3 Companies Who Saved Themselves Through Innovation
120 years ago, Nintendo was making playing cards.
These weren’t cards for kids to collect and fool around with, these were gambling cards for very serious Japanese businessmen.
Safe to say, Nintendo has gone through some changes since 1889.
So what happened?
First of all, Nintendo’s market started getting competitive when Japan lifted laws forbidding the trade of playing cards. Soon the company was suffering losses.
Second, in 1949, 22-year-old Hiroshi Yamauchi took over the company from his father.
Hiroshi Yamauchi knew he needed to turn his company around. He didn’t exactly have a strategy to make this happen, but he had a lot of guesses for what might work.
Yamauchi started adding new products to Nintendo; things like a taxi company, instant rice, hourly hotels (yes, that’s exactly as sketchy as it sounds), vacuum cleaners — all of which met with little success.
Finally, Yaumauchi started selling different games and toys, and in doing so, hit upon a whole new, much younger audience.
His first toy was called the “Ultra Hand”. It was a huge, extendable plastic grabber with suction-cup fingers.
This may have been a dubious first attempt, but it was definitely a step in the right direction.
Next, Nintendo secured the rights to to distribute the world’s first home videogame console in Japan, called the “Magnavox Odyssey”.
The Magnavox Odyssey had moderate success, until, one day in 1980, video game designer Shigeru Miyamoto created an arcade game called “Donkey Kong”. The game featured a hammer-wielding hero who was to become…
Of course, the rest is history.
In 1986, Nintendo launched the NES video game console featuring the all-time classic Super Mario Bros., which became the best-selling video game franchise of the next thirty years.
Nintendo has since followed up with all the products that have defined the way we game — Nintendo Wii, Nintendo DS and so many more.
It’s the stuff of legends: a 22-year-old takes a floundering card company, and transforms it into an 18.4 billion dollar institution.
How did he do it?
First of all, he recognized that his company needed to change. This sounds easy, but it takes guts to risk what you have for the unknown.
Second, Yamauchi was determined. He arrived at a game-changing solution through sheer, exhaustive trial-and-error and the bravery to try a lot of ridiculous-sounding things (the “Ultra-Hand”?).
In 1997, Reed Hastings came up with an idea for a video subscription service.
He’d just had to pay $40 in overdue fees after returning Apollo 13 weeks late, and wasn’t too happy about it.
Furthermore, Hastings had recently heard about these newfangled devices called DVDs.
Unlike the chunky VHS, DVDs could be mailed out to subscribers for a monthly fee, which is exactly what Hastings did.
It was a great idea; a sort of all-you-can-watch movie buffet. Members could keep DVDs as long as they liked and trade them in for others when they wanted something new. No more fines.
When the video streaming revolution came along in 2000, Hasting was quick to foresee the ways that emerging technology would change his business.
Netflix went online, achieving massive success while companies like Blockbuster, who failed to adapt, went out of business.
But around 2010, Hastings was facing a new problem.
All of Netflix’s streaming competitors — AMC, CTV, HBO etc. — were streaming their own, original content, whereas Netflix was just a middleman, providing shows second-hand and months after their air dates.
So Netflix started to create its own shows — Orange is the New Black, House of Cards, a reboot of Arrested Development; all-new Netflix originals.
At first glance, it seems like Netflix was just mimicking its competitors.
But in fact, the company was pioneering a whole new kind of content creation using the one thing Netflix had more of than anyone else: data. A lot of data.
Netflix tracks everything: completion rates on every movie and show, time gaps between watching one episode and the next. When you pause, rewind or fast-forward, Netflix takes note. The time of day you watch, the day of the week, what searches you make… Netflix records every detail.
So when Netflix bought the rights for House of Cards, they weren’t just making a best guess as to what their subscribers would enjoy, they were calculating an outcome.
They knew that:
- Movies directed by David Fincher got watched from beginning to end.
- A lot of people watched political dramas beginning to end, back-to-back.
- People who watched political dramas also watched Kevin Spacey films and films directed by David Fincher.
So what’s a + b + c? A new political drama starring Kevin Spacey, directed by David Fincher, released a whole season at a time so subscribers could binge-watch.
Netflix knew that House of Cards would be a hit long before it was released, because the show was built to be loved.
Today, Netflix has almost 70 million subscribers across the globe.
The story of their success is a good one because the company has reinvented itself repeatedly, and each time they’ve done it by understanding their market better than anyone else.
This list would not be complete without Apple — no company has reinvented itself so completely and successfully.
In 1996, saddled by huge financial losses, Apple was on the verge of collapse.
Sales were down, and in desperation the company brought back Steve Jobs, ousted from the company just a few years ago, to turn things around.
Jobs knew that what Apple needed wasn’t a technological revolution, it was a design revolution.
At this time, computers were ugly, clunky, beige boxes.
This was a problem because computers were no longer being sold exclusively to big corporations, but to everyday consumers, who love all things beautiful.
It was at this point that Jobs drew inspiration from an unlikely source: a calligraphy class he’d once audited as a college dropout.
In his Stanford Commencement Address, Jobs recalls,
“I learned about serif and sans-serif typefaces, about varying the space between different letter combinations, about what makes great typography great. It was beautiful. Historical. Artistically subtle in a way that science can’t capture. And I found it fascinating. None of this had any hope of any practical application in my life. But 10 years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac”.
In 1998, Apple released the original iMac.
First and foremost, the iMac was pretty. The translucent casing came in five bright colors, it was tear-drop shaped and it had a handle on the back so you pick it up.
And, just like the typography that Jobs was so fascinated with, it was elegant, clean and simple.
Not only was the iMac a huge success, but its simple and intuitive design embodied a vision for all the iconic Apple products to come.
Partly, it’s just a cool story that such a massive design revolution was sparked because Steve Jobs took a class on typographies.
But it’s also a great nugget of wisdom on innovation:
Be curious. Follow your interests. “Think Different”.