Marcos Benevides • Chris Valvona • Mark Firth
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ISBN: 978-1-941140-50-5
© 2022 Atama-ii Books, Tokyo
by Marcos Benevides, Chris Valvona, Mark FirthProduction editor: Marcos Benevides
Design: Junko Takahashi
Disclaimer: Kodak™, Tesla™, Netflix™, Twitter™, Nintendo™, and other references to registered trademarks in this textbook are made in observance of nominative fair use doctrine regarding trademarks. The publisher implies no with any of their competitors. endorsement, sponsorship, or association with companies mentioned within, nor These case works written by the authors based studiesare original on publically available research, and are factual to the best of our knowledge at the time of writing.
Photos: Cover: Costco Amagasaki (Kirakirameister, CC BY-SA 3.0 via Wikimedia Commons, modified to remove corporate logo); Kodak Eastman II (Karl Thomas Moore, CC BY-SA 4.0 via Wikimedia Commons, modified to remove background); other stock images obtained under license via DepositPhoto. Page 51: Kodak_Eastman_II (Karl Thomas Moore, CC BY-SA 4.0 via Wikimedia Commons); Tesla_electric_car_charger_30032293895 (dronepicr, CC BY 2 0 via Wikimedia Commons); Netflix_button_on_Sharp_Aquos_remote_20131106 (Brian Cantoni, CC BY 2.0 via Wikimedia Commons); @solenfeyissa_Twitter (Solen Feyissa, CC BY-SA 2.0 via Wikimedia Commons); Wiiconsole (Evan-Amos, Public domain via Wikimedia Commons). Page 52: Young_girl_taking_a_Kodak_picture_of_her_doll_LCCN2003671161 (Public domain via Wikimedia Commons); No. 28_-_The_Kodak_Girl_LCCN2003654748 (Public domain via Wikimedia Commons). Page 53: 2015_04_08_012_Kodak_Instamatic_50.jpg (Friedrich Haag, CC by-sa/4.0 via Wikimedia Commons). Page 54: Take a_Kodak_With_You (John Hassall, Public domain, via Wikimedia Commons). Page 55: Kodak Instamatic_155X.jpeg (Karsten11, Public domain, via Wikimedia Commons). Page 56: Ford experimental electric car 1914 (unknown artist, Public domain, via Wikimedia Commons); Tesla Roadster 2.5 (Overlaet, CC BYSA 3.0 via Wikimedia Commons). Page 57: Roadster 2.5 windmills (Tesla Motors Inc., public domain via Wikimedia Commons). Page 58: Tesla_electric_car_charger_30032293895 (dronepicr, CC BY 2.0 via Wikimedia Commons). Page 60: Manifold Video a few weeks before closure (Jarred Crowe, CC BY-SA 4.0 via Wikimedia Commons). Page 61: Netflix envelope (BlueMint, CC BY 2.5 via Wikimedia Commons). Page 62: Netflix_button_on_Sharp_Aquos_remote_20131106 (Brian Cantoni, CC BY 2.0 via Wikimedia Commons). Page 64: @solenfeyissa_Twitter (Solen Feyissa, CC BY-SA 2.0 via Wikimedia Commons); First Tweet (Jack Dorsey, via Twitter <https://twitter.com/jack/status/20>). Page 65: NTT docomo F-01M 001 (Mc681 via Wikimedia Commons, CC BYSA 4.0, modified to include text message); SMS composition on feature phone (Miss Puzzle via Wikimedia Commons, CC BY-SA 4.0, modified to fit in phone screen). Page 66: Four more years (Barack Obama, photographer unknown, via Twitter <https://twitter.com/BarackObama/status/266031293945503744>. Page 68: Wii Wait - 5 (Samm, CC BY-SA 2.0 via via Wikimedia Commons) ; Wii-console (Evan-Amos, Public domain via Wikimedia Commons). Page 69: Nintendo-Color-TV-Game-Blockbreaker-FL (Evan-Amos, public domain via Wikimedia Commons). Page 70: Mario,_Luigi_Wii_U_controller (othree, CC BY 2.0 via Wikimedia Commons).
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Case Studies in Business Innovation is a reading and discussion course that can be used either on its own or as a supplement to Widgets Inc.: A task-based course in workplace English (*). The intended audience is learners of English as a second language.
This book is made up of thirty case studies divided into six themed chapters. Chapter themes help to aid comprehension and to organize discussion. The readings within each chapter are not sequenced in any particular order.
Each reading presents a single brief “snapshot” of a company, product, or strategy that we consider to be innovative and worthy of discussion. We do not recommend nor reject any brand or idea in this book; our aim is to present interesting, factual information that you can consider, discuss—and maybe even discard!
At the beginning of each chapter, there is an Executive Summary. This provides a pre-reading opportunity to activate your previous knowledge. After each reading, there are discussion and research tasks. At the end of each chapter, a more substantial project encourages a broader look at the theme.
We hope that you will enjoy teaching and learning with this book as much as we enjoyed writing it.
Best regards,
Marcos Benevides Chris Valvona Mark Firth(*) For more information about Widgets Inc.: A task-based course in workplace English, visit widgepedia.com
CHAPTER 1 Power of the People: Innovations in human resource management
CHAPTER 2 Eureka moments: Innovations in product research & development
5 Zoom (improvement on Cisco’s Webex)
CHAPTER 3 The next big thing: Innovations in strategy & planning
1 Kodak™ and the digital camera
2 Tesla™ and the electric car
3 Netflix™ and video delivery
4 Twitter™ and the new media
5 Nintendo Wii™ changes the game
CHAPTER 4 The customer is always right: Innovations in market research & analysis
CHAPTER 5 Buy now! Innovations in advertising & brand-building
CHAPTER 6 Best for the job: innovations in attracting and retaining talent
Creativity is not only for inventing new products and services. It is also an important part of strategy and planning. As we see in this chapter, companies that can creatively adapt to threats and opportunities in their market, and that can clearly understand the strengths and weaknesses of their products, are the ones that succeed. Executive Summaries
Reading
1
Kodak became one of the most successful companies of the 20th century by innovating how we take photos. Their slogan, “You press the button, we do the rest” says it all. However, even though it innovated in other areas, Kodak failed to see threats to its business model in the digital age.
Reading 2
Tesla was started in 2003 by engineers who wanted to create a cool, fun, and fast electric car. Although they did not actually invent the technology, they understood the strengths of electric cars, and saw a clear opportunity in the market. Tesla’s success changed the car industry—and the world.
Reading
3
To Netflix, the small size and durability of DVDs suggested an opportunity. Instead of making people go to the video store, what if movies could be delivered right to their front door? Not only did the company innovate movie delivery with DVDs, they did it again with streaming.
Reading
4
Twitter™ and the new media
Twitter has been called many things: a social network, a microblogging service, an open and democratic way to connect people, and a dangerous tool for spreading misinformation. All of these are true to some extent but, at least in the beginning, Twitter was an idea in search of an opportunity.
Reading
5
The Nintendo Wii was created as an easy-to-use but relatively low-tech console that focused on fun for the whole family. This strategy was different from its competitors, which mainly focused on faster and more high-tech hardware for hardcore “gamers”. Nintendo’s strategy was to not only focus on the current gaming market, but also target non-gamers.
The Kodak camera company is almost as old as photography itself. It was started in the 1880s by a man named George Eastman. Eastman did not invent the camera; his idea was to make photography so easy that anyone could do it. Kodak’s first slogan was, “You press the button, we do the rest.”
Kodak soon succeeded in popularizing photography. It grew into one of the best-known brands of the 20th century. By the 1980s, the company was so popular that its newest slogan, “It’s a Kodak moment” basically came to mean “Let’s take a photo” in popular culture.
Young people may not know the name “Kodak”. That’s
because, when digital technology was starting to become common in the 1990s, Kodak did not see the threat to its business model. This is especially interesting because, in fact, it was Kodak that invented the portable digital camera.
Kodak did not become successful simply because it made cameras. In fact, its profit from cameras was lower than from other products. The company actually made most of its money from selling photographic film and paper.
Kodak followed a “razor-and-blades” business model. In this model, an expensive product, like a camera, is sold at a very low price. However, customers must regularly buy other items, such as film and paper, to continue using the product. This business model was very successful for Kodak.
The company also had an active research and development section. In 1975, a Kodak employee named Steve Sasson developed the first digital camera that was small enough to carry. This camera weighed 3.6 kg and could only take low quality black and white photos.
However, because digital cameras do not need film or special paper, Kodak gave up on the technology. At first, this seemed like a good decision. After all, professional photographers did not like digital cameras either; many insisted that they would never switch to digital.
It wasn’t until the 1990s that digital photography really took off with most people. By the 2000s, the threat was clear, but Kodak had missed its best opportunity to be a player in the digital camera market.
For a while, it seemed that digital and film cameras might co-exist. That was until the smartphone came along and put the final nail in the film camera’s coffin. Soon, by the early 2010s, the film camera market was dead.
Kodak tried to move in a new direction. It started selling printers and ink. This was another industry that used the razor-and-blades business model—but Kodak tried a new approach. Instead of making cheap printers and expensive ink, Kodak made expensive printers with cheap ink.
Their idea was that its customers would want highquality photographic prints, and so they would pay for better printers. Unfortunately, trends were again going in another direction—more and more, people wanted to store images digitally, not to print them.
Kodak developed an innovative technology, but it did not take advantage of it. It did not see the strengths of digital photography, nor the threat that digital posed to its core film and paper business. Kodak bet it all on its past and present successes, failing to capture the future.
What kinds of cameras have you owned? What do you use now to take pictures?
A company using the razor & blade business model sells the main product at a low cost, but it then sells the replacement or supply products at a high profit margin.
Discuss these examples:
• Printer and ink
• Video game consoles and games
Can you think of others?
3 In groups, think up a new product that uses the razor & blade business model. Present your idea to the class.
Electric cars are older than most people think.
In fact, they are almost as old as cars themselves. Yet it wasn’t until the early 21st century that a company made electric cars that people wanted to buy. That company is Tesla.
Tesla was founded by a couple of engineers in 2003. They knew that electric cars could be better, quicker, and more fun to drive than gas-powered cars. To achieve this goal, they had to overcome weaknesses in electric car technology. The main problem was that battery charging and storage technology was not good enough. Electric cars did not have enough range—that is, distance per charge—compared to gas-powered cars.
For the company to grow and succeed, Tesla needed money to invest in better research and development. In 2004, it approached a rich investor named Elon Musk. Musk was an innovative thinker in his own right, and he quickly saw the many potential strengths of the electric car.
With Musk at the head of the company, Tesla focused on developing battery packs that would not only have better range, but would be safer too. While range is important, they also understood that safety is one of the main things people look for in a car.
In 2008, Tesla achieved its first electric vehicle, the twoseater Roadster. However, by then the company had used up almost all of its funding. The cars were sold at a loss. Customers had pre-ordered their Roadsters for $92,000, but the actual cost of production was around $95,000 per car.
Nevertheless, the Roadster was a hit. Drivers were impressed by how fun to drive electric cars could be. They also saw the many other strengths of this new technology. Electric cars were not only faster, but also quieter, easier to control, more reliable, and of course, greener.
Tesla was able to get government support to keep the company alive. It also made a deal with Daimler AG,
makers of Mercedes, to supply Tesla with battery packs. Due to Tesla’s effort, Daimler became convinced of the potential market for electric vehicles; the German company bought a 10% share of Tesla.
The success of the Tesla Roadster was only the first step in Elon Musk’s plan. He wanted the next car to target rich customers who looked for power, comfort, and luxury in their cars. By targeting the luxury market, Musk hoped to brand Teslas as status symbols, which would help to popularize the technology.
Soon, the Tesla Model S was launched. This was the car that established electrics as more than just fun toys. The Model S was widely praised for being better than gaspowered cars at… well, nearly everything. The S won every major automotive award when it launched, from safety to luxury to performance.
Tesla succeeded because of a combination of factors. Yes, the world was facing threats of oil shortages, and people were concerned about climate change. But Tesla also recognized the many clear strengths of the electric car, and focused on overcoming its weaknesses.
In the end, the company did what any other car maker could have done— even decades earlier—if they had had the vision.
What is the situation with electric vehicles (EVs) in your country? What kinds of EVs or models are popular? Which companies are focusing on EV technology?
In your opinion, what is the future of the electric car? Do you have, or plan to buy one? What features would you like to see included in future models?
3 Elon Musk is famous for being an engineer, an entrepreneur, and a corporate leader. Research his connection to other projects and companies, and then present your findings to the class.
PayPal SpaceX The Boring Company
Neuralink Twitter
Until the late 1990s, the main way to watch a movie at home was to rent a videotape from a store. When DVDs—then a new technology—grew popular, this video store business model continued. Customers visited a local store to rent DVDs, and then returned the discs to the store a few days later.
However, DVDs and videotapes had different strengths and weaknesses. Videotapes were relatively large and easy to break, and they needed to be replaced often. DVDs, on the other hand, were much smaller, thinner, and lighter, and they did not wear out from usage.
To Reed Hastings and Marc Randolph, co-founders of a startup called Netflix.com, this suggested an opportunity.
DVDs could fit into a small envelope, and easily survive being mailed again and again. So, instead of making customers go to the video store, they thought, how about delivering movies right to their door?
This idea is what led to Netflix becoming a major international company.
Netflix launched in 1997 as an online-based DVD rentby-mail service. At that time, the internet was just starting to take off, so customers could easily set up an account, and then choose and manage their rentals, by going to the Netflix site. A day or two later, a DVD would arrive at their home.
It started as a per-rental model, meaning customers would pay for each DVD rented and delivered. This allowed Netflix to grow and to take a share of the 16-billion-dollar DVD market. However, the company did not stop there.
By 1999, their model had changed to a monthly subscription fee. This allowed unlimited rentals, did not have time limits, and did not charge late fees. Co-founder Hastings claims that he had the no-late-fees idea after having to pay a big late fee to Blockbuster Video, Netflix’s early competitor. He correctly saw that his frustration at being charged for returning late movies was something that most people also felt.
Netflix’s new business model had a big effect on the movie rental industry. In fact, people were so satisfied with the convenience of DVDs by mail that the video rental store model started dying out. In 2004, Blockbuster tried to catch up with Netflix by starting its own DVD rental service, but by then it was too late.
However, the most amazing part of Netflix’s innovation story is that it does not end there. In fact, many people today don’t even know that Netflix used to be known for DVDs by mail. That’s because Netflix continued to look for new threats and opportunities in the video delivery market, and soon changed again.
Netflix realized that faster internet speeds would soon allow online streaming to be possible, so they changed their business model again. In 2007, they started to deliver video online.
Netflix also saw that access to video content would soon become a problem with its new competitors, such as Amazon and Disney. So Netflix innovated again, this time by producing its own TV series and movies.
In a fast-changing world, businesses need to actively look for emerging threats and opportunities. Netflix is a rare case of a company that adapted successfully, not only once but several times.
Questions and extension tasks
Do you use online streaming services? Explain:
Compare some of the major online streaming services.
Price Features Comments
Netflix
Amazon Prime
Apple TV
Disney+
YouTube
Other:
Discussion: In ten years, which of these companies do you think will be most and the least successful? Why?
3 In pairs, create your ideal online streaming company. Describe your content, customization options, price plans, sharing options, etc. Present your new service to other groups.
The history of social media in the 21st century is full of cautionary stories. The rise and fall of companies such as Friendster, MySpace, and Mixi remind us that emerging threats and opportunities are difficult to predict in the online world.
One company that has continued to grow strong for many years is Twitter. Since its creation in 2006, Twitter has been called many things: a social network, a microblogging service, and a “firehose” of information. It has been praised as a platform for free speech, but also accused of spreading lies and hateful speech.
One thing that fans and critics alike can agree on is that Twitter has become a major player, and is unlikely to go away. By the early 2020s, Twitter had over 300 million
users, making it the 10th biggest social media companiy in the word.
From the beginning, it was hard to pin down Twitter’s main strengths and weaknesses. The short length of its “tweets”, which some may consider a weakness, was to other people a kind of strength. As one of Twitter’s cofounders famously said, “[Twitter is] hard to define, because it didn’t replace anything. […] over time you figure out what it is.”
The launch of Twitter in March 2006 predated apps and smartphones. However, texting was already common at the time. People were used to using SMS to send short texts to each other’s cell phones.
One of Twitter’s co-founders, Jack Dorsey, suggested taking this idea, and creating a service where users could share short messages openly. That is, users would be able to broadcast SMS-like messages that anyone else could follow.
It was an instant hit. Users loved that they could share short messages and “personal status updates” with the whole world. Movie stars, musicians, authors, and politicians could now make announcements directly to their audiences. They could know how fans reacted by how many likes, retweets, and replies that they received.
What’s more, breaking news could be shared as it happened, and large groups of people could organize
their actions in real time. It didn’t matter how wellknown or how rich a person or group was. Twitter gave every voice an easy, instant way to be heard.
As users demanded new features, Twitter was quick to adapt. For example, it soon became clear that users wanted to be able to tweet more than 140 characters. First, Twitter stopped counting “@” handles within the 140 characters. Then, they stopped counting filenames and attachments. Finally, they doubled the limit to 280 characters.
Twitter also added new features, such as photos, polls, user profiles, even streaming video. Over time, it has expanded to compete with more “traditional” social media such as Facebook or LinkedIn.
Today it is difficult to image a world without Twitter as a major player. But perhaps the same could have been said about MySpace in 2006. In the social media industry, “long-term” success can mean just a few years.
What seems most interesting about Twitter is that it was not created with a very clear plan of action. The company founders first built the platform, and then reacted to how people used it. It seems like an unlikely model for success, but maybe that is the lesson here: sometimes the best strategy is to be flexible and to adapt quickly.
What social media services do you use? Describe your experiences.
What is the current business situation of Twitter? Do some online research and complete the SWOT analysis.
Opportunities
Threats
Discussion: What do you think Twitter should do next?
3 Think up your ideal social media company. Present your new service to other groups. Consider target users, key features, sources of revenue, etc.
Nintendo is a Japanese company known for its popular video game products. However, even fans of Mario™, Donkey Kong™, and Zelda™ may not realize that Nintendo is over a hundred and thirty years old. It released its first video game console, called the “Color TV Game”, in 1977— nearly fifty years ago.
Despite its early innovations, by the 2000s Nintendo was struggling to compete in a tight video game market. Its recent consoles, the Nintendo 64™ and the GameCube™, had been successful in giving players fun and exciting games. However, competitors like the Sony
Playstation™ and the Microsoft Xbox™, had fun games too. What’s more, Sony and Microsoft, had huge R&D budgets to make their next generation of consoles even better. How would Nintendo continue to compete?
In 2006, Nintendo introduced the Wii, a cheap system that was easy to plug and play. It focused on fun, simple, active games that anyone could enjoy. The Wii console came with a game called Wii Sports™. This was a familyoriented interactive game, and it made it easy for players to have fun together just minutes after unboxing.
Nintendo’s president, Satory Iwada, had made a decision that the company would not, in his words, “fight Sony”. That is, Nintendo would not compete to make the fastest, most powerful game console. Instead, it would follow a different strategy.
The Wii was less powerful than its competitors, but it did have one “killer” feature. The Wii Remote™, or “Wiimote”, was a motion-based wireless controller that was easy for anyone to use. Players could hold it in one hand to move around like a tool, or use both hands like a traditional game controller.
With these simple features and relatively cheap price, the Wii became an instant success. In its first year, Nintendo could not keep up with demand. By 2008, the company was producing 2.4 million units per month. By the end of
2010, Nintendo had outsold both Microsoft’s Xbox 360 and Sony’s PlayStation 3, to become the best-selling video game console of that generation.
The Wii story does not have a completely happy ending. In 2012, Nintendo tried to extend the Wii’s success by introducing the Wii U™ GamePad™. It was a hybrid console and game tablet, which included a screen as part of the controller.
Unfortunately, the tablet market was also competitive at the time, and customers had no need for another similar device—especially one that was neither a great tablet, nor a great improvement on the Wii console.
In 2013, Nintendo finally discontinued the Wii and Wii U, and launched their successor, the Switch™. The Switch has been another success for the company, and includes many of the best features of the Wii and the Wii U.
What the Wii did best was to untap a new customer base by rethinking the kind of product that was already in the market. Nintendo realized that there was no way it could compete with giants companies like Microsoft and Sony. So it avoided direct competition by offering something new and different.
With the Wii console, Nintendo thought deeply about the user experience—that is, how and why we play games—instead of focusing on the technical specifications of the games themselves.
5
Questions and extension tasks
Describe your experiences with video games.
Compare and contrast the major in this generation of consoles.
Nintendo
Switch
Sony PlayStation
Microsoft Xbox
Other:
Other:
Which platform do you like the most? Why?
3 In pairs, think up your own original video game. Present your new video game to other groups.
Consider: target users, key features, how it is innovative, etc.
Make a joint venture proposal to another company.
A B
Create small groups of 3-4 members. Each group represents a company from Chapter 3. If needed, make several groups per company.
Step 1
Each group will present a joint venture proposal to another group.
Think of some ideas about how your companies can work together in a joint venture.
Group 1
Tesla present to Group 2 Netflix
Idea:
Idea:
Group 2
Netflix present to Group 3 Twitter
Idea: Idea:
Group 3
Twitter present to Group 4 Nintendo
Idea:
Idea:
Group 4
Nintendo present to Group 1 Tesla
Idea: Idea:
Step 2
Prepare a detailed presentation about how your companies can collaborate with each other. Think about what each company does well, and what you could do together.
Step 3
Present your idea to the other company. Explain how your joint venture can be mutually beneficial, and explain how it addresses an opportunity or threat in the market.
Step 4
Q & A. The other company will ask you some questions about your plan. You can prepare by imagining what kind of questions they may ask you:
Q1:
Q2:
Q3:
Step 5
A different company will present a joint venture proposal to you. Listen to their pitch, then ask them any questions you have. Take notes on their proposal:
Q1:
Q2:
Q3:
Hold a company meeting and do a SWOT analysis on the proposal that was presented to you. Decide if you should enter into a joint venture with the other company. Report on what you decide, and give reasons for your decision.
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