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Crises Fuel Creativity & Innovation

JAY RAOPROFESSOR

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CRISES

APPLICATION INNOVATION

CREATIVITY

INNOVATOR’S DNA

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BOEING

1946

End of WWII

Lost 90% of its revenues

Laid off 70,000 employees

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CUBA1989 - 1993

Fall of former Soviet Union

Exports went from $8B 🡪 $2B

Lost all its creditors

Lost 80% of Foreign trade

Lost 1/3 of Food Imports

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BUMRUNGRAD

HOSPITAL,

BANGKOK

1997 Asian Economic Crisis

Lost 90% of its customers

(upper & middle class Thais)

Seven months prior, moved into a 12-floor, state-of-the-art $110M facility in coronary

care, dialysis and imaging

$60M in loans & empty beds

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CARMEN,

MEDELLIN, COLOMBIA 2020 COVID19 Crisis

3 High-End Restaurants

Contemporary, Latin, Asian

Lost 100% of Customers

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Innovation & Creativity is Flourishing All Around Us

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INNOVATION

IN A CRISIS

COVID19 SHOCK THERAPY

8 • Cincinnati Children’s Hospital did 2000 telehealth visits in all of 2019. Post-Covid, 5000 per week.

• MAF Dubai retrained its 1000 movie theater ushers & ticket sellers to work for their online grocery division in 2 days.

• Best Buy was testing for months a few curbside store pickups. Post-Covid, every store had it in 2 days.

• In 4 days, Unilever converted factory lines from deodorants to hand sanitizers.

SOURCE: THE CEO MOMENT, MCKQ, JULY 2020

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U.S. PHYSICAL RETAIL BANKRUPTCIES FROM 2016 TO 2019

Golfsmith, Aeropostale, Pacific Sunware, NastyGal, American Apparel, City Sports, Sports Authority, Vestis (Eastern

Mountain Sports, Bob’s Stores, Sports Chalet), HHGregg, Gymboree, David’s Bridal, Mattress Firm, Brookstone, Sears,

Rockport, Nine West, Radioshack

20112009 2010

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U.S. PHYSICAL RETAIL BANKRUPTCIES….. POST COVID19

Dena & Deluca, Apex Parks, FoodFirst (Bravo, Brio Tuscan Grille), True Religion, CMX Cinemas, Rubie’s Costume Co., Gold’s Gym, Neiman Marcus, Stage Stores (Bealls, Goddy’s, Palais Royal,….),

JCPenney, Pier1 Imports, Hertz, Tuesday Morning, Le Pain Quotidien, 24 hour Fitness, GNC, CEC Entertainment (Chuck E.

Cheese & Peter Piper’s Pizza), Cirque du Soleil, Lucky Brand (Aeropostale, Nautica), Brooks Brothers, Sur La Table, Muji, Ascena

(Ann Taylor, LOFT, Lane Bryant, Lou & Grey, Justice)

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Crisis1375–1425; late ME 🡨 L 🡨 Gk: krísis “decision”

WEIJI = CRISIS IN MANDARIN

wei = DANGERji = OPPORTUNITY, crucial point

Word Usage

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How did they get so creative?

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THERE ARE MANY WAYS TO INNOVATE

Source: Moore, HBR, 2004

DisruptiveInnovation

ApplicationInnovation

ProductInnovation

ProcessInnovation

ExperienceInnovation

MarketingInnovation

Business ModelInnovation

StructuralInnovation 2008

1973

2007

2004

1992

1983

2003

2001

Rev

enu

e G

row

th

Time

2007

2010

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APPLICATIONINNOVATION

1971 DocutelThe First ATM was an extension of computers into the banking industry

1981 VisicalcThe First Spreadsheet was the adoption of financial table calculations

1996 OnStar Took GPS into the automobile market for roadside assistance

2009 D1Took the Aldi model and replicated it in Colombia

2012 Tesla Model S car with Li-Ion BatteryAdopted the Li-Ion battery from the consumer electronics industry

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BORN IN CRISIS

Founded in 1967

3 existing airlines filed a lawsuit

Couldn’t start operations till 1971

18Source: NYT 1971 and Collins & Hansen, 2011

“Southwest Airlines has been developed from its inception around the ideas that have proven to be successful for Pacific Southwest Airlines. We don't mind being copycats of an operation like that. Southwest Airlines copied PSA so completely that you could almost call it a photocopy.”

– Lamar Muse, Southwest Airlines co-founder1949-1988PSA called itself "The World's Friendliest Airline"

Southwest founders visited PSA and bought PSA’s flight & operating training plans.

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When Southwest Airlines was figuring out how to do a faster “turn-around” at the airport gate, they went to…

1. McDonalds

2. Domino’s Pizza

3. NASCAR pit-stop

4. Formula1 pit-stop

5. All of the Above

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Henry Ford’s idea for an assembly line came from…

1. An Archimedes’ “Eureka” like moment

2. A visit to the Goodyear tire plant

3. A visit to a slaughter house

4. Seeing the conveyor at a dry cleaner

5. None of the Above

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MyMagicPlusMagicBands

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WHICH IS THE MOST FAMOUS LOVE STORY IN THE WORLD?• Romeo & Juliet (1591-1595)

– Based on an Italian tale, translated as The Tragical History of Romeus and Juliet by Arthur Brooke in 1562. Retold in Palace of Pleasure by William Painter in 1567.

• Hamlet (1599-1602)– Based on Amleth (Latinized Amlethus, Old Icelandic Amlóði) a medieval

Scandinavian legend.• Macbeth (1599 – 1606)

– Based on Holinsheds Chronicles of England, Scotland, and Ireland, from 1577.• King Lear (1603 – 1606)

– Based on semi-legendary Brythonic figure Leir of Britain. Again from. Holinshed’s Chronicles. Holinshed took it from Historia Regum Britanniae by Geoffrey of Monmouth, written in the 12th century.

• Merchant of Venice (1596 – 1599)– Taken from the 14th-century tale Il Pecorone (The Simpleton) by Giovanni

Fiorentino, which was published in Milan in 1558.

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BobDylan

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“I basically have made a career stealing ideas from psychologists.”

- Richard Thaler, Nobel Prize in Economics, 2017

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Walt Disney

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INSPIRATION FOR DISNEYWORLDTIVOLI GARDENS IN DENMARK (OPENED 1843)

1939 Layout

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PICASSO’S INTERPRETATION OF VELASQUEZ’S LAS MENINAS

32U.S.A. (1850S – EARLY 1900S)

Pirated booksAdulterated foods – milk, meats, sugar

Mislabeled products – butterProducts lacking basic safety

Counterfeit ales, wines, gloves, hatsFastest growing economy

Sacrificing standards in the pursuit of profitsLax legislation and even worse regulation

Can you name the country / countries?(It is ok to be politically incorrect!)

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2018

2016 2014

2005

+LIVE STREAMING

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“It comes down to trying to expose yourself to the

best things that humans have done….and bring those things in to what you are doing. Picasso

had a saying, ‘good artists copy, great artists steal.’ We have always been

shameless about stealing great ideas.”

– Steve Jobs

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ORIGINALITY IS VERY IMPORTANT

PATENTS ARE VERY IMPORTANT

UNIQUESS SHOULD ALWAYS BE CELEBRATED

UNIQUENSS SHOULD ALWAYS BE PURSUED

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It’s not where you take things from; it’s where you take them to.

- Jean-Luc Godard, French-Swiss Film Director

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40 restaurants, hotels, cinemas decided to share their employees with HEMA, a new retail supermarket chain opened by Alibaba.

O2O retailers Ele, Meituan & JD’s 7Fresh immediately COPIED this and started borrowing employees from restaurants

Covid 19 Crisis in China

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SPANISH FLU 1918

PhiladelphiaPersonal DistancingNot till 14th DayDeaths16,000 (0.26%)

St. LouisPersonal DistancingWithin 2 DaysDeaths700 (0.031%)

Wilmer Krusen – Philadelphia Public Health Director

“It is only among the military.”Disregarded data and climbing epidemic numbers

Experts explicitly asked him to cancel the “Liberty Loan” parade(Government bonds for war efforts)

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Goal: keep the epidemic out of the city, if possible, and if that fails, to use every means to keep it down to the lowest possible number of cases.

- Dr. Max Starkloff, St. Louis Health Commissioner

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• Created an advisory body: reps from city’s chamber of commerce, schools, medical society, university, Red Cross & local public health services

• Pushed “intelligent citizen cooperation” via outreach to the community: Engaged health department staff, policy makers and teachers to implement individual quarantines and bans on public gatherings

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Dr. Hugo von Starkloff, US Army Surgeon

US Consul to Bremen, Germany

Dr. Max Starkloff, St. Louis Health Commissioner

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• Landed in Germany as Consul in the middle of a cholera panic • Sprang into action, set up sanitary measures• Avoid epidemic to reach steamers bound to the U.S.

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COPYING IS THE STARTING POINT FOR CREATIVITY

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AssociativeThinking

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Please steal and copy LEGALLY.

APPLICATION INNOVATIONASSOCIATIVE THINKING

POSITIVE DEVIANCEBENCHMARKING

INSPIRATION

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Thanks

&

Good Luck in your Entrepreneurial

Leadership Journeys

Jay Rao

rao@babson.edu

Connect on LinkedIn

QUESTIONS / COMMENTS

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