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Today, we're going to look at three

interconnected topics.
Entrepreneurship, creativity, and
innovation.
And within that, we want to start with
creativity.
And with creativity, we want to think
about
that as the way one of generating ideas.
Now, as we have ideas, we want to think
about, where, is it going to make things
better?
Is it going to make things more
comfortable?
Can I create a product or service that's
going to be more efficient or
more effective and in that model there are
various
ways that creativity can come forward, one
is certainly the
process when you think about creativity
you may think well
I am creative or I am not or my friend
is creative or they are not But what we
find
is that much like building a financial
statement, or doing
marketing plan there are some tools and
techniques to help
you be more creative, to help you find
creative solutions.
The other piece of the puzzle
is there maybe people that you can bring
into the fold.
If you have friends or family that are
creative.
If you have founders or other individuals
that are creative and
that are just known for coming up with the
crazy ideas.
And having novel solutions to things.
Incorporating them into your decision
making.
Even if it's just to bounce ideas off of,
is very valuable as well.
So when we think about creativity, we're
going to look at it
both in the process, as well as from the
people standpoint.
So again, some people think they're
creative or think they're not creative.
And they maybe right.
But just as entrepreneurial skills can be
taught and learned.
Creativity skills, can be taught and
learned.
And you'll see in a number of
Universities, there are an
increasing number of courses in creativity
and there are a lot
of books and articles and resources that
are out there to
help you be more creative in what it is
that you're doing.
And we'll talk
about a few of those.
One thing that certainly helps is some
background in the topic matter.
Why does that make sense?
Why does it make sense that you're going
to have
more creative solutions if you know
something about the topic?
>> Cause you can think of like, further
in depth
about the topic, have a little background
knowledge about it.
>> Okay, you can think further in depth
about the topic because
you have a deeper understanding or you
have a background in it.
>> You know the strengths and the
weaknesses,
so I guess You know where to start, and
>> Okay.
You have a sense of some of the strengths
and
weaknesses, maybe things that have been
tried in the past, that
either worked or didn't work, so you're
just better versed on
what some of the candidate ideas could be
or should be.
And so in that way, again, one way of
improving your
creativity is having more in-depth
knowledge
and experience in the subject matter.
There's also this element of incubation
and ideas, and
I think a big piece that's often missed is
evaluation.
If we're faced with some problem, we tend
to
want to come up with a solution, and
implement.
What's the problem with that?
There's an idea, we implement.
What pieces are missing?
>> We don't know if it's a good idea.
>> Is it a good idea?
We typically implement the first idea.
We typically try and solve something with
the first thing that we think of.
And often times, that's wrong.
And/or sub-optimum in that if you
evaluated
that, and/or if you generated several
ideas,
it might be that second, third or fourth
idea that turns out
to be the better of the lot, or there
might be some combination.
And/or if you're doing things as a group
There's in a solution you came
to bear, based on input of the group,
rather than just of the individual.
So in that way, again, the creativity
element in the creative process is
something that, with knowledge and
background certainly
helpful, but I would say more helpful
to engage some other people in this
solution, more helpful to evaluate that.
And recognize, well what is the problem
that we're trying
to solve, and how are we going to evaluate
it's success?
So recognizing relationships is a piece of
that.
And what we mean there is that you're
looking at things that are different, or
somewhat unorthodox.
There's a company in the US called
Borders, Borders Books and Music.
Heard of it?
>> No, it's
[CROSSTALK].
>> Went out of business.
They were a Barnes & Noble competitor.
Boarders Books and Music was based in Ann
Arbor, Michigan, and in 2003, I worked on
a consulting engagement with them to help
them
figure out what they should do, if
anything.
About digital music.
And 2003 was a time where you typically
went to the bookstore, went to the record
store, bought
your CD.
Or you went to Amazon and you bought your
CD.
You did not typically buy a track.
Why you did not buy a song?
>> Because the music company to know
[UNKNOWN].
>> Music companies did not release
individual songs, with much frequency.
Now maybe there was one song from an album
that you could pay $3
or $4 for that song, versus paying $12 or
$15 for the entire CD.
But again singles were rare and
infrequent.
And getting them on your MP3 player was
even more of a challenge.
Now, you could buy the CD,
you could plug your MP3 player into your
computer And you could
get the songs from the CD that you
purchased, to your MP3 player.
But there wasn't such a thing called
iTunes.
There wasn't such a thing called
iPod, or iPhone.
And there was no, really
access, to be able to get music.
On a per song
basis in 2003.
Why did Boarders care?
Why did Boarders care about the future of
music and the future of digital music?
>> To compete.
>> With?
>> Barnes and Noble.
Okay.
So there's Barnes and Noble.
They kind of do what we do and
we want to know what they're doing and be
competitive.
What else are they concerned about?
>> Well if someone else is doing the
same thing,
they're trying to figure out how to make
it better.
>> kay.
They expected
that someone was going to come along and
do some novel things in the digital music
space.
That someone is going to sell a CD that
you can download directly to your mp3
player, and someone might even be able to
convince the music companies to sell on a
per-song basis for 99 cents as opposed to
a per-album basis for $12.
What else drove them to
Be concerned about that marketplace.
You could find your song online.
Where were you finding your
song?>>Napster.>>YouTube?>>Napster.
So I had a free, pirated.
Repository of any song that
I wanted.
So they too were trying to find a way.
How do we compete with free?
How do we compete with pirating?
But again, a bricks and mortar store.
So what do they also want?
[INAUDIBLE]
Digital store?
>> They wanted dig, you say a digital
store.
Okay, so they were some online element.
But what do you, if you're paying rent on
a bricks and mortar facility, what do you
want?
>> Customers at your bricks and.
>> You want people to come in to the
store.
You want them to buy the coffee.
You want them to buy the
[UNKNOWN]
or whatever else it is that you can get
at your Starbucks inside of your Barnes
and Nobles.
Again, Boarders also had their cafe and
again high profit center.
They would have if they'd have just gone
online to buy that one thing.
So in that way too, they saw a lot of
value of how do
we compete with Napster, how do we
anticipate what's going on in the music
space, how do we get people in our bricks
and mortar retail space and
how do we do it not exactly knowing how
the market's going to shape and emerge.
So again, took some creative thinking to
come up with an idea for them.
And the
idea that we came up with was essentially
a vending machine in the store whereby you
could plug in your phone or your MP3
player, choose songs, and download them
onto your device.
So how is that better than the
alternative?
[INAUDIBLE].
>> Tell me more.
>> instead of having to bring it home
and do
it yourself, you can just do it in the
store.
[INAUDIBLE].
>> Okay.
So it's something you can do in the store
while you're there.
What else is good for the customer with
that vending machine model buy the song?
Versus the existing way and again put
yourself in ten years ago of I buy a CD.
>> well, I mean
[INAUDIBLE]
to like the customer if the customer has
any
like problems, and they can go to like
customer service.
>> Okay.
If there are technical issues, then there
is somebody
onsite right then and there that can be
helpful.
You don't have to buy 12 songs for $12.
You buy the one song you want for $1.
>So, going from download to computer, to
device
you can go straight from download to
device.
>> Instead of I buy the CD, I put into
my machine, I put it
on my hard drive, I plug in my device and
then I move it over.
I can just plug my device right in, in the
vending
machine, I can dial up what I want and
it's done,
Boarders didn't go for that, now it's easy
in
retrospect to say oh, look how dumb they
were, what were their issues?
>> When you have to bring your cord with
you, for your device?
Plug it into the machine cause I'll
>> There's some element of, again,
attachments and cables and adaptability
but
again, that wasn't a major sticking point
for them for not adapting it.
>> Doesn't the phone itself have to have
a program that allows all that?
>> Okay.
There's the element of is there enough of
the companion hardware out there.
And what's that going to take?
But again,
there were some norms of how to do it.
And people were again, adapted.
I can plug it into my computer and it
works.
So there was an emerging market.
I'm just going to kind of sweep this way.
Yep.
[INAUDIBLE]
costs money?
>> Okay, there's an expense.
But for them it was essentially the cost
of a PC,
and a box, and a web connection.
So versus what their operating costs were
as a company, fairly cheap.
Yup.
>> Do they have a fear that they won't
have any profit off of it?
>> There's a fear of, again, is it
going to be worth it?
Is it going to be profitable?
Yep?
>> Because you have to buy something,
and then sell
things that are cheaper like individual
songs, as opposed to a
whole CD.
>> Well they would not have to buy.
They would have to again have an agreement
with the labels,
with the music distributors so that if
we're going to sell on
a per song basis instead of selling on an
album basis,
what was the sticking point that made them
not want to do this?
>> In like
[UNKNOWN]
for a long time, it would have to develop
this technology, and make all these
contracts and stuff.
They probably didn't want to, they just
wanted to continue.
>> It's your element of the first, of,
well, they've been
selling CDs, and is the math going to work
out where enough
consumers are going to buy enough songs
that I am not going to
lose money of consumers that would have
otherwise, given no other
options, bought the CDs, does that make
sense?
So you have a group of consumers, maybe
there is a
quarter of you that buy CDs and you may
only want
one or two songs which you will buy the
whole CD
for that one or two songs, and that's a
known factor.
And I've been doing this for years, and I
know what that number
is, and I know what my revenues and
profits are based on that.
Now there's a bigger group of you
that don't buy CDs.
Because you don't want the whole thing,
but you might buy a song.
If its more convenient than Napster.
If the record label makes that song
available, you might buy it.
And that's a big unknown.
But again, for them that unknown was not
worth
the difference of let's stick with what we
know,
and, in retrospect, in 2004, 2005, largely
iTunes Made their existing model somewhat
defunct.
And in that way,
slowly but surely they have kind of
fizzled out.
Now Barnes and Noble have done some other
things,
but when you think about these
relationships, a lot
of big companies fail because they see the
obvious
and they are comfortable in what they've
been doing.
And that's what the advantage often is for
entrepreneurs, in
that you're not stuck in what you've been
doing, you're
not committed to expenses that you've
already incurred, and we'll
talk about some other companies that have
been caught with that
as well.
Another thing to think about is there's
this element of left brain right brain
that
you might be familiar with, of elements of
am I analytical, am I more creative,
Yeah, it's worth recognizing and worth
understanding what the terms are.
You know, fundamentally I would argue good
entrepreneurs have a balance of both of
these, or that they can think creatively,
they can come up with novel ideas.
But, what they also do is come up with
some ways of implementing that, and/or
teaming with other people.
That are going to helpful in implementing
that.
So they're able to again, as a team,
bring this element of creativity and
implementation to bear.
And so you have these three elemnts.
You have the creativity, you have
innovation.
You also have invention.
What's the difference between innovation
and invention?
Yep.
>> Invention is when you develop a whole
new idea or.
>> Okay.
>> And innovation is just tweaking it or
applying it to a new thing or What's that,
it?
>> The technology, the
[INAUDIBLE]
>> Okay.
So, invent is I created something new and
then innovation is applying the invention?
>> You're
[UNKNOWN]
it or changing it, slightly the, the
technique.
>> Okay, to fit a need?
Okay, what do you think?
>> It's going to say make it even
better.
>> Well, what's the difference of
innovation and invention?
What's the difference in the two?
>>
[COUGH]
Invention, you're like creating something
that isn't already made.
>> Okay.
>> Innovation is taking something that
is already made and building upon it.
>> So invention is that creation of a
new product.
I will buy that and then innovation is
improving something that already exists.
So an innovation cannot be inventive.
>> The idea I guess like how your
[INAUDIBLE]
in different?
>> And that's where a lot of people.
Kind of fall into this gap, but we've get
what invention knows, one kind of
know what invention, but the innovation
doesn't have
to be something new, shouldn't be
something new.
>> Doesn't necessary have to be
something new.
>> Don't have to be new.
>> It helps to
>> Might help.
So it's somewhat difficult.
Again, I would say that
there certainly is an overlap area, of you
have things that might be inventive.
I could have a three handled plunger for
my toilet.
Never seen one before, it's inventive.
Why could I argue that it might not be
innovative?
>> You only have two hands.
>> Okay, the usablility of it, the
purpose of it.
The benefit is questionable.
Can I commercialize it?
Can I sell it?
Probably not.
Not in any volume.
So again, just because you invent
something
doesn't nessecarily mean there's a market
for it.
Doesn't necessarily mean you can build a
venture or build a business off of it.
So again, as we think about innovation,
and we'll connect these terms in a
moment, as we think about innovation,
there's
lots of definitions that are out there.
These elements of introducing something
new.
New ideas and methods exploiting, so
that's beginning
to go down the path of applying, or
implementing.
There's some element of performance.
And that in some measure it's not only
different
than, again invent typically means
different, performance typically means
better.
So innovations have some element of
better, or have some element of applied,
that will differentiate an innovation from
an invention.
And so, for us, at least for our purposes
in the course, you can think about
commercialized ideas.
As a good definition for innovation.
It's an ideal, might be a new idea, it
might be an
old idea, it might be a reframed or kind
of re-thought idea.
But, that you can in some way bring that
to market.
You can commercialize that.
You can add some value.
And people will recognize, adopt,
purchase,
the product of that item.
There's also an adage, particularly in
working with highly technical teams.
They want to produce gold-plated padlocks.
A gold-plated Mercedes.
And often it traces back to wanting to
develop better.
[COUGH]
They want the top materials.
They want The top performance.
What's the problem with that?
>> The price of
[INAUDIBLE]
>> The price.
People might like it, but not enough
people may like it
enough to pay what it is you need them to
pay.
For it to be a profitable venture.
So there's a question of how do we design
something
that people want, but also keep in mind
there's a cost.
And a price associated with it and being
careful that you're designing
appropriately for what people are going to
be willing to pay for that.
In summery, it's important to recognize
that creativity ignites innovation.
In that way, if you're creative, if you're
thinking broadly, you can develop some
imaginative solutions.
You can maybe connect ideas across
different industries.
You can also discover opportunities and
possible solutions
that may not have been thought of before.
And that way again, being innovative,
doing something
new, doing something novel that has value.
Inventions are certainly a piece of the
innovation puzzle but you may have
concepts that are inventive that there may
not necessarily be a market for.
Alternatively, you might have something
that's an incremental innovation.
Where you're not inventing something brand
new, but you are developing some
new ideas and bringing some new things to
market, or connecting existing ideas.
In that way, we think
about creativity as ignition for
innovation, but fundamentally we also
want to think about also the
commercialization of these ideas.
And so this set's the landscape for that
and we'll be talking
going forward about how to put some of
these ideas into action.

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