“Capital isn’t so important in business. Experience isn’t so important. You can get both these things. What is important is ideas. If you have ideas, you have the main asset you need, and there isn’t any limit to what you can do with your business and your life.” — Harvey Firestone
When I was growing up, Sony was the most innovative company on the planet. They practically invented consumer electronics as an industry. First came the transistor radio, which allowed us teenagers to party away from home. Liberation! Then came the portable cassette player and now we had access to the music we loved, not what the DJs were bribed to play. Then another innovation in consumer technology, the portable Walkman and the CD. Decades of innovation and the company grew in size and profits. In 2000 Sony had a market cap of $82B.
Today, 2012, Sony Corporation has a market capitalisation of just $36B and is ranked number 79th in the Global Fortune 500. Sony hasn’t made a profit in 4 consecutive years, just recently announced it will double its expected loss for this year to $6.4 billion, has only 15% of its capital left as equity (debt/equity ration of 5.67x) and is only worth 1/4 of its value 10 years ago!
There’s a great lesson here for companies, and individuals.
Sony stopped innovating and started managing!
The focus shifted from new ideas to cost savings and productivity measures. From increasing the number of patents to increasing the number of MBAs. The father of Sony’s innovative decades, Akio Morita was replaced as CEO by US-trained MBA and finally by a non-Japanese, Howard Stringer. The focus shifted from innovation and new products to budgets and balance sheets.
A similar shift happened at NASA, where the original focus on mission and scientific discovery gave way to a focus on budgets and professional management. The ratio of scientists and engineers to MBAs and managers shifted dramatically, and so did the morale and safety of the organization, to say nothing of the innovation that also dwindled.
“It isn’t the incompetent who destroy an organization. The incompetent never get in a position to destroy it. It is those who achieved something and want to rest upon their achievements who are forever clogging things up.” — F. M. Young
As I see it, there is an invisible force that comes into play when we are creating and when companies are innovating. Human beings are designed to create, to make something new, to put 2 and 2 together and get 6! Whether it be art, music, dance, products or services, human beings have an urge, a need, to create. If we don’t create, we wither as individuals, as corporations, as a race.
Look at the difference between the individual who has a creative hobby, a creative passion, and the individual who just works and comes home to television. I’m not saying we are all artists and can create the next great thing. But what I’m saying is that unless we create, we wither.
Create a short poem for your spouse or child, make up a joke to tell your friends at the pub, tie flies for flyfishing, take photographs, do arts and craft projects to decorate your home. All are creative endeavors. Each enriches our spirit and, I suspect, probably prolongs our life as well.
People don’t wear out, they rust out!
How do you create? Does your company innovate? Let’s start a creativity revolution.
John R Childress