally: wait for winter, live in a cold city, cut blocks of ice. 30 years later, we have Ice 2.0. Now we have the ice factory. Major technological breakthrough. It did not have to be winter; it did not have to be a cold city. You froze water centrally and delivered it via the ice man in the ice truck. Imagine the breakthrough this was. No more limitations by climate. No more limitations by season. You could have an ice factory. 30 years go by, we have Ice 3.0. Refrigerator curve. Now, it's not a matter of can you freeze water, essentially? Can you put it in a truck? Can you deliver the ice to people? Now, everybody could have their own personal ice factory. A PC, if you will. A Personal Chiller. (Laughter) The very interesting story about all of these curves is that none of the organizations that were ice harvesters became ice factories, and ice factories did not become refrigerator companies, because most companies define themselves in terms of what they do, not the benefits they provide. If you define yourself as we cut blocks of ice out of lakes, you remain an ice harvester. If you define yourself as we freeze water centrally, you remain an ice factory. If you define yourself as we make a mechanical gadget called a refrigerator, then you stay on the refrigerator curve. Great innovation occurs when you get to the next curve, when you go from telephone to Internet, when you go from a Daisy-wheel printer to a laser printer, to 3D printing. Great innovation occurs on the next curve. The fourth thing is to roll the DICEE. These are the five qualities of great innovation. Great innovation is deep. Lots of features. Lots of functionality. This is a picture of a fanning sandal made by Reef. Arguably the deepest sandal ever made. Every sandal has one primary purpose: to protect your feet. If you look at that circled area, that's a metal clip. That metal clip is for the sandal to open beer bottles. This sandal has twice the functionality. Twice the depth of any other sandal in the world. Great products are also intelligent. When you look at it, you say, "Aha, somebody understood my pain; somebody understood my problem." This is a GT500 Shelby Mustang. 650 horsepower. For those of you in Berkeley who do not rate the horsepower in muscle cars, this is 6.8 Priuses. (Laughter) I would love to buy one of these cars. 59 years old, going through a midlife crisis, feelings of impotency: I would love ... (Laughter) I would love to buy this car to compensate for my feelings of inadequacy. However, I have two teenage boys; one's 18, and one's 20. And I know that no matter how carefully I plan it, there may be instances where they may drive my car. And the thought of them in a 650 horsepower car is immoral. (Laughter) I've learned, however, that Ford makes a very intelligent product called the MyKey. And what the MyKey enables you to do is program the top speed of the car into the key. Very intelligent product. Great products are also complete. It's the totality of the product. In the software business, it's not just the software; it's not just the DVD. It's the webinar; it's the documentation; it's the android developers if you have an android phone; it's the iOS developers if you have an iOS phone; it's the totality. Great products are also empowering. They make you more creative, more productive. They enhance you. They change the meaning of your life. This is a picture of a MacBook Air. If you use a Macintosh, it becomes one with you. It makes you more creative and more powerful. More productive. Windows you have to fight. You have to wrestle Windows to the ground. You need to defeat Windows. (Laughter) And, finally, great products are elegant. Somebody cared about the user interface. So as you go through life, and you're trying to jump curves, ask yourself, "Am I creating something that's deep and intelligent, and complete, and empowering, and elegant? Am I rolling the DICEE?" The fifth thing is - I stole something from Bobby McFerrin. He had a great song. Don't Worry. Be Happy. But what innovators do is don't worry, be crappy, which is to say, when you have the first refrigerator, there may be elements of crappiness to it. When you have the first laser printer, there may be elements of crappiness to it. When you had the first Macintosh, thanks to my efforts there was no software; there was no hard disk, not enough RAM, too slow a chip. Lots of elements of crappiness to it. But, if you waited for the perfect world and you waited till the chips were cheap enough, and fast enough, and everything was in place, you would never ship. And I learned a very valuable lesson. Don't worry. Be Crappy. When you have jumped to the next curve, it's OK to have elements of crappiness to your revolution. I am not saying you should ship crap. I am saying that you should ship things that are revolutionary, innovative, on the next curve that have elements of crappiness to it. Biotech people, ignore this slide. (Laughter) Number six is to let 100 flowers blossom. I stole this from chairman Mao although it's not clear to me he ever implemented this. Letting 100 flowers blossom means that at the start of great innovation, you may think you have in mind exactly who your user is, exactly who your customer is, what they should do with your product. And you may be surprised that people are going to use your product in ways you did not anticipate. It's going to be people who you did not anticipate would be using it at all. And when this occurs: hallelujah! Thank God that it's occurring. Positioning and branding ultimately comes down to what the consumer decides, not to what you decide. So, with Macintosh, we thought we had a spreadsheet, database, and word processing machine. We were zero for three there. What made Macintosh successful was Aldus PageMaker. PageMaker created a field of flowers called desktop publishing. Desktop publishing was what saved Macintosh. Not spreadsheet, database, or word processor. If we focused on spreadsheet, database, and word processor and ignored desktop publishing, Apple would be dead today. With Apple dead, it would be a different world. We'd all have phones with real keypads; the batteries would last more than a day; the GPS would actually work. It would be a different world, right? Aldus PageMaker was a gift from God to Apple because it saved Apple. I believe in God, and one reason why I believe in God is there is no other explanation for Apple's continued survival than the existence of God. (Laughter) Let 100 flowers blossom. Don't be proud. Take your best shot with positioning and branding, but then when customers use your product, if they say it's a desktop publishing machine: Hallelujah! Declare victory. It is now a desktop publishing machine. Number seven, polarize people. Great products, great services, great innovation polarizes people. This is a TiVo. People like me, who travel a lot - I love TiVo. We have four TiVos in our house. I need to time shift a lot of TV; I love to watch TV. There are people who also hate TiVo. People who hate TiVo usually work for large brands and advertising agencies, because people like me, we watch advertising one day a year. About a week ago, right? We watch Super Bowl ads. The rest of the year, we are fast-forwarding with TiVo through ads. Great products polarize people. If you're an agency, you hate TiVo. If you're me, you love TiVo. You can love or hate a Harley-Davidson. You can love or hate a Macintosh. You can love or hate an iPhone. I'm not saying that you should intentionally piss people off, but I'm telling you that great products polarize people. Don't be afraid of polarizing people. Number eight is churn, baby, churn. This is stolen from the Black Panthers, who said "burn, baby burn." But what innovators in business do is they churn, baby churn. They take version 1, and they make it 1.1, 1.2, 1.3, 1.4, 1.5, 2.0; the hardest thing in the world. Because to be an innovator, you need to be in denial. You need to be in denial because the naysayers will tell you it can't be done, shouldn't be done, not necessary. You need to ignore those people. But as soon as you ship, you need to flip that bit and start listening to people and churn your product. Change it, change it, and change it, and keep evolving it. Number nine is all the marketing you need to know. It is to niche thyself. It's a very simple chart. On the vertical axis, we measure uniqueness. On the horizontal axis, we measure value. This is a 2 × 2 matrices. When you graduate, if you go to work for McKinsey, you'll be charging five million dollars for people to figure out that they want to be in the upper right-hand corner of this chart. (Laughter) Let's go through all corners, in the bottom right is where you have something of great value but it's not unique. There, you have to compete on price. This is what I call the Dell corner. Slap the same operating system on the same hardware. You have to compete on price. In the opposite corner, you have something truly unique. Only you do it, but it is of no value. In that corner you are just plain stupid. (Laughter) Bottom left corner, we call that the USC corner. The bottom left corner ... (Laughter) (Applause) (Cheering) The bottom left corner is what I call the .com corner. In the .com corner, you have something that's not valuable and not unique. Like buying dog food online. We buy dog food online. You pay as much for the dog food, because of shipping and handling, and then you have to be at home when UPS drops off the dead cow in the can. So it's not very convenient and it's just as expensive, so it's not valuable. And then stupid people like me, because there was, we decided we had to have our own portfolio in so there were multiple ways to spend the same amount of money on dog food, less conveniently. That's the worst corner. Not valuable. Not unique. If you want to be in is the upper right-hand corner. In that corner, you are unique. Where I go to movies, I can only buy tickets with Fandango. When you take kids to a movie, you really want to know you have a ticket before you go. By the way, may I highly recommend the Lego Movie? It is a fantastic movie. Trust me when I tell you. Go see the Lego Movie. Fandango. The only way you can buy a ticket. Breitling emergency watch. The only watch that can save your life. Pull out the big knob, puts out an emergency signal. That watch can save your life. Smart car. Everybody has cars that can park parallel to the curb when there's lots of parking. How many of us have a car that can park perpendicular to the curb, right? If you're an engineer, make a product unique and valuable. If you're a marketing person, you communicate to the world that your product is unique and valuable. Number ten, perfect your pitch. If you're an innovator, you have to learn to pitch. Two key points about pitching. First, customize your introduction. Start with something customized to the audience. This is a picture of an LG washer and dryer. I used these pictures to introduce my speech in Latin America when I was speaking to the LG management. However, to tell you the backstory behind this, I was already in Brazil when I thought about: well, I should use the picture of our LG washer and dryer. So I didn't have pictures, not something I carry with me, you know? Pictures of your washer and dryer. So I sent a text message to my two older boys, one of whom is in the audience right now. His name is Nic, older boy. Younger boy, Noah. So I sent them a message saying, you know, get off the Call of Duty that I bought you on the Xbox that I bought you in the house that I bought you. Take your iPhone that I bought you; go downstairs - both of you - take pictures of the LG washer and dryer. I need it right away. 15 minutes go by, nothing happens, right? So, again, Nic is the older boy. He's the cowboy. The other one is in high school still. So this is what happens. This is the text message. I send Nic a text message. Did you get my text message because I don't see the pictures. Nick responds that Noah, his younger brother, said he would take the pictures. By the way, can you get us some free TVs? (Laughter) Welcome to my life. And then you see my bottom response. I don't think so, Nic. Welcome to my life. The key here is to customize your introduction. When I spoke in Moscow, I opened up with this slide and I said, "Wow, you Russians have big balls." (Laughter) In Istanbul, I opened up with this picture of me in the Grand Bazaar. That guy behind me is the shopkeeper. He is really happy. You know why he's really happy? Because he's thinking, this dumbass American tourist is going to buy this fez. (Laughter) This fez has been in my family for three generations. I finally found somebody stupid enough to buy this fez. Trust me when I tell you, if you'd open up a speech in Istanbul with a thing like that, a picture like that, you own the audience. Customize your introduction. More on slides. 10, 20, 30 rule of presentations. The optimal number of slides in a presentation is ten. Ten. Now, you're all Cal people. You're not stupid. You know I'm way past ten. You may be thinking I'm a hypocrite. How should I explain this? I will explain this: you are not me, OK? (Laughter) Ten slides. You should be able to give these ten slides in 20 minutes. Yes, you may have an hour slot, but to this day, unfortunately, 95% of the world uses Windows laptops. Those people need 40 minutes to make it work with the projector. (Laughter) And the last thing is the optimal size font is 30 points. A good rule of thumb is to take the oldest person in the audience; divide their age by two: 60-year-old divided by two, 30. 50-year-old divided by two, 25 points. Someday, you may be pitching a 16-year-old VC. That day, God bless you. Use the 8 point font. (Laughter) Eleven, as a bonus to my friends here at Cal: don't let the Bozos grind you down; they will try to grind you down. The more innovative you are, the more they'll try to grind you down. There's two kinds of Bozos in the world. I'm an expert in Bozos, OK? Two kinds of Bozos. Slovenly, disgusting, pocket protector, body odor, just a loser of a person. Rusty car. Japanese watch. You look at and say, "Wow, what a loser!" That person is not dangerous because that person is so obviously a loser, only a loser would listen to that loser. Because you're not losers, you won't listen to that person; hence, that person is not dangerous. The dangerous Bozo dresses in all black. The dangerous Bozo owns a lot of stuff that ends in "I." Like Armani, Maserati, Lamborghini, Ferrari, OK? (Laughter) Audi is OK, a rare exception. (Laughter) That's the dangerous Bozo because you think rich and famous parses too smart. But rich and famous parses too lucky, not smart, at least half the time. So I believe that Bozosity is like the flu: you need to be exposed to Bozosity so that when you encounter big Bozosity, you have already built up the antigens. I am going to expose you to some Bozosity. "I think there is a world market for maybe five computers." Thomas Watson of IBM. Five computers. I have five Macintoshes in my house. In other words, I have all the computers he anticipated in the world, in my house today. "This telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." Western Union, internal memo, 1876. Western Union wrote off telephony in 1876. Western Union should be PayPal today. Oops! (Laughter) There is no reason by anyone would want a computer in their home - Ken Olsen. Great innovator, great entrepreneur, said this about computers. There's no reason to have a computer in your home. How many have a computer in your home today? Because according to Ken Olsen there's no reason. He was a great innovator, extremely good entrepreneur, but he was so successful on, let us say, the ice factory curve, he could not appreciate the next curve, the refrigerator curve. And that is the art of innovation. Thank you very much. (Cheering) (Applause)