In his epic commencement speech to the USC law school grads in 1994, Charlie Munger mentions “scale” 24 times.
The advantages of scale are “ungodly important”, he points out.
Benefits of scale include reducing costs, raising prices and testing new markets.
In a beer business, for example, Anheuser-Busch operates at such a higher volume than Anchor Steam beer (based in San Francisco), that …
How many brands can you count in the following sentence:
“I needed some aspirin, a band-aid, ace bandage — and probably a jacuzzi!– after my zipper got caught in an escalator while my realtor friend and I carried a bubble-wrapped ping-pong table from a dumpster to our jeep and slipped on our California stir fry with broccolini take-out.”
If you counted thirteen then you are correct!
They are brands whose names are used in day to day conversations as generic terms synonymous with their product categories (e.g. more people refer to a “frisbee” (a brand) than a “flying disc.” (the category)).
Note: These brands are called by many different terms: “Colloquialized,” “Synonymous,” to “Genericized” to “Generic Trademarks”.
I made a list of the top 100 of these colloquial brands using one simple criterion: would I use the brand name instead of the product category if I was referring to the product/activity in a sentence (e.g. “I need a band-aid” versus “I need an adhesive bandage.”).
I was fascinated by a recent Harvard Business Review (HBR) article on how to innovate (an abstract is here with the option to purchase).
They researched such innovators as Apple’s Steve Jobs, Amazon’s Jeff Bezos, eBay’s Pierre Omidyar and Meg Whitman, Intuit’s Scott Cook and Proctor & Gamble’s A.G. Lafley.
Their key finding was that innovative entrepreneurs (who are also CEOs) spend 50% more time on five “discovery activities” than do CEOs with no track record for innovation.
I fully agree with these five tips for how to innovate; and want to provide my insights on them:
HBR points out that Michael Dell famously created Dell with the question:
“Why do computers cost five times the cost of the sum of their parts?”
Innovators are excellent at asking questions that challenge the status quo such as:
Innovators are strong at observing people and details. …