Failure To Prepare Is Preparing To Fail

Innovation is impossible to define.

What is it exactly? What does it look like? How do I find it? How can I plan for it?

Nobody really knows. Yet, when innovation is absent, it is as clear as day.

Yahoo’s sale to Verizon two weeks ago is a perfect example of just that. A pioneer of the Internet age, a company meant to be in perfect hands with former Google starlet Marissa Mayer at the helm, sold for a mere $4.8 billion.

Mere is an incredibly subjective term. However, Facebook raked in $6.44 billion of revenue in the second quarter of 2016 alone. And, as of this writing, Facebook is valued at $361 billion. So, a mere $4.8 billion is pretty fitting for a company that was poised to transform digital media.

Clearly, Mayer and Yahoo missed the innovation that Facebook so clearly saw. That innovation was in social media & the rise of mobile technology.

But even Facebook couldn’t have done it alone. Zuckerberg and his team prepared for the mobile and social revolutions. They invented modern day social media & the business formula around it. Even with over a billion people logging into their Facebook accounts every day, Zuck knew he needed more.

That is when Instagram came into play.

Facebook purchased the popular photo-sharing app for $1 billion back in 2012. Now, Instagram draws 500 million monthly users and is rumored to pull in $3.2 billion in ’16 revenue for $FB. In just four years, Instagram is contributing 3x what Facebook paid for it directly to the company’s bottom line. And it’s only going to grow from here.

Back in 2001, Google did something quite similar by purchasing YouTube for $1.65 billion. 15 years later, YouTube has a billion monthly users and, in their last revenue filings from 2014, pulled in $4 billion. And that’s two years ago!

What Facebook and Google have shown is that preparation is everything. There are many ways to truly innovate and grow your business. Whether it’s investing in new technologies or totally transforming your product, there is more than one formula to achieve success and to be considered innovative.

What Yahoo and so many others failed to do was find their path towards innovation. Instead of simply pushing their own ideas, beliefs & products, innovative companies take full advantage of what the market is really saying. They then take those insights and develop new products accordingly.

That is what Facebook & Google did with Instagram and YouTube, respectively. They saw HUGE increases in social, sharing, photos & videos, and realized that, internally, they were not equipped to tackle it alone.

Yahoo tried something similar when Mayer & her team coughed up $1.1 billion in 2013 to bring David Karp and his ambition yet anti-advertising team of Tumblrs to Yahoo’s headquarters in Sunnyvale, California. The strategy was right. Social was on the rise and Tumblr was at the heart of the Internet. It made complete sense for Mayer to try to bring social into their stale organization, while adding 300 million new users to Yahoo in the process.

One reason this strategy worked so well for Facebook and Google? The product. Instagram and YouTube were both bound for stardom. Instagram had 30 million users and was the top app in the App Store when Facebook acquired them. YouTube boasted an audience of 72 million users and 100 million videos were uploaded to the platform everyday when Google swallowed them whole.

Both companies had clear paths to revenue: advertising. It’s really that simple. Tumblr was the exact opposite. Karp and his team were profoundly anti-advertising from the get-go and the future of their business / product suffered tremendously. They were unable to innovate and grow, primarily because of Mayer’s mismanagement, but also because of their resistance to ads. And, therefore, their resistance to revenue of any kind, which would’ve helped push Tumblr forward.

The great John Wooden once said, “Failure to prepare is preparing to fail.”

What Yahoo, Facebook & Google have in common is that they all tried to prepare for social and mobile. For one reason or another, Facebook and Google were able to capture the users & revenue of the social/mobile age.

They were able to innovate. And, by innovate, I mean prepare for the future.

Viacom is yet another recent example of what happens when preparation is pushed to the side and innovation becomes increasingly absent in a global organization.

Similar to the massive investments from companies like Facebook and Google, media brands have dove head first into the innovate by acquiring mentality.

• NBC Universal invested $200 million each in both Vox Media and BuzzFeed.
• In 2014, Disney bought Maker Studios for more than $500 million. And just this week, Bog Iger’s conglomerate spent $1 billion to own 33% of BAMTech, the MLB’s fast growing streaming division.
• Turner purchased Bleacher Report back in 2012 for $175 million. They also led Mashable’s latest round of financing and their parent company Time Warner purchased a 10% stake in Hulu earlier this month.

These media heavyweights have, yet again, shown that innovation can be purchased. As strange as that may sound. By investing in the future of streaming and digital media, NBC Universal, Time Warner & Disney have prepared for the next generation of media consumers.

And, thus, they have innovated for their business & their shareholders.

Viacom is a very different story.

In what seems to the only Soap Opera people tune into, Viacom has had a tumultuous summer with their aging Chairman Summer Redstone losing his mind and CEO Philip Dauman praying for job security & a future with the company. It’s a real mess for the Comedy Central owner.

Recode recently wrote a piece about Viacom. Not a story about The Real Housewives of Viacom, which we all would’ve read, but about the lack of innovation at the media company.

And by innovation they mean acquisitions.

What all of these iconic brands have clearly taught us is that there are many ways to innovate for both your business and your consumers. If you’re not comfortable changing your business, product, and priorities, you will never be able to achieve serious levels of innovation across your organization.

Social has proven something quite similar in the last few weeks.

With Instagram Stories, Snapchat Memories & Facebook Live, these three platforms have realized the need for change, innovation, and, most of all, preparation when looking towards the future of one’s business.

Instagram realized that Snapchat Stories presented a real opportunity to both change their core product and easily steal users / usage from their rival.

Snapchat, themselves, did something eerily similar when they announced Memories, a nod to the company’s shift from ephemeral messaging to a global media destination & new age camera app.

Facebook Live, although less recent, has completely transformed the company’s focus from a simple social network to an online video hub.

All three of these platforms put their core businesses in jeopardy by shifting their focus and looking to what the future holds. That change, that perceived agility and the flexibility to pounce on clear market opportunities, is the precise reason investors beg to invest and brands die to advertise on these platforms.

The next wave of preparation and innovation will define a number of traditional businesses & the industries they’re apart of.

Brands must take note and plan their messaging and content accordingly. Here are two of those areas to watch:

Virtual Reality

VR is something all brands must accept, plan for, and invest in. Immediately. Because, quite frankly, the results & data are impossible to ignore.

• After more than 1 million people used Gear VRs back in April, Samsung has realized the mass appeal & hunger for this new type of medium.
• Samsung partnered with NBC for the 2016 Summer Olympics in Rio to produce 85 hours of VR content for viewers to enjoy from home.
• NetDragon Websoft, a Chinese company known for its hack-and-slash video games, is testing “headset-mounted virtual reality teachers” in an effort to transform the future of the classroom & education overall.
• Visionary VR is working on a new app called Mindshow that helps ordinary users create & star in their own virtual reality movie.

This medium is here to stay because it gives your audience a first-person perspective of the story your brand is trying to tell. It has led to serious investments around sports & legitimate increases in charitable donations. And we’re just getting started.

Your brand & team must plan for virtual reality as a necessary platform to connect with consumers for the next 2–5 years. And maybe longer.

Cars

With the rise of autonomous driving technology from companies like Tesla, as well as the continued craze around ride-sharing from Uber & Lyft, I believe the car and its dashboard will be a legitimate screen for advertisers in the next 5–10 years.

Here are a few recent stats & stories that prove where we’re going.

• Uber sold its Chinese operations to Didi Chuxing last week for $35 billion.
• Lyft set a company record last month with 14 million rides.
• Car sharing has led to serious declines in both car ownership and overall emissions in cities.
• Elon Musk released his Master Plan, Part Deux a few weeks ago in which he stated one of Tesla’s goals is to, “ Enable your car to make money for you when you aren’t using it.” In other words, Musk wants Tesla owners to let their cars act as Ubers of their own when they’re “driving” them. #Genius

As you can see, there are serious transformations going on in the automotive space. And for advertisers this is a BIG DEAL.

Not only does the car have the reach advertisers crave (253 million vehicles in the US alone) but it also has the conversion ability many platforms simply do not.

Retail businesses, as one example, are perfectly positioned to utilize in-car advertising. With exclusive discounts & directions to your store, retailers will claw their way into your vehicle the second they’re allowed in.

And, I believe, other big brands will follow.

Which brings us back to Mr. Wooden, a man praised for his leadership skills and managerial lessons. But, for some reason, one quote has resonated with me more than any other from the late great UCLA coaching legend.

“Failure to prepare is preparing to fail.”

After analyzing the ways gigantic businesses like Facebook, Google & Disney have approached their next phases of innovation, I don’t think I’m the only one who sees the direct correlation between preparation and innovation.

Your brand must analyze the current market and identify growth areas & future opportunities for your business. Even if it disrupts your product.

If John Wooden were alive I would love to see him advise some of the biggest CEOs in the world. If he were still around, Coach Wooden would be the perfect mentor to this next generation of iconic CEOs like Mark Zuckerberg & Evan Spiegel.

But there would be one substantial tweak to this legendary Woodenism.

“Failure to prepare is preparing NOT TO INNOVATE.”

After 10 NCAA Championships in 12 years, one thing is certain.

John Wooden never would have let this lack of preparation into his team.

And, while you’re not The Wizard of Westwood, don’t let it happen to yours.

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