In the last part of the first session
we are going to talk about the innovation more detail
and also I want to give you
some recent view of the entrepreneurship
Innovation and recent view of the entrepreneurship
Let's begin with the innovation first
Do you remember Schumpeter?
Dr. Schumpeter is a very famous economist
who argued the importance of the innovation
He said that entrepreneurship is same as innovation
It's a pretty straightforward
It's very clear
So why innovation is important?
According to him, innovation is the core of the entrepreneurship
Why?
Because without innovation
we are just simply replicating what already exists,
not creating some additional values
What do you mean by that?
For example, personally,
I have a younger sister
She opened up the beauty salon recently
and then later she did these businesses
pretty much similar to other beauty salons
The businesses stay same
Why?
Because there is no innovation
She followed just the traditional method
Nothing new
So that's why she cannot create additional values
If she is highly innovative,
then probably her business will be growing
So, in dynamic markets,
doing something different or better
is the only way to survive and grow
So that's why we need to keep the innovation in your mind
So, Schumpeter argued that
there are five different types of innovation
First one is the new product
If you introduce a new product, that is innovation
Second one is new method
If we use a new method of the production
then you use innovation and you are innovative
What about new market?
If you change the market,
if you introduce your service or product
into the new market that never served before,
then you are innovative
Next one is new raw materials
If you use newly developed materials
or just get new materials that you find
then you are innovative
The last one is a new organization
If you adopt new types of organization or new models of organization
then you are innovative
The innovation doesn't have to be
limited to the new product
Innovation can be broad
Let's begin with the new product
New product is a good or service
that is novel and not yet commercially available
It's kind of something new
I will give you example
What is it?
It is Apple phone
It was introduced in 2007
Steve Jobs introduced this new type of phone
But this cell phone,
the concept of cell phone was not new
And Apple was not the first company to develop the cell phone
But what is the new product?
So the new product is this cell phone
This Apple phone combined many things
This cell phone combined the music players
This cell phone combined the internet
This cell phone combined the function of the telephone
Also, this cell phone is
first cell phone that adopted the touchscreen panel
Apple introduced a touchscreen smartphone
This is a very new product right?
Second innovation is new method
New method means
the adoption of a new way of producing good or services
not previously tested in your industry
I will give you example
Let's watch this video
This is a very interesting video about
how the car was made in the Tesla factory
Let's watch it together
What do you think?
Tesla adopted many new methods
to make the factory automated
The Tesla factory adopted the robot arms
The robot arms assemble and paint the cars
Basically, Tesla adopted the new method to produce the car
This is an innovation
With this this activities
probably, Tesla reduced the cost of the production
which is innovation
I will give you another example about the innovation as a new method
I will give you another example
I prepared another short video clip
Let's watch the video together
How about this video?
Isn't it amazing?
This amazing scene was taken from drone
The production team of Game of Thrones, which is a very popular drama
Game of Thrones adopted new technology, which is a drone
Then they used the drone to
take the video from the air in Ireland
They made this beautiful video clip
With the adoption of the drone technology,
they can reduce the cost of production
and also they can produce this amazing amazing scene
This is an innovation
What kind of innovation?
This is a new method types of innovation
Next one is new market
New market means a new geography reasons
or new consumer segment or application domain
that has not been served before
I will give you example
Look at this guy
This man is Phil Knight who is the founder of Nike
He started his businesses in 1964
But his first business is not Nike that we know right now
His first business was the Blue Ribbon Sports
What did Blue Ribbon Sports do?
Blue Ribbon Sports was not a manufacturing company
Blue Ribbon Sports is a kind of distributing company
distributing the Japanese shoes company
Phil Knight went to Japan
to get the shoes from the Onitsuka Tiger shoes company
Then he got the shoes from Japan
and distributed these shoes in American market
This is his first businesses
Basically, he targeted the new market
that never served before
Which is, he used Japanese shoes
and distributed these Japanese shoes to the American market
Then five or six years later,
he started his own shoes company
This is the starting point of the Nike that we know right now
Again, his innovation was new market
Let's look at another example
Look at this picture
This picture in the middle
There is some furniture
It's not just furniture
It is a radio
It is a vacuum tube radio
This is 1940s GE FM radio
The radio is so big
and inside the radio, there is a vacuum tube
The vacuum tube is thick and heavy
That's why we say it is furniture type radio
Later what happened?
Thanks to the development of technology
some of the electric companies got the new technology
and they created new types of radio,
which is a transistor radio
Look at this picture
This is a 1958 Philips transistor radio
and another one is 1960s Motorola transistor radios
They made a very small and portable radios
and they targeted to vacation usage
The radio, they target to outdoor market
Previously, the the radio market was home market
which is indoor market
We thought the radio is an indoor market product
But electric companies changed this market
from the indoor to outdoor
They targeted to the outdoor market
So, again, new market doesn't have to be limited to the geography reason
If we find out a new consumer segment or a new segment,
then we can be innovative in terms of a new market
Next one is the new materials
If we find or create new materials
or new ways to access existing materials
then you are innovative
I'm going to give you example
He is Thomas Edison which is a very famous inventor
He's known as the inventor of the light bulb
But he's not the person who invented
the light bulb for the first time
His invention was
the long-lasting light bulb
This is it
In order to make a existing light bulb long-lasting,
he tried many experiment
to find out a great material for the filament
Then, he found that
there are really great materials from Japanese bamboo
He took the material from the Japanese bamboo,
made a new filament, and made the light finally long-lasting
Basically, his innovation was based on new materials
Is it easy?
No, it is not easy
Because he conducted tons of experiments to find out great materials
and also he sent out many researchers
all over the world to find out new materials
Finally, he found the Japanese bamboo as a new material
That's why he's innovative
Do you know what it is?
It's a waterproof and windproof
This is a really great material, which is Gore-Tex
Gore-Tex was invented by Bill Gore and his son Bob Gore
These two guys developed this material as a new types of fabric
Then later, one of the company who produced the camping gear
adopted this new material
This company name was Early Winter
The Early Winter adopted Gore-Tex as a new materials
This company made a camping bag or tent or jackets
This product became very popular
Not because of the product itself
but because of the new material, Gore-Tex material
The last innovation is about new organization
If you introduce new types of organizational structure
or new business model
or a combination of the resources
that had not previously been applied within the industry
Then, you are innovative in terms of the new organization
I want to give you example
Have you heard about Avon Ladies?
Avon Ladies was so popular
after 1886
Avon adopted this model
This model is basically individual salesperson model
Avon right now is a global cosmetic company
But at first, they didn't have money to hire the salesperson
That's why instead of hiring salesperson,
they made a contract with individual sales distributors
and they tried to collect many individual sales distributors
and put the name of Avon Ladies
Basically, Avon Ladies is door-to-door saleswomen
They are not just normal employee of Avon
But they are a contract individual salesperson
Basically, they got the cosmetic product from the Avon
and then visited door-to-door try to sell Avon product
and then they got the profit based on the prices differences
They are vendor
Basically, they are in the middle between
pure entrepreneur and pure employees
Then later, what happened?
One of the Japanese company, which is Yakult Honsha,
adopted this model exactly
Yakult Honsha introduced Yakult Ladies
Yakult is specialized beverage, so popular in Asian market
Anyway, the Yakult Honsha adopted this Avon Ladies model
and introduced Yakult Ladies
Yakult Ladies is the same
They are not just normal employee
They are individual sales distributor
They make a contract with Yakult Honsha
Then they get the Yakult a beverage as a product
and they distributed this product door-to-door
This is a door-to-door saleswoman model
Also later, in Korea, we have Yakult Korea
Yakult Korea also adopted the same model
We have around 12,000 Yakult Ladies in Korea
It's the same
Also, what about amazon.com?
These days amazon.com adopted this model
We say it is a gig-based independent contractor
Behind the model is exactly same
and they are not amazon's employee
They are not amazon's permanent employee
They are just individual contractor
Do you understand the concept?
Anyway, the Avon initiated this new model
That's why Avon is innovation
Also, amazon adopted this same model Yakult Honsha adopted
I will give you another example in terms of a new organization
His name is Price
He is a founder of the Price Club
Price Club is very similar to the concept of Costco
Costco is a discounted retailer store
A retail business
In order to use the Costco,
you should be member of the Costco
It means you should pay membership fee annually
This is a membership based discounted retailing business model
He is a pioneer of warehouse club model
This is a warehouse club model
Then why do I say Costco is very similar to the Price Club?
Because the founder of the Costco was working at this Price Club
Then he just copied the concept of the Price Club
and applied this concept into Costco
Then he started Costco
Costco was heavily inspired by Price Club
because the founder of the Costco worked at the Price Club
So, the new business model is distributed
Let's move on to the recent viewpoint about entrepreneurship
So far, we have discussed three major view
about entrepreneurship from the history
Do you remember Richard Cantillon's view
Jean Baptist Say's view
and Schumpeter's innovation view?
These views are amazing
But it's old dated
These days, we have a new types of view
Modern view
I want to introduce modern view about entrepreneurship
He is Dr. Kerr
He is a professor at Harvard University
He argued that
entrepreneurship is about experimentation
Entrepreneurs should conduct experiment
in order to introduce a new product or new services
In the meantime, they fail on their project
and they fail to validate their product
and they fail to achieve the product market fit
Anyway, all these process
are viewed as experimentation
So, don't be afraid of the failure
Because you are just a scientist and your approach is like a scientist
You establish your own hypothesis
and make a service or product based on your hypothesis
and try to validate your hypothesis
In the meantime, you can fail but don't worry about it
and you start it again and again
in order to meet your product and market product fit
Steve Blank said that
He's a very famous man in the entrepreneur field
because he initiated some hypothesis testing concept
He said entrepreneurship
as a hypotheses testing
It's pretty much similar to
Dr. Kerr's experimentation view
You take the data and derive
some insight to validate the hypotheses
about business model and consumers
It's pretty much the same
His argument is pretty much the same as
entrepreneurship is about experimentation
More specifically,
it is a hypotheses testing, like a scientist
Let's move on to another modern view of entrepreneurship
He's name is Paul Graham
He is a very famous man
Because he initiated an accelerator model
His accelerator is famous acceleartor,
which is Y combinator
We heard about the name Y combinator,
because Y combinator is a really good supporter
for the startups
He argued that
A startup is a specialized organization
designed to grow very quickly
His idea was
Startup and entreprenuership
is strongly related with growth
If you do not grow,
then, you are not startup or entrepreneur
Your organization is not entrepreneur organization
Your company is just a normal company
You are just a normal business man
Most important thing in entrepreneruship is growth
People ask him,
How much should we grow?
He gave us very clear guideline
How much?
It is pretty simple
At least, 10% weekly
You should grow 10% weekly
Overall, 1420% growth
1420% growth annually
Then, you are fine
It's so ambitious
Your consumer growth should be at least 10% weekly
and annually 1420% increase
So ambitious
Please make this guideline as your rule of thumb
Remember, startups and entrepreneurship is growth
He is my friend
and he is a senior student
We studied togethe rwhen I was a PhD student
At that time,
I asked him what is your PhD dissertation topic
He said that
I want to make some new types of theory
I was very skeptical about it
Because making theory to me was almost impossible
I thought he was very ambitious
Then, I thought it is
almost impossible to make a new theory
But he tried to do that
And he finally introduced new theory
Which is associated with growth perspective
His idea was
Successful startups can be rock star
Not too many startups can be successful
But successful startups can be rock star
They grow really big
And the most of the startups remain same
But some of the startup grow really big
And he was curious about
what factors can make
some startups grow much big
He tried to find out those factors
Then he provided us rock star theory
He suggested us four Es are very important
What are four Es?
I prepared a video
He explains very well about his theory
Because he made this theory about the growth
and he provide us four Es
Kind of a meta theory
Let's watch this video
It can be very helpful
Again, his idea is associated with
growth perspective
What do you think?
Now, do you understand
a modern view of entrepreneurship?
What are they?
Modern view of entrepreneurship is about
experimentation
Like hypotheses testing
and also growth
To grow very fast and very well,
you need to memorize four Es
Four Es that Dr. Christopher suggested us
Thank you for listening the first class