The Often Long Journey to Radical Innovation
With Concepts Drawn from our Upcoming Book:
Innovator’s Grit: Pixar’s Perilous Innovation Journey
Jay Rao and Jim Watkinson
If you have read any business periodicals over the last two decades you might easily conclude that the path to successful innovation is normally a very short journey. But the world we see around us has been largely shaped by ideas that took many years to develop, and often taking even longer to gain wide market acceptance.
As with all maxims, there are of course exceptions, and we can certainly point to many cases where success was reached very quickly. Take for example the mobile photo-sharing application Instagram. Begun in Oct. 2010 by twenty-something entrepreneurs Kevin Systrom and Mike Kreiger, who had met as students at Stanford seven years earlier, and had also taken the same work-study program for entrepreneurs. While working at Google and through personal contacts, Systrom had already gotten to know a wide range of entrepreneurs, angels and venture capital friends before starting Instagram. Once launched, the ability of their service to connect people helped push it out to the millions of younger internet users who were eager to reach out to the world, causing a strong viral-effect resulting in rapid product adoption, and quickly building a large base of users. Within weeks, Instagram was carrying the images and messages of millions of people. In April 2012, Facebook bought Instagram for a billion dollars.
This and other similar stories have spurred an entire generation of wanna-be entrepreneurs armed with the vocabulary of get-rich quick speak, and incessantly looking for their insta-million, or even better, insta-billion opportunities. They network furiously, make rocket-pitches, do hackathons, and have exit strategies even before having a single paying customer. This need for fast riches has also infused the thinking and decision-making at medium and large enterprises, along with their shareholders, resulting in a shortening and narrowing of their view towards acceptable innovation ideas.
Thankfully the epidemic of innovation near-sightedness has not killed off all entrepreneurial courage and toughness, even in the notoriously short term internet space. Rovio is the maker of the famous game Angry Birds. Rovio was founded in 2003 and for eight years they labored through 51 different game releases without a significant hit. Finally, on their 52nd attempt they had a hit with Angry Birds reaching 1 billion downloads. Instagram makes Rovio looks like an old and tired way of winning the innovation race. But is it really a sprinters race, or is innovation more often the longest of life’s marathons?
The reality is that out beyond the world of software and virally driven adoption, innovators must travel a long and difficult road before reaching even the beginning stage of success. Let’s consider some noteworthy examples.
John Harrison and the Longitudinal Problem
Exactly 300 years ago, in 1714, the British Government established a Board to solve a difficult problem. The Board of Longitude was seeking a solution to determine a ship’s exact location at sea. Ships often got lost at sea during their long transoceanic voyages; sometimes tragically. While determining the latitude (Jay: was there a reason you used the word – altitude- here?) of the ship was relatively easy, there were no easy tools for finding the longitudinal location. So, the Board offered £20,000 (£2.45 million in 2014 terms) for a practical method to determine the ship’s longitude position within 30 nautical miles.
Several clockmakers and scientists had tried to solve this problem with little luck. In 1730, John Harrison an English carpenter and clock maker decided to compete for the prize with some financial help from another clockmaker who believed in Harrison’s skills. Harrison started building an accurate sea clock. The first sea trial took place after five years of work and it proved not too accurate. However, impressed with the general direction, the Board granted Harrison £5,000 to continue development. Harrison abandoned the second attempt after another five years of work when a serious design flaw was discovered. The third attempt lasted yet another 17 years, at which time Harrison determined that a clock won’t work and that it should be a much smaller watch. Having worked another 6 years, the 68-year old Harrison’s first Sea Watch was tested in 1761. The watch was accurate to within 1 nautical mile. The Board deemed the test as luck and demanded another trial. Following another successful demonstration, the Board still balked. Finally, the King had to intervene and the 80-year old Harrison was paid the reminder of the award money in 1773; just three years prior to his death. The persistence, testing and failures were not it vain. Harrison had contributed to several valuable inventions in clock and watch making and his Sea Watches changed the future of naval explorations forever. Fast forward to today and we can see that Harrison’s work to create accuracy in measuring time for travel and location now serves as a key to the operation of the Global Positioning Systems (GPS) that we use to guide planes, boats and people driving their cars.
Soichiro Honda and Honda Motor Company
In 1922, fifteen year old Soichiro Honda left school to work at a motorcycle and car repair shop. While the repair shop gave him tremendous knowledge about the workings of motorcycles and cars, Honda was more interested in manufacturing. In 1936, with a friend he set up Tokai Seiki, a piston rings manufacturing firm. After several tries Tokai Seiki finally got selected by Toyota as a supplier. However, they soon lost it since only 3 piston rings out of 50 met the required standards. Honda attended engineering school but did not graduate. He travelled extensively in Japan to understand Toyota’s production processes and finally by 1941 he was reliably supplying to Toyota. Then came the war. In 1942, Toyota took 40% control of the firm and Honda was downgraded from president to senior manager. Towards the end of the war, one plant of Tokai Seiki was reduced to rubble by air raids and in Jan. 1945 the other plant was destroyed by an earthquake. Honda picked up from these setbacks and tried to manufacture a rotary weaving machine for the textile industry. This failed due to a lack of capital. He then tried to make frosted glass with floral patterns, and then roofing sheets of woven bamboo set in mortar. Uncharacteristically, he never pursued any of these in earnest. His heart didn’t seem to be in any of these initiatives. In late 1946, he was visiting an old friend from Tokai Seiki who happened to show him a generator engine designed for a wireless radio. He was immediately inspired to use it for something very different—to power a bicycle. The Honda motorcycle company was born!
George Mitchell and Mitchell Energy
By 1980, Mitchell was already a Texas natural-gas baron; but his wells were drying up. So, he turned to a decades old technique called hydraulic fracturing – fracking. In fracking, water, sand and chemicals were pumped into a well at high pressure to produce cracks in stone of the deep underground shale layer to dislodge the trapped gas. Though demonstrated in the 1940s, this method had been abandoned since it was deemed commercially unviable. While, George Mitchell did not invent fracking, starting in 1981, his firm Mitchell Energy drilled well after well in the Barnett Shale area of Texas. For the next 15 years the firm struggled to demonstrate through trial and error that fracking could be an economically viable and reliable source of natural-gas. Finally, in 1997 one technique that involved water and sand and inexpensive foams and gels worked spectacularly well. In 2002, at the age of 82, Mitchell sold his company for $3.2 billion. By 2012, Shale gas accounted for nearly 35% of U.S. natural gas production. While still environmentally controversial, one industry historian hailed Mitchell’s fracking technique as the biggest and most important innovation of this century.
Elizabeth Holmes and Theranos
In 2003, 19-year old Elizabeth Holmes dropped out of Stanford and started a revolutionary blood diagnostics firm called Theranos. In the last decade, Theranos has raised $400 million, and now has 500 employees, and is valued at $9 billion. The $73 billion blood testing industry performs nearly 10 billion tests a year that are used in nearly 70% of all medical decisions. But historically, most of these tests are made in hospitals and large, free-standing labs, where work is time-consuming. Emergency labs are faster, but can only perform about 40 different tests. Theranos process performs nearly 70 different tests in the same time and with just 25 to 50 microliters of blood. That is nearly a 100 times less than what most blood tests require. Finally, Theranos charges 50-75% less than what independent labs charge and about 10% of what hospital labs charge. The firm posts all prices online, and aims to never charge more than half the published Medicare rate. Today, Theranos exists only in a few Walgreens drug stores in California. Not bad for an 11-year old firm. But, Elizabeth Holmes’ goal is to have a testing facility within five miles of every American.
Certainly history is showing us that in most industries the path to success is often a long journey. Some ideas, because of the nature of their science, application, and acceptance experience long cycle times where there are no short-cuts. On average it takes about a billion dollars and 10 years to bring a new drug to market. Coca Cola’s internal estimates are that it takes about 10 years to build a $1 billion new beverage franchise. When looking out this far, the road is always fraught with uncertainties, ambiguities, set-backs, failures, losses and heart-aches. The best innovators persist on this journey with sheer resilience, patience and an indomitable spirit that we call INNOVATOR’S GRIT.
Lately, the concept of personal grit has been getting a lot of media attention and especially the work of Prof. Angela Duckworth at the University of Pennsylvania. Her research into the behavior of people shows that those who have achieved outstanding success tend to have a high level of personal passion and unwavering dedication toward the accomplishment of their mission, whatever the obstacles, and however long it takes. In fact, she has found personal grit to be a great predictor of long-term success in a variety of situations, from school performance of kids with difficult backgrounds, to cadets surviving the demands of West Point, as well as the performance of students at Ivy League schools and National Spelling Bee competitions.
There is still much that we need to learn about innovation and the unique form of grit that powers those who succeed at it. But rather than trying to falsely suggest that it can be approached as a simple repeatable formula, we will try to help would-be innovators understand and be prepared for what they will face by bringing to life the true-life story of the more than twenty year journey of Pixar Animation Studio and its people as they struggled to survive through a long series of transformations. This journey begins in 1974 when one of their founders, Ed Catmull, took a position running a computer lab for graphics research at a school on Long Island. Then in 1979, Catmull, and co-founder Alvy Ray Smith and their team moved to become part of Lucasfilm, where they began work to make computerized film production hardware and special visual effects for films. Because of changes at Lucasfilm, the team was spun out as Pixar in 1985, and their new business would focus on making a unique graphics computer and related software. Part of the team here included a small group of animators who produced short animated films to demonstrate the hardware/software. By 1989 it was clear that their hardware and software business would never produce significant income, so they turned to using their animation and software skills to make TV advertising. Finally after knocking on Disney’s door for 16 years, in 1991 Disney called back, suggesting they partner to make the first fully computer generated animated film, Toy Story, which itself took four years to complete. The voyage to reach this first real success was a continuous struggle for survival, and every step was charged with remarkable Innovator’s Grit.
We were drawn to this story of Pixar because of the length of time they struggled before reaching success, the many technical innovations they had to develop along the way, the dramatic transformation they helped to create in film-making, and the many remarkable people involved. Although several books have been written about Pixar, all focus solely on history. For the first time, our research, interviews, and writings for the book will show the story of Pixar and its people through an innovator’s eyes. In coming months we will preview material from the book, along with other stories providing important insights for all executives and enterprises into personal, innovator’s, and enterprise grit.
Some of the topics we’ll cover from the book will include:
The birthplace of Pixar – The New York Institute of technology
The challenges of Pixar’s early film days as part of Industrial Light & Magic (ILM) & Lucasfilm
The innovation history of Walt Disney and George Lucas
Early computer innovations in film-making: Tron, Star Wars, Star Trek II, Jurassic Park.
Pixar’s first project with Disney – The Computer Animation Production System (CAPS)
How culture within the film industry impacted early Pixar and innovation adoption
How Disney moved slowly to accept computer animation
The Pixar Team: Ed Catmull, Alvy Ray Smith, John Lasseter, Steve Jobs
The Disney Corp. Folk: Roy Disney, Jeffrey Katzenberg, Mike Eisner
Pixar’s famous projects: Star Trek – Genesis, Andre & Wally, Luxo Jr, Red’s Dream, Tin Toy.
As well as general discussion and true-life innovation stories on:
Evolution and Development of Technology – Hardware and Software
Industry Life Cycles and Innovation Life Cycles
The Loss of Competitiveness among Incumbents
The Rise of the Disruptors
The Coming Together of Technology and Art
The impact of examining the culture of your enterprise on innovation
 Behind Instagram’s Success, Networking the Old Way, New York Times, April 13, 2012
 Exxon’s Big Get on Shale Gas, by Brian O’Keefe, Fortune, April 16, 2012
 He fracked until it paid off, by Jon Gertner, The Lives they Lived, NYTimes Magazine, 21 Dec. 2013
 This CEO is out for blood, Fortune, June 12, 2014