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In the last part of the first session

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we are going to talk about
the innovation more detail

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and also I want to give you

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some recent view of the entrepreneurship

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Innovation and recent view
of the entrepreneurship

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Let's begin with the innovation first

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Do you remember Schumpeter?

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Dr. Schumpeter is a very famous economist

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who argued the importance of the innovation

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He said that entrepreneurship
is same as innovation

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It's a pretty straightforward

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It's very clear

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So why innovation is important?

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According to him, innovation is
the core of the entrepreneurship

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Why?

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Because without innovation

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we are just simply
replicating what already exists,

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not creating some additional values

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What do you mean by that?

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For example, personally,

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I have a younger sister

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She opened up the beauty salon recently

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and then later she did these businesses

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pretty much similar to other beauty salons

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The businesses stay same

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Why?

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Because there is no innovation

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She followed just the traditional method

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Nothing new

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So that's why she cannot
create additional values

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If she is highly innovative,

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then probably her business will be growing

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So, in dynamic markets,

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doing something different or better

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is the only way to survive and grow

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So that's why we need to
keep the innovation in your mind

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So, Schumpeter argued that

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there are five different types
of innovation

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First one is the new product

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If you introduce a new product,
that is innovation

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Second one is new method

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If we use a new method
of the production

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then you use innovation
and you are innovative

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What about new market?

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If you change the market,

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if you introduce your service or product

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into the new market
that never served before,

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then you are innovative

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Next one is new raw materials

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If you use newly developed materials

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or just get new materials that you find

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then you are innovative

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The last one is a new organization

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If you adopt new types of organization
or new models of organization

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then you are innovative

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The innovation doesn't have to be

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limited to the new product

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Innovation can be broad

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Let's begin with the new product

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New product is a good or service

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that is novel and not yet
commercially available

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It's kind of something new

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I will give you example

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What is it?

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It is Apple phone

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It was introduced in 2007

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Steve Jobs introduced
this new type of phone

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But this cell phone,

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the concept of cell phone was not new

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And Apple was not the first
company to develop the cell phone

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But what is the new product?

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So the new product is this cell phone

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This Apple phone combined many things

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This cell phone combined the music players

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This cell phone combined the internet

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This cell phone combined
the function of the telephone

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Also, this cell phone is

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first cell phone that adopted
the touchscreen panel

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Apple introduced a touchscreen smartphone

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This is a very new product right?

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Second innovation is new method

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New method means

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the adoption of a new way
of producing good or services

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not previously tested in your industry

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I will give you example

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Let's watch this video

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This is a very interesting video about

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how the car was made in the Tesla factory

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Let's watch it together

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What do you think?

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Tesla adopted many new methods

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to make the factory automated

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The Tesla factory adopted the robot arms

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The robot arms assemble
and paint the cars

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Basically, Tesla adopted the new method
to produce the car

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This is an innovation

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With this this activities

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probably, Tesla reduced
the cost of the production

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which is innovation

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I will give you another example
about the innovation as a new method

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I will give you another example

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I prepared another short video clip

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Let's watch the video together

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How about this video?

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Isn't it amazing?

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This amazing scene was taken from drone

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The production team of Game of Thrones,
which is a very popular drama

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Game of Thrones adopted
new technology, which is a drone

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Then they used the drone to

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take the video from the air in Ireland

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They made this beautiful video clip

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With the adoption of the drone technology,

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they can reduce the cost of production

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and also they can produce
this amazing amazing scene

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This is an innovation

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What kind of innovation?

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This is a new method types of innovation

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Next one is new market

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New market means
a new geography reasons

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or new consumer segment
or application domain

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that has not been served before

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I will give you example

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Look at this guy

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This man is Phil Knight
who is the founder of Nike

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He started his businesses in 1964

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But his first business is not Nike
that we know right now

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His first business was
the Blue Ribbon Sports

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What did Blue Ribbon Sports do?

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Blue Ribbon Sports was
not a manufacturing company

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Blue Ribbon Sports is
a kind of distributing company

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distributing the Japanese shoes company

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Phil Knight went to Japan

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to get the shoes from
the Onitsuka Tiger shoes company

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Then he got the shoes from Japan

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and distributed these shoes
in American market

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This is his first businesses

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Basically, he targeted the new market

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that never served before

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Which is, he used Japanese shoes

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and distributed these Japanese shoes
to the American market

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Then five or six years later,

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he started his own shoes company

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This is the starting point of the Nike
that we know right now

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Again, his innovation was new market

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Let's look at another example

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Look at this picture

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This picture in the middle

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There is some furniture

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It's not just furniture

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It is a radio

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It is a vacuum tube radio

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This is 1940s GE FM radio

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The radio is so big

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and inside the radio,
there is a vacuum tube

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The vacuum tube is thick and heavy

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That's why we say it is
furniture type radio

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Later what happened?

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Thanks to the development of technology

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some of the electric companies
got the new technology

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and they created new types of radio,

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which is a transistor radio

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Look at this picture

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This is a 1958 Philips transistor radio

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and another one is 1960s
Motorola transistor radios

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They made a very small and portable radios

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and they targeted to vacation usage

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The radio, they target to outdoor market

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Previously, the the radio market
was home market

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which is indoor market

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We thought the radio is
an indoor market product

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But electric companies changed this market

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from the indoor to outdoor

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They targeted to the outdoor market

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So, again, new market doesn't have to be
limited to the geography reason

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If we find out a new consumer segment
or a new segment,

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then we can be innovative
in terms of a new market

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Next one is the new materials

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If we find or create new materials

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or new ways to access existing materials

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then you are innovative

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I'm going to give you example

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He is Thomas Edison
which is a very famous inventor

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He's known as
the inventor of the light bulb

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But he's not the person who invented

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the light bulb for the first time

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His invention was

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the long-lasting light bulb

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This is it

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In order to make a existing
light bulb long-lasting,

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he tried many experiment

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to find out a great material
for the filament

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Then, he found that

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there are really great materials
from Japanese bamboo

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He took the material
from the Japanese bamboo,

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made a new filament,
and made the light finally long-lasting

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Basically, his innovation
was based on new materials

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Is it easy?

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No, it is not easy

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Because he conducted tons of
experiments to find out great materials

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and also he sent out many researchers

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all over the world 
to find out new materials

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Finally, he found the Japanese bamboo
as a new material

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That's why he's innovative

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Do you know what it is?

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It's a waterproof and windproof

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This is a really great material,
which is Gore-Tex

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Gore-Tex was invented by Bill Gore
and his son Bob Gore

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These two guys developed
this material as a new types of fabric

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Then later, one of the company
who produced the camping gear

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adopted this new material

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This company name was Early Winter

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The Early Winter adopted Gore-Tex
as a new materials

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This company made
a camping bag or tent or jackets

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This product became very popular

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Not because of the product itself

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but because of
the new material, Gore-Tex material

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The last innovation is about
new organization

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If you introduce new types of
organizational structure

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or new business model

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or a combination of the resources

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that had not previously been
applied within the industry

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Then, you are innovative
in terms of the new organization

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I want to give you example

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Have you heard about Avon Ladies?

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Avon Ladies was so popular

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after 1886

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Avon adopted this model

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This model is basically
individual salesperson model

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Avon right now is
a global cosmetic company

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But at first, they didn't have
money to hire the salesperson

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That's why instead of hiring salesperson,

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they made a contract with
individual sales distributors

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and they tried to collect
many individual sales distributors

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and put the name of Avon Ladies

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Basically, Avon Ladies is
door-to-door saleswomen

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They are not just normal employee of Avon

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But they are a contract
individual salesperson

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Basically, they got
the cosmetic product from the Avon

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and then visited door-to-door
try to sell Avon product

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and then they got the profit
based on the prices differences

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They are vendor

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Basically, they are in the middle between

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pure entrepreneur and pure employees

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Then later, what happened?

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One of the Japanese company,
which is Yakult Honsha,

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adopted this model exactly

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Yakult Honsha introduced Yakult Ladies

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Yakult is specialized beverage,
so popular in Asian market

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Anyway, the Yakult Honsha adopted
this Avon Ladies model

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and introduced Yakult Ladies

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Yakult Ladies is the same

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They are not just normal employee

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They are individual sales distributor

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They make a contract with Yakult Honsha

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Then they get the Yakult
a beverage as a product

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and they distributed this product
door-to-door

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This is a door-to-door saleswoman model

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Also later, in Korea,
we have Yakult Korea

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Yakult Korea also adopted the same model

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We have around 12,000
Yakult Ladies in Korea

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It's the same

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Also, what about amazon.com?

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These days amazon.com adopted this model

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We say it is a gig-based
independent contractor

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Behind the model is exactly same

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and they are not amazon's employee

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They are not amazon's permanent employee

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They are just individual contractor

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Do you understand the concept?

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Anyway, the Avon initiated this new model

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That's why Avon is innovation

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Also, amazon adopted this same model
Yakult Honsha adopted

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I will give you another example
in terms of a new organization

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His name is Price

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He is a founder of the Price Club

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Price Club is very similar to
the concept of Costco

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Costco is a discounted retailer store

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A retail business

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In order to use the Costco,

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you should be member of the Costco

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It means you should pay
membership fee annually

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This is a membership based
discounted retailing business model

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He is a pioneer of warehouse club model

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This is a warehouse club model

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Then why do I say
Costco is very similar to the Price Club?

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Because the founder of the Costco
was working at this Price Club

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Then he just copied
the concept of the Price Club

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and applied this concept into Costco

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Then he started Costco

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Costco was heavily inspired by Price Club

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because the founder of the Costco
worked at the Price Club

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So, the new business model is distributed

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Let's move on to the recent viewpoint
about entrepreneurship

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So far, we have discussed three major view

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about entrepreneurship from the history

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Do you remember Richard Cantillon's view

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Jean Baptist Say's view

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and Schumpeter's innovation view?

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These views are amazing

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But it's old dated

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These days, we have a new types of view

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Modern view

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I want to introduce
modern view about entrepreneurship

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He is Dr. Kerr

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He is a professor at Harvard University

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He argued that

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entrepreneurship is about experimentation

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Entrepreneurs should conduct experiment

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in order to introduce
a new product or new services

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In the meantime,
they fail on their project

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and they fail to validate their product

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and they fail to achieve
the product market fit

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Anyway, all these process

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are viewed as experimentation

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00:18:18.880 --> 00:18:21.589
So, don't be afraid of the failure

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Because you are just a scientist
and your approach is like a scientist

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You establish your own hypothesis

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and make a service or product
based on your hypothesis

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and try to validate your hypothesis

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In the meantime,
you can fail but don't worry about it

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and you start it again and again

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in order to meet your product
and market product fit

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Steve Blank said that

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He's a very famous man
in the entrepreneur field

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because he initiated some
hypothesis testing concept

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He said entrepreneurship

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00:19:05.801 --> 00:19:07.351
as a hypotheses testing

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It's pretty much similar to

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Dr. Kerr's experimentation view

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You take the data and derive

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some insight to validate the hypotheses

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about business model and consumers

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It's pretty much the same

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His argument is pretty much the same as

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entrepreneurship is about experimentation

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More specifically,

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it is a hypotheses testing,
like a scientist

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Let's move on to another
modern view of entrepreneurship

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He's name is Paul Graham

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He is a very famous man

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Because he initiated an accelerator model

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His accelerator is famous acceleartor,

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which is Y combinator

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We heard about the name Y combinator,

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00:19:55.659 --> 00:20:00.059
because Y combinator is
a really good supporter

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00:20:00.059 --> 00:20:02.909
for the startups

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00:20:04.759 --> 00:20:06.059
He argued that

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A startup is a specialized organization

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designed to grow very quickly

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His idea was

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00:20:16.159 --> 00:20:19.409
Startup and entreprenuership

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is strongly related with growth

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00:20:22.009 --> 00:20:24.009
If you do not grow,

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then, you are not startup or entrepreneur

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Your organization is not
entrepreneur organization

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Your company is just a normal company

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You are just a normal business man

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Most important thing in entrepreneruship
is growth

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00:20:39.909 --> 00:20:42.659
People ask him,

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How much should we grow?

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00:20:45.659 --> 00:20:50.059
He gave us very clear guideline

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How much?

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It is pretty simple

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At least, 10% weekly

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You should grow 10% weekly

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Overall, 1420% growth

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1420% growth annually

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Then, you are fine

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00:21:13.510 --> 00:21:17.710
It's so ambitious

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Your consumer growth should be
at least 10% weekly

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and annually 1420% increase

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So ambitious

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Please make this guideline
as your rule of thumb

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Remember, startups and entrepreneurship
is growth

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He is my friend

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and he is a senior student

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00:21:51.260 --> 00:21:56.160
We studied togethe
rwhen I was a PhD student

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00:21:56.160 --> 00:21:57.810
At that time,

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00:21:57.810 --> 00:22:02.810
I asked him what is
your PhD dissertation topic

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00:22:02.810 --> 00:22:03.910
He said that

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00:22:03.910 --> 00:22:07.810
I want to make some new types of theory

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00:22:07.810 --> 00:22:10.660
I was very skeptical about it

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00:22:10.660 --> 00:22:14.660
Because making theory to me was almost impossible

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00:22:16.610 --> 00:22:20.260
I thought he was very ambitious

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00:22:20.260 --> 00:22:23.210
Then, I thought it is

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00:22:23.210 --> 00:22:26.560
almost impossible to make a new theory

387
00:22:26.760 --> 00:22:29.010
But he tried to do that

388
00:22:29.260 --> 00:22:32.210
And he finally introduced new theory

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00:22:34.010 --> 00:22:37.160
Which is associated with
growth perspective

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00:22:38.610 --> 00:22:40.310
His idea was

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00:22:40.560 --> 00:22:45.410
Successful startups can be rock star

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00:22:45.910 --> 00:22:50.110
Not too many startups can be successful

393
00:22:50.110 --> 00:22:53.410
But successful startups can be rock star

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00:22:53.610 --> 00:22:57.310
They grow really big

395
00:22:59.160 --> 00:23:02.360
And the most of the startups remain same

396
00:23:02.360 --> 00:23:05.110
But some of the startup grow really big

397
00:23:05.360 --> 00:23:07.660
And he was curious about

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00:23:07.660 --> 00:23:11.710
what factors can make

399
00:23:11.710 --> 00:23:16.210
some startups grow much big

400
00:23:16.760 --> 00:23:19.260
He tried to find out those factors

401
00:23:19.260 --> 00:23:22.660
Then he provided us rock star theory

402
00:23:23.460 --> 00:23:30.060
He suggested us four Es are very important

403
00:23:30.410 --> 00:23:32.010
What are four Es?

404
00:23:32.010 --> 00:23:34.010
I prepared a video

405
00:23:34.010 --> 00:23:37.610
He explains very well about his theory

406
00:23:37.610 --> 00:23:41.660
Because he made this theory
about the growth

407
00:23:41.660 --> 00:23:44.860
and he provide us four Es

408
00:23:44.860 --> 00:23:46.310
Kind of a meta theory

409
00:23:47.110 --> 00:23:48.760
Let's watch this video

410
00:23:48.760 --> 00:23:50.410
It can be very helpful

411
00:23:50.410 --> 00:23:53.510
Again, his idea is associated with

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00:23:53.510 --> 00:23:55.111
growth perspective

413
00:24:00.761 --> 00:24:01.961
What do you think?

414
00:24:01.961 --> 00:24:04.661
Now, do you understand

415
00:24:04.661 --> 00:24:07.061
a modern view of entrepreneurship?

416
00:24:07.861 --> 00:24:09.061
What are they?

417
00:24:09.061 --> 00:24:11.861
Modern view of entrepreneurship is about

418
00:24:12.961 --> 00:24:14.861
experimentation

419
00:24:15.211 --> 00:24:17.311
Like hypotheses testing

420
00:24:17.311 --> 00:24:18.811
and also growth

421
00:24:20.161 --> 00:24:23.611
To grow very fast and very well,

422
00:24:23.611 --> 00:24:28.911
you need to memorize four Es

423
00:24:28.911 --> 00:24:34.361
Four Es that Dr. Christopher suggested us

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00:24:35.661 --> 00:24:38.561
Thank you for listening the first class