The Law of Scale (the benefits are “Ungodly Important”)

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 = Lower Costs, Higher Prices & Bets on New Markets

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 …

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The Top 100 Brand Names Used as Generic Terms

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.”).

Enjoy!

The Top 100 “Genericized” Brands (Synonomous With Their Product Categories)

1. Band-Aid — An adhesive bandage brand owned by Johnson & Johnson.
2. Zipper — This device that brings together two pieces of fabric was originally a trademark of B.F. Goodrich but is now generic.^
3. Jell-O — A brand name of gelatin desserts owned by Kraft Foods.
4. Yo-Yo — Generic (originally a trademark of Duncan Yo-Yo Company.^
5. Frisbee — A flying disc product trademarked by Wham-O.

…

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How To Innovate: 5 Tips From The Top Innovators

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:

Five Tips On How To Innovate

1) Question (The Status Quo)

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:

• Why not try it this way?
• Why do you do things the way you do?
• What if you tried this new thing or stopped doing some old thing?
• What would you do if failure was not an option?

2) Observe

Innovators are strong at observing people and details. …

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