Ninja Innovation

Nothing Has to Happen

IN JUNE 1967, THE FIRST TRADE SHOW DEVOTED TO CONSUMER electronics was held in New York City. At the time, consumer electronics (CE) was an $8 billion industry ($55 billion in today’s dollars) that centered on the TV and hi-fi markets. But the industry was also experiencing something of a downturn, as radio sales were declining sharply, and several of the industry’s major players had made highly publicized layoffs.

It was in this uncertain environment—a growing but not yet secure CE industry—that Jack Wayman, an Electronic Industries Association (EIA) executive, determined that a specialized CE trade show was necessary. And so in the early summer at the Americana and Hilton Hotels in midtown Manhattan, fifteen thousand manufacturers, distributors, and retailers walked among a hundred exhibits occupying a hundred thousand square feet and featuring more than a thousand new products ranging from “$8 radios the size of a pack of cigarettes to $15,000 room-length stereophonic units,” according to coverage of the show in the New York Times.

On display were a wide variety of TVs, transistor and tabletop radios, record players, and console furniture units that combined all these advanced audiovisual (AV) components. The latest tech rages were stereo audiotape player/recorders that used “cartridges” or “Playtape”—the then-new compact cassette format—and a growing number of devices that relied on solid-state components, including integrated circuitry rather than vacuum tubes. According to the Times, there was “a television set, radio, or tape recorder to suit any taste or price.”

Fast-forward forty-five years. That specialized trade show for the CE industry had grown into the International CES (Consumer Electronics Show), the largest trade show in the Americas. Here’s a sample of one of dozens of stories the Times filed from Las Vegas at the 2012 International CES: “There were a million gorgeous new Android phones and Windows phones, many of them 4G (meaning faster Internet in big cities),” one report read, with slight exaggeration.1 “Microsoft revealed that its popular Kinect, which plugs into an Xbox and lets you play games just by moving your arms and legs in front of the TV, will now be available for Windows computers.”

Android, Windows, Kinect, Xbox, 4G? To a time traveler from 1967 these words would be meaningless. But we know immediately what they are: a cell phone, a computer operating system, video game consoles, and the term for ultra-broadband Internet access. In 1967, CES attendees marveled at $8 tape recorders. Today, we marvel at pocket-sized devices that carry more computing power than the Apollo rockets that took Americans to the moon.

Indeed, the 2012 International CES was the largest to date—with more than 156,000 attendees and 3,100 exhibitors. Meanwhile, in 2012 U.S. factory sales of consumer electronics exceeded $200 billion annually, and worldwide sales topped $1 trillion for the first time. That’s a 1,700 percent increase from 1967.

In 1967, the big technological advance was Ray Dolby’s noise-reduction system. In 2012, the killer innovation is . . . well, where to begin? Technological breakthroughs happen so frequently that to argue one is bigger than the other is, practically speaking, not a useful exercise. Can we say that Apple’s iPad is more advanced than Amazon’s Kindle Fire or Samsung’s Galaxy? Some say yes, some say no. What’s astonishing is the remarkable pace of innovation set by the most successful consumer-electronics companies.

As it was after World War II, after the recession in the late 1970s, and after the recession in the late 1980s, once again it looks as if CE devices will be a prime economic generator to help the economy emerge from the current downturn. Despite the recession, global spending on consumer technology devices topped a record $993 billion in 2011. And for the first time in history, the world’s most valuable company—Apple—sells not cars or oil, but consumer electronics.

In the previous CE-fueled recoveries, consumer gadget spending was spurred by “must-have” technology that was barely a fantasy—if even that—only a few years earlier. After World War II, for instance, everyone wanted that newfangled thing called a television, along with new hi-fi audio gear and the transistor radio. After the oil-embargo-induced recession in the mid-1970s, enthusiastic uptake of new videocassette recorders (VCRs), personal computers (PCs), and compact discs (CDs) boosted the economy. Following the stock market crash in 1987, cordless phones, cell phones, personal digital assistants (PDAs), the World Wide Web, digital cameras, satellite TV, Global Positioning System (GPS) devices, and high-definition television (HDTV) spurred the 1990s tech boom.

This time around, we are rushing online and into stores to snap up touch-screen devices, gesture-based game consoles, Internet-connected “smart” HDTVs and Blu-ray players, 4G smart phones more powerful than desktop PCs were a decade ago, e-book readers, media streaming set-top boxes (STBs), cloud-based subscription services, and Ultrabook laptop PCs measuring less than an inch thick and weighing fewer than three pounds.

While we can’t yet buy the personal jetpacks or Star Trek–style transporter chambers that many futurists thought we’d all have here in the twenty-first century, the next few years will bring even more new technology into our homes and businesses—organic light-emitting diode (OLED) HDTVs as thin as a pencil and as light as a Thanksgiving turkey; 802.11ac Wi-Fi with speeds measured not in megabits per second but gigabits; Thunderbolt device interconnections to complement and finally replace USB; “super” Wi-Fi hotspots measured not in feet but in miles; ultrawide-screen 21 x 9 HDTVs; body sensors to keep a constant eye on our health; and maybe even driverless cars.

While a CE-fueled recovery has historical precedent, at no time in gadget history has the influx of new foundational technologies been so numerous and impactful. In other words, for all its resemblance to 1967, we live in a world that is profoundly different. This isn’t solely because of the revolutionary products that have emerged from the industry I represent (although I am biased); nor would I attempt to argue that we live in a better world. There are too many other factors that go into what one would deem better.

Rather, these products have become indispensable in our lives. An American living in the second decade of the twenty-first century cannot lead a fully productive life without a cell phone. A twenty-first-century company cannot survive without giving every one of its employees access to the Internet. And, to be a bit overzealous, the global economy would implode if suddenly the World Wide Web disappeared. Nearly every modern system, private and government, requires the Internet—with the possible exception of the U.S. Postal Service, which would probably see the Web’s disappearance as the dawning of a golden age.

The reason I summarize this progression is not because this book is a history of the consumer electronics industry; it isn’t. Rather, I raise this point because we have a tendency to look at an indispensable tool—be it electricity, an iPhone, or even a car—and think it exists because it must exist. In other words, we take these tools for granted after the honeymoon with them is over. And we assume that they came into our lives for the reason the sun rises in the east: It is the way it was supposed to be.

What we forget is that it wouldn’t have been this way unless an individual person, company, organization, or country made it happen. Technological progress is not on an inevitable trajectory pointing ever upward. Nothing must happen. Take the most revolutionary technology to hit humanity since the harnessing of electricity: the Internet and the World Wide Web.

The Internet was developed in 1969 by ARPANET (the Advanced Research Projects Agency Network), which was founded by the U.S. Department of Defense in 1958 and charged with advanced technology research in the wake of the Russians launching Sputnik. The idea was to provide a decentralized communications network that would not be disrupted by potential global war. Any individual node of the network could be knocked out, but these destroyed nodes could be bypassed and the network would survive. Academia became the largest user of the Net, with researchers linking up their computers to share data.

Right here, we can begin playing the game of what-if. What if the Russians had never launched Sputnik, sending the United States into a technological panic? What if someone had made a different strategic decision at the Defense Department? Would the Internet have been created anyway? We like to think so. But there’s more to the story.

In 1989, Tim Berners-Lee and a group of fellow researchers at CERN, an international scientific organization based in Geneva, Switzerland, created a computer code called hypertext transfer protocol (HTTP), a text format code called hypertext markup language (HTML), and a universal resource identifier (later universal resource locator, or URL) for identifying document locations, which formed the basis for the World Wide Web. In 2010 and 2011 respectively, the two men who developed transmission control protocol (TCP) and Internet protocol (IP), Dr. Vint Cerf and Dr. Robert Kahn, were inducted into the Consumer Electronics Hall of Fame and named Consumer Electronics Association Digital Patriots in honor of their contributions to the development of the Internet.

If the U.S. government created the framework, then CERN built the rooms and elevators. A few years later, companies like CompuServe, AOL, and Prodigy were the first tenants. So roughly thirty-five years passed from the “invention” of the Internet to when the first American heard the famous words “You’ve got mail.” To say that all that—all the decisions, people, circumstances, and sheer luck—would have happened no matter what is taking too much for granted.

The Internet is a success story of monumental proportions, if only because it all could have been so very different. And that’s what this book is about: a uniquely powerful and democratic way of ensuring success. In my thirty years working within the consumer electronics industry, I have seen more than my fair share of successes—and I’ve seen many failures. The reason I provided a brief summary of the industry I know best is because it is not the story of the inevitable momentum of history. Rather, it is the story of a thousand different successes, some isolated in their occurrence, and some intimately connected to others. Today, we look at the dominance consumer electronics hold over our lives but we rarely wonder if it could have been any other way.

The answer: Yes, it could have. I know because I saw what it took for these revolutionary products to change our lives. It was not easy. The conceit of this book is that I have in my thirty years’ experience gleaned some insight into what it took for these individuals, companies, and societies to achieve success. Were I the head of the association representing the U.S. steel industry, perhaps my insight wouldn’t be worth much. As it is, I was fortunate to be present at the creation, so to speak, of the most impactful industry driving America’s economic progress. I take no credit for these successes; I am merely relating what I saw and what I learned. I think it’s a story worth telling. My hope is that you agree.

Discipline and Goals

AS I MENTIONED IN THE PREFACE, MY INSPIRATION FOR THIS BOOK began when I started thinking about the essential traits of a successful person, company, and organization. What ties them all together? Surely, there must be some shared qualities that lead one person to succeed while his peer fails. Then I recalled my study of tae kwon do.

Studying martial arts teaches discipline. Simply the act of regularly attending class reinforces the value of a disciplined approach to personal growth and development. Additionally, the classes themselves include rituals that help develop the focus, respect, and inner resolve necessary for personal success.

Upon entering the school or greeting an instructor, students are taught to put their hands at their sides and bow respectfully. After a few times this bow becomes a habit, but the ritual underscores the importance of showing respect to the teacher and the school.

Each class begins with the whole class reciting a pledge together. While the pledges certainly vary among schools and types of tae kwon do, most share common themes of respect, discipline, and basic ethical principles. My school’s tae kwon do pledge was as follows:

WE COMMIT OURSELVES TO MENTAL AND PHYSICAL DISCIPLINE

TO BE FRIENDS WITH ONE ANOTHER AND TO DEVELOP STRENGTH IN OUR GROUP

WE SHALL NEVER FIGHT TO ACHIEVE SELFISH GOALS

BUT TO DEVELOP WISDOM AND CHARACTER IS OUR ULTIMATE COMMITMENT.

Saying the pledge each day before class reinforced our shared goals and helped build our personal discipline. More, it was part of the ritualistic comfort that becomes ingrained in any communal activity. As when schoolchildren say the Pledge of Allegiance each morning, repetition is good for daily reflection and character building.

The recitation of the pledge was followed by the class schedule of intense and exhausting warm-ups, including stretching and push-ups. We would then review katas—specific stylized routines of kicking, punching, and blocking. The katas become more advanced the farther a student progresses, but their purpose never changes: Routine is good for discipline.

We would also practice kicks, receive weapons training, and conclude with sparring. For the sparring we would wear protective clothing, gloves, and masks, and focus on hitting with control. As a parent, I watched with concern as my young sons sparred, but the pads and helmets were enough to absorb the blows, which gives the combatant the opportunity to focus.

Reaching the next belt level—a constant goal in tae kwon do—naturally reinforces all these habits as you slowly but surely learn the art. It’s not just physical progression either, although it is a great way to stay in shape; also it’s about building a mental toughness that you can use in other life pursuits. It is a discipline that requires discipline!

The entire experience helped my sons and me develop discipline, respect, and self-confidence. While I don’t think I can take on Jet Li just yet, I can say with assurance that I am a more focused person because of my martial arts training. But perhaps most important, studying martial arts is about setting and achieving goals—and that struck me as a perfect metaphor for what I’ve witnessed in my career with the most successful people: They are goal setters, they are achievers, they strive for the highest rung, and even if they don’t reach it at first, they try again.

But martial arts innovation doesn’t have the best ring to it. Ninja innovation? Much better.

The Way of the Ninja

IT WASN’T JUST THE NAME, EITHER. AS I THOUGHT ABOUT IT, I REALIZED that while martial arts is an art, being a ninja is a profession: A ninja is a particular brand of person who studied the martial arts, but not simply for the sake of doing so. They studied so that they could be better ninjas. This seemed to me a key differentiator, and so I began to study the way of the ninja. Who were they? What were their roles? Why have they persisted in popular legend hundreds of years after they disappeared from history?

I think a key to understanding ninjas is to compare them to their feudal Japanese counterpart: the samurai. Now, the samurai were akin to European knights. One was born into the samurai class, just as knights were members of feudal Europe’s landed aristocracy. The samurai were noble warriors who followed a code of ethics and conduct—known as Bushido. Indeed, they took their role as masters quite seriously, and dishonor was a great crime among the samurai class.

Shiba Yoshimasa, a fourteenth-century samurai, stated that the ultimate glory for a samurai was death in battle: “It is a matter of regret to let the moment when one should die pass by. . . . First, a man whose profession is the use of arms should think and then act upon not only his own fame, but also that of his descendants. He should not scandalize his name forever by holding his one and only life too dear. . . . One’s main purpose in throwing away his life is to do so either for the sake of the Emperor or in some great undertaking of a military general. It is that exactly that will be the great fame of one’s descendants.”2

Very brave, but anyone who follows that type of strict ethical code isn’t exactly concerned about success. In other words, the samurai followed their code to a fault. While they were very interested in self-preservation through the expansion or defense of their feudal power, they weren’t exactly goal-oriented.

Let’s contrast this with the ninja. Little is known about their exact origins, but they began to appear around the fourteenth and fifteenth centuries as spies for the samurai. They were recruited from the lower classes—another telling detail—and valued for their unique skill set and training. As opposed to the samurai, who were born samurai whether they were any good with a sword or not, the ninja lived in a meritocracy: He could only advance as far as his talents could take him. In time ninjas would expand their skills into what we know today as unconventional warfare, excelling at the art of espionage, sabotage, infiltration, and assassination. After existing mostly in the shadows for many generations, ninjas by about the sixteenth century were a well-known class of warriors whom the varying clans of feudal Japan hired to do their dirty work.

Whereas the samurai fought honorably in open combat, a ninja would just as soon slit your throat while you were sleeping. Not very honorable, but it got the job done. While the ninja followed a code of honor and discipline, he didn’t much care if he died a “good death” in the course of his mission. He only cared if the mission was completed. But it’s a mistake to think of ninjas as feudal Japanese Terminators—mindless killers. As one historian wrote of a group of ninjas: “They travelled in disguise to other territories to judge the situation of the enemy, they would inveigle their way into the midst of the enemy to discover gaps, and enter enemy castles to set them on fire, and carried out assassinations, arriving in secret.”3

And so the ninjas had to be smart as well as adept professionals. They had to survey the defenses of their enemy and discover how to beat them. And they couldn’t just bring the mightiest force to the battlefield to do so. That wasn’t their job. They had to look at a fortified position, like a castle, and investigate its weaknesses; avoid detection; change course if surprises arose; and, finally, complete the mission they were assigned. In short, ninjas had to be innovative in besting their competition.

What better description is there for a successful person, enterprise, or organization in today’s world? And so: Ninja Innovation.

As for the innovation part, readers of The Comeback might recall what I mean by the word, which encompasses far more than simply “an invention.” When I say innovation, I’m talking about progress. I’m talking about growth. I’m talking about the essential element every successful organization needs not just to survive, but to thrive. If you’re doing it like everyone else, you’re not innovating. Indeed, sometimes innovation comes in the form of a flashy new product, but not always. Sometimes it comes in the form of a new way of doing business. I put innovation at the pinnacle of economic performance because without it, we are idle. With it, we achieve great success.

But for the business readers in the audience, we can try to be even more precise. At the most basic level, there are three principal types of business innovation4:

• Evolutionary: an improvement in an established market that competitors and customers generally expect to happen. For example, I would say that faster computer chips are evolutionary.

• Revolutionary: an improvement in an established market that competitors and customers generally do not expect to happen. For example, the introduction of smart phones was a revolution in the mobile phone market.

• Disruptive: an improvement that is generally unexpected by customers and competitors, serves a new set of customer values, and ultimately creates a new market that competitors scramble to understand and adapt to. If any innovation warrants stealth development, it’s probably this type. For example, the advent of mobile telephones was disruptive to the traditional landline telephone market.

Ninja innovation is my catch-all phrase for what it takes to succeed. You have to display the qualities of the ancient Japanese ninja, whose only purpose was to complete the job. He wasn’t bound by precedent; he had to invent new ways. He didn’t have the luxury of numbers; he had to make do with a small group of professionals. He wasn’t asked to do the ordinary; he had to perform extraordinary tasks.

Of course a major difference between the ancient ninja and today’s ninja innovator is that for the former, failure was fatal. That isn’t true today. One can fail, dozens of times in fact, before finding remarkable success. Indeed, America is quite unique in the world because we actually reward failure: We want you to go down trying. Some of our most spectacular successes were also spectacular failures: In war, George Washington failed countless times against the British before achieving miraculous victory; in politics, Abraham Lincoln lost his Senate race to Stephen Douglas—while giving us some of the most memorable debates in history—before saving the Union; in industry, Henry Ford’s first company, the Detroit Automobile Company, dissolved three years into its existence, but Ford Motor Company launched two years later; and, perhaps best known to us, Steve Jobs failed probably more often than he succeeded. And, yes, I have failed more times than I care to recall.

Today’s Ninjas

FOR THE PURPOSES OF THIS BOOK, THE ANCIENT-NINJA METAPHOR will only carry us so far. Which is another way to say that what follows is my interpretation of what today’s ninjas exhibit: how they see their task, how they tackle the competition, how they overcome the odds, how they plan, how they fight, and how they ultimately succeed. After all, this is not meant to be a history course on ninjas, but an examination of success in today’s world.

The chapters that follow will attempt to break down the ten characteristics of ninja innovation. In brief, they include:

Chapter 1, “Your Goal Is Victory”: The goal of a ninja is to defeat the enemy and complete the job. Likewise, the goal of an enterprise is to be better than the competition. This chapter will examine cases and examples where enterprises succeeded because they were driven to win, and where the ultimate goal of the business strategy was clearly defined as victory.

Chapter 2, “Your Strike Force”: Ninjas often operated as a team. More important, they were a team of professionals, not amateurs. One of the first steps toward success in any enterprise is to build the right team.

Chapter 3, “In War, Risk Is Unavoidable”: Ninjas, and successful leaders, approach their assignments as a way of life, not merely as a “day job.” If you don’t take risks, you won’t be successful.

Chapter 4, “Prepare for Battle”: A ninja’s behavior is grounded in a specific mental attitude. We can call this discipline. To succeed, you must mentally steel yourself for the trials ahead. You will fail, often spectacularly. But never take your eyes off your goal.

Chapter 5, “The Art of War”: Successful strategy is an art, not a science. Often you will not know all you should know to achieve success. That’s okay. A successful strategy is a living strategy; it must be executed in a way that allows for a change in tactics. Your competition is fierce and smart, and they won’t willingly let you defeat them. Expect surprises and adjust accordingly.

Chapter 6, “The Ninja Code”: No matter the goal, all actions are “informed” by a martial code of conduct, a.k.a. business ethics. Ninjas create chaos because they don’t follow the normal rules; that’s how they succeed. But even ninjas follow a code of ethics.

Chapter 7, “Ninjas Break the Rules”: Unlike their feudal counterpart, the samurai, ninjas were not an aristocratic class. They succeeded because they were the best. Likewise, an organization won’t succeed if its hiring principles are hereditary, hierarchical, and closed to mavericks. The last ninja standing is the enterprise or individual that not only employed the best people but also pursued the most innovative approach to success.

Chapter 8, “Innovate or Die”: The ancient ninja always confronted obstacles that forced him to alter his approach. It’s the same with today’s enterprises. Life isn’t predictable. But too often dying organizations turn to third parties (usually government) to save them without having the courage to change their mode of business. Be creative; be daring; be willing to take a different course. Otherwise, your failure will be fatal.

Chapter 9, “An Army of Ninjas”: Today’s ninjas are part of something larger than themselves. As they build, they also defend. Technology allows for all of us to participate in innovation.

Chapter 10, “The Shadow Warrior”: The ninja’s best skill was stealth. He was able to deceive his enemies through invisibility and disguise. Great ninja companies do this as well, but this is the one ninja trick that isn’t part of the innovator code.

As I mentioned previously, The Comeback analyzed the macro factors that foster innovation and economic growth. Ninja Innovation focuses on the micro factors that lead to individual and organizational success. But both remain forever connected. With a few notable exceptions, the successes I recount in the following pages would not have been possible if not for the freedoms of capitalism and the pro-innovation, pro-growth policies of government. We remain in need of these today.