MBA2289 Guest Teacher – Derek Lidow – How to Become a Master Innovator by Copying Others

0:08Heyo! Welcome to the$100 MBA show because successful entrepreneurs never do it alone. That's why we deliver daily 10 minute business lessons for the real world.

0:30lit out. And he'll be teaching you how to become a master innovator by copying others. Yep, you heard that right. And I wanted to bring on Derek on today's show because he has a very unique career. He was the CEO of a publicly traded company, as well as the CEO and founder of a very valuable and innovative startup. He's also a professor and scholar of entrepreneurship, teaching at Princeton University. So he's got this great combination of real world experiences and is also a great teacher, as you'll see in his guest teacher lesson. He's going to give you real-world examples of how you can be a master innovator by looking at what others have done before you.

1:09So let's get into it. Let's get down to business. Today's guest teacher episode from Derek Liddow is a special one. If you're looking to come up with innovative ideas for your business, your products, your services, even your marketing, then Derek's going to show you how to be innovative by copying others and putting your own spin on it, your own flavor, your own brand. I'm going to pass it to Derek now, but I'll be back to wrap up today's episode and give my takeaways. But for now, take it away, Derek. Hello, everyone. I'm Derek Lido, and thank you for joining me today. Today, I'll be teaching you about how to become a master innovator by copying others.

1:49I know this sounds counterintuitive, but that's why learning this can give you an important competitive advantage. So let's get down to business. Being innovative means thinking about good ideas and implementing them before your competition. Today, lots of books are written about being creative and innovative, but few, if any, are written from the point of view of somebody who's on the spot, running an enterprise with lots of competitors, and who really wants to increase business. That's the position most business owners find themselves in, working hard to stay ahead of the competition, but needing or wanting to increase revenues.

2:28So it is from this perspective that it is most valuable to understand innovation and how to use your limited time and resources to be innovative. As a professor of entrepreneurship, I've studied how entrepreneurs are innovative. And before being invited to teach, I was a successful entrepreneur who innovated faster than dozens of entrenched competitors. Innovation done by businesses run by entrepreneurs are great to study because they innovate faster and with fewer resources than do firms run by professional managers. Some people say entrepreneurial firms innovate faster with fewer resources because they're smaller.

3:11But this would be wrong. We see entrepreneurial firms that get pretty large and remain great at churning out innovative products. So size is not a primary factor. Some say that being the most innovative is just about finding creative people to hire who are naturally innovative. Many people feel that successful entrepreneurs, especially gifted individuals, who are born with instincts on how to balance risk and rewards. Innovation to them is all about knowing how to spot someone with entrepreneurial characteristics. This is wrong, too. We find lots of successful entrepreneurs that do not think of themselves as creative or as risk takers.

3:56Some businesses try to train their employees to be entrepreneurial, but that doesn't work either. This also leads people to conclude that some people are just born entrepreneurs. I can assure you that there are no traits that define innovators or successful entrepreneurs. Researchers have been looking for the past 50 years. Over 10 ,000 research papers have been published looking for the traits of successful innovative entrepreneurs. And not one important trait has ever been substantiated. Matter of fact, relative to entrepreneurs, being innovative and successful almost always come together. When you find one, you almost always find the other.

4:38So what is the key to successful entrepreneurial innovation? The key is that successful entrepreneurs must focus their efforts on copying one another. Entrepreneurs innovate because they must act to keep up in the swarm of entrepreneurs that are doing the same thing. It's this collective behavior that makes entrepreneurs so impactful in the world. responsible for most of the jobs and all of the job growth and all the most innovative new products and services. It's not a lucky few entrepreneurs heroically innovating in secret. It is the collective behavior of the one billion entrepreneurs on this planet.

5:26Their combined efforts make us want new products and services that make us feel better with less effort. Consider Josiah Wedgwood. whom I profile in my book, The Entrepreneurs. He is considered by many to be the most innovative entrepreneur of all time, even more than Steve Jobs. He was as famous and as successful in his time as Elon Musk and Jeff Bezos are today, or any other entrepreneur has ever been. We still recognize him as a major product design innovator more than 200 years after his death. He innovated the modern shopping experience, and Steve Jobs copied his designs for the Apple Store.

6:12Wedgwood also built the first factory with inline production, and he created the first brand known as the Queensware. But he was not a lone innovative savant, as myth might have you think. He was born to a family of potters in an ancient town of potters. He worked for others before starting his own enterprise. His many innovations were incremental. Most did not work. His success was more a reflection of being the most curious and hardworking potter than any aha moment. And even more important, he copied others. He used versions of glazes that he saw sold well for his competitors. Of course, then other potters copied his version of the glaze.

6:57And whether it's Wedgwood or modern-day entrepreneurs such as Jeff Bezos or Oprah, innovations in a swarm are the result of entrepreneurs constantly watching one another. They copy what caused someone else to be successful. And here's the key. As they copy, they personalize it. Maybe something about how it was delivered like Bezos, or how it was made like Wedgwood, or some other facet of value creation like Oprah. The swarm sees what works well due to that personalization, and then that becomes what gets copied, leading to even more innovation. In this way, swarms of entrepreneurs produce innovations that constantly and rapidly expand and scale.

7:44Ultimately, these innovations make us want to change our lives to adopt them. Sure, many entrepreneurs drop out of the swarm and give up. It's not that most of the dropouts were not creative or innovative enough. They were not as good at finding out what was working better and copying that. They didn't lack courage and risk-taking. More often what they lacked is the boldness to quickly apply what they saw working well for someone else. Successful innovators copy whatever already works well and confidently create their own version. That's where the personalization comes in, doing things in a way that will work best for you.

8:30Success comes from copying your way again and again and again. So how do you know what to copy? Well, Sam Walton, the founder of Walmart, another all-time great entrepreneur whom I profile in my book, Building on Bedrock, purposely spent one day a week visiting the stores of competitors. Sam Walton wanted to see what was selling in their stores to quickly implement other people's good ideas at Walmart. He would even go up to store managers, introduce himself, and boldly ask for a tour of their storeroom or loading dock. And he'd usually get it. Every Saturday morning, Sam Walton called all his lieutenants together to discuss what they could do better.

9:17And he would always lead off by telling them what he learned that week from competitors. Then they would decide, as a group, what they could do in the coming week to leapfrog the competitor. Usually it was something simple like offering a bigger version or a better selection of the product or promotion. It was these tiny innovations that week by week added up to Sam Walton being recognized as a merchandising mastermind. Sam Walton was relentless, doing this every single week of his professional life, and he won because of that. The question you want to ask yourself is, who is doing better than you, and what can you do just as well?

10:05Do you know? Well, go find out. Enlist the help of your kids and friends. It's actually fun to scope out the competition. So, this lesson is about how success comes from understanding what works better for your competitors, and then quickly copying that in a way that is quick and easy every single week, taking resources from what isn't working and redeploying them into what does. These simple steps add up quickly to a ton of incremental innovation, which then quickly creates your own style of innovation which will be noticed by customers and of course then copied by some of your competitors. I hope you found this insight invaluable.

10:55This is Derek Lito and if you want to continue learning about how to be a successful entrepreneur then you can visit my website www.dereklidow.com Thanks again for joining me today. Now back to Omar.

11:40is very much what Derek spoke about today. Everything is a remix. There's no real original ideas. Everything we know in our life that we think is amazing and innovative and crazy, special, is basically just a nuanced change on an existing idea. Uber is basically taxis in digital form. They allowed the whole licensing or the medallion system of taxis to be digitized and applied to anybody with a car. They didn't just invent this idea from scratch. They just improved upon an existing idea. Amazon didn't invent online shopping. E-commerce existed way before Amazon. They just perfected it. They improved it.

12:21They made it more convenient with the two-day shipping and Amazon Prime. Or even big brand of physical products like Nike. They're not the first sneaker company. In fact, Phil Knight, the founder, didn't even sell his own sneakers at the start. It was called Blue Ribbon Sports, and they sold another brand of sneakers from Japan until they built their own sneakers and put a little of their own character there. Made their first soul with a waffle maker to stand out. But they weren't first to market or reinventing the market in any way. Everything is a remix. This is why I always say do not reinvent the wheel when you're trying to improve your business.

12:56Whatever problems you have in your business that need solving, they've been solved already by other people. Find out what they did and apply it to your business in your own unique way. Look at your business right now and ask yourself, where is it struggling? Where do you need improvement? Look at another business similar to yours that's successful. What are they doing in that area that you're not? And do that. It's actually that simple. It's not the ideas that are hard. It's actually having the discipline and the focus to implement those ideas. Thanks so much for listening to The$100 MBA Show.

13:30And thanks to Derek Leda for that great guest teacher lesson. If you love this podcast, hit subscribe, hit follow right now so you get our next episode automatically. It's also the best way you can say thank you to us and give back to the show. It tells the algorithms of all the podcast players that, hey, this podcast is all right. So go ahead and hit subscribe or follow right now. Before I go, I want to leave you with this. I'm always looking for great ideas. I'm out to have dinner. I'm going to the movies. I'm going shopping. I'm looking at marketing ideas. I'm looking at advertising. I'm looking at packaging of products.

14:04I'm looking at things I don't like and make sure that we don't do this in our business. I'm looking at things that we do like and figure out, okay, how do we apply that to our business? I have a little section in my note-taking app in my phone just called random ideas. And I just take a quick note of a thought I had. I may or may not use this idea, but the exercise of being alert and always open to ideas is a good one. I'll give you a random example from my phone right now. Me and a close friend of mine, we took his kids to a theme park. And I remember at the theme park, I saw they were selling these plastic cups that you can buy soft drinks with.

14:41And the idea was when you bought that larger size, you can get free refills throughout the day at that restaurant. And I just thought that was an interesting idea. And I just wrote down some notes. The notes say different tiers of the same product, incentive to upgrade to the highest tier with free refills. What is free refills for me? I asked some questions like, how many refills do I think each person is gonna get? Is it cost effective? And it just got me thinking, that's a large cup. To get a refill in that cup, you have to drink a lot of soda. So what are you gonna have, two, three refills throughout the day?

15:12You might share with your friends, so what? This deal might just encourage them to not only go with this large size, but to even buy the soft drink in the first place. Be like, hey, this is actually a pretty good deal. Let me spend whatever it was, nine bucks or 10 bucks for this drink. that probably cost them a few cents to fulfill. Anyway, the point is I'm just trying to grab and document any ideas I find interesting. I might do something with them. I might not. But the point is, is that I'm switched on because there's good ideas everywhere, okay? You don't have to come up with all the ideas.

15:42Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

15:57Thank you.