What do businesses fail to learn about innovation?

1. Branding

Why is branding so important? You all know companies like Starbucks, Google, Apple, and Dunkin’ Donuts. All those companies used to have different names and, in some cases, different logos.

Starbucks used to be called Starbucks Coffee, Tea, and Spices. Now they want to be called Starbucks because they want to be able to sell alcoholic drinks and food. They don’t want to be limited by one product, and that makes sense.

Dunkin’ Donuts changed their name for the same reason. They don’t want to be known as a donut company. They want to be known as a coffee company, and they want to compete directly with Starbucks because there is more money in coffee drinks.

McDonald’s is also introducing more coffee drinks, so they are now all competing for the same thing.

Apple used to be called Apple Computer, and Steve Jobs changed the name at the same time when he introduced a new iPhone. A funny story is that Apple did not have a trademark for the name iPhone, but a different company, Cisco, had. Cisco, in turn, got it from Linksys.

Steve Jobs Called Cisco, and he asked if Apple could have the name iPhone, and a Cisco executive said “No” because they had plans to use it themselves. So Steve Jobs’ reply was: “Ok. I’m going to use it anyway.” And he did. And Cisco ended up suing Apple. It was a 2-year long lawsuit that ended in a settlement.

Google used to be called Backrub, and Yahoo used to be called Jerry and David’s Guide to the World Wide Web. Would those companies get as big as they did if they did not change their names? Probably not.

2. It’s Not a Money Problem

If you ever watch Shark Tank, sometimes there would be a company where the owner would say that he is running out of money, and he needs an investment as soon as possible, so that he can stay in business.

And one of the sharks would say: “No, because if I give you more money, you are going to spend all of it anyway. You are just going to burn through that money, and your company would still fail. Why? Because money is not the problem. It’s your execution that’s the problem.”

And that’s accurate because there are companies that have a lot of money that still fail, and there are companies that don’t have any money, and they succeed.

What’s a good example? Blockbuster and Toys R’ Us. Blockbuster lacked in innovation, not in how much money they were making. They had a chance to buy Netflix, and they passed up on that opportunity.

As for Toys R’ Us, instead of having their own website, they decided to make a deal with Amazon, and Amazon was learning everything about the toy business from Toys R’ Us. So, while Toys R’ Us had an exclusive deal with Amazon, Amazon violated that deal and allowed other sellers to sell toys on their site.

Toys R’ Us ended up suing Amazon, but it didn’t matter. Even though they won, they didn’t have a backup, so they couldn’t go back and use their own website as a backup plan because they abandoned that idea already. And that’s why they failed.

3. Sometimes You Have to Pivot to Make Money and to Stay in Business

Some companies hold on to their idea on how to make money, and they get attached to their products and services. They don’t want to change anything, even if it’s not working. Other companies move on to other ideas, and they don’t, and that’s why they fail.

Kodak is a good example. Instead of pivoting to digital photography and smart phones, they stayed in the film industry and, at the time, it wasn’t enough. It was not a good idea.

But a little known fact is that there is a company that was spun off from Kodak called Eastman Chemical that’s still in business, and that company makes 10 billion dollars a year while Kodak is gone.

But there are other companies that did pivot, and it’s companies like Slack, Groupon, and Yelp. They started out doing something else. Slack used to make video games, Groupon used to have a crowd-funding site, and Yelp was an email referral service. All these companies now provide a different service or offer a different product. And that’s because they pivoted in a different direction where they could actually make money. And that’s why they are successful today.