Business is No Fairy Tale

Posted by Chuck Kocher
On May 5, 2014

People have been reading the works of Jacob and Wilhelm Grimm since their first collection of folk tales was published in 1812. But business today is no fairy tale. So what can two brothers born in late 17th Century Germany teach us about doing business in the 21st Century?

One tale in particular, The Three Sons of Fortune, reveals how some aspects of business have changed very little over the last 200 years. Here’s how the tale begins:

A father once called his three sons before him, and he gave to the first a cock, to the second a scythe, and to the third a cat. “I am already aged,” said he, “my death is nigh, and I have wished to take thought for you before my end; money I have not, and what I now give you seems of little worth, but all depends on your making a sensible use of it. Only seek out a country where such things are still unknown, and your fortune is made.”

Each of the three brothers faces the same dilemma: The resources their father had left them were what we might call commodities. Everybody around them had roosters, scythes, and cats. What they had to offer was indistinguishable from what everybody else was offering. That meant the brothers had to travel far and wide to find a market for what they had to offer. Eventually, each brother found his way to an island where these commodities were unknown—and each made his fortune.

For years, businesses have searched out those “islands” where they could present their goods and services to people who were unaware of them. But it became increasingly difficult over time. And then along came the Internet . . . and now there are no more islands. And if you’re trying to sell the same roosters, scythes, and cats, (or insert your product or service here) that everyone else is offering, your chances of success are slim.

That’s why innovation is so crucial for business success today—and it’s why I love talking about innovative companies. Not long ago, Fast Company devoted an issue to “The World’s 50 Most Innovative Companies.” As you might imagine, there are a lot of technological offerings in these top 50 companies (Google comes in at #1). But you might be surprised that the focus isn’t really on the gadgetry.

Philips came in at #50. Philips has been in the lighting business for a long time, and I’d venture to guess that every one of us has purchased a Philips light bulb at some point. But Philips hasn’t been cranking out the same old bulbs forever. They’ve been working on innovations in lighting. Right now, LED lights are the big new deal in the lighting industry. But Philips has been working on LED lights for 50 years! (So much for the idea of “overnight success” when it comes to innovation!)

As George Yianni, the engineer responsible for Philips’ new Hue products explained, “We’ve been making lighting products for 120 years, and until last year, for the home, all they did was turn on and off. We thought: Why not do more? What we really wanted to do was to change how people think about lighting.”

Hue allows homeowners to “tune” their lighting with up to 16 million different colors—making sure that a home’s light is just right for each family. But there’s a lot more to the LED revolution than just offering a pleasing palette to homeowners. Because LEDs operate differently, there are applications in safety, farming, health and wellness, durability and efficiency, and remote control.

Currently, LEDs make up about 30 percent of what Philips sells. By 2015, they project that number to be between 45 and 50 percent. And as consumers demand more and more from their lighting solutions, Philips will be positioned to deliver.

Innovation doesn’t happen over night. But you have to be thinking about it now in order to enjoy the fruits tomorrow. You have to anticipate what people really want—rather than just perfecting the delivery of an existing product.

And when you commit to innovation and put in the work it requires, who knows . . . you just may live happily ever after!