Frank Mattes: 10:07
Yep. So here’s an interesting story. A case study that’s also elaborated in more detail than in the book. It’s about the story of Kodak. But wait a second.
There’s more to that. Many people would say, we know the story of Kodak, right? The common narrative goes, they invented that new technology. They actually created the first digital camera, but were too dumb, etc., to, to to really turn the company around. That’s partially true.
First of all, I mean, there were three massive disruptions that Kodak had to go through. The first one was technological. They kind of got it. I mean, they invested in the precursor to Instagram image sharing service called Ofoto back at that time. Right.
And they made digital cameras here that weren’t that successful, but they got it on the radar screen in 2000. The market started to dip from analog to digital photography, but they were monitoring digital photography for ten years. So they meticulously tracked the market share here. The second disruption which they did not get is change disruption in consumer behavior. These days, you and I and also the folks out there, we’re looking at images on computer screens.
We are not looking at paper anymore. And the third one that’s exactly that you mentioned is how do you rally the troops, so to say, for a new direction. And here comes the second part to that Kodak story. What few people know is that at that time, when the demise of Kodak started, their fiercest competitor was a Japanese company, Fujifilm. Right.
So we have two companies, same industry. They were the same size with a 3,637% global market share. Faced with the same challenge right? Digital disruption. Now we all know Kodak went bankrupt, but Fujifilm is now 20 times larger than what is left of Kodak.
How come? How come? And that’s what I researched also for one of the case studies in the book. And it turned out that first of all, they looked at the world differently. Kodak, with its long history, said, we’re a silver film company.
And when the then CEO of Fujifilm Camera said, well, at the end of the day, we’re looking for a new foundation now that we see that our current business is eroding. And if we look very closely, we’re not a silver film company. That’s basically there’s a story behind that. But I think that would take us too far. Our excellence is in surface chemistry, right.
Which happened in the first part of our company history to be a silver plated photo film. Right. So how could we use that expertise to create new businesses? And it turned out. Surface chemistry can be applied, for instance, in pharmaceuticals can be applied also in.
In cosmetics when you code certain things, etc.. And here comes the part that ties back to. Your question. The Fujifilm CEO said this will be our new foundation and I will take the company with me. Me.
So he made some structural changes, recalculated budgets. That’s kind of the mechanical stuff. But he also insisted that the top 1000 of Fujifilm speak with him directly. Right. So he went out, had those lunches with the managers, and he asked every one of them.
1000 people wrote him a two-page memo. What stands in the way of transforming the company up to new boundaries, which weren’t even visible at that time. So he took from there where, where, where the mindset needs to be shifted. He also took from these interactions, which obstacles need to be removed to open up the way and to let the vision work? So that’s a leadership task.
Frank Mattes: 14:17
Yeah. Actually, that’s one of the reasons why I say out of these one dozen success factors, one of them I called the one company mindset in too many companies. John, you find that the 99% of staff that work in today’s business, right? They do the selling. The other guys do the procurement. The third ones recruit new people and have a clearly defined profile.
The fourth, do the financial accounting, you name it, etc. they see themselves and they identify themselves with the current products like Kodak did with a silver film company, or we’re a machinery building company, or we’re a chemical company. They don’t think in solutions, they don’t think in capabilities. They don’t think about the customer’s needs. Right. And understanding to think broader and then understand that this now with the 99% of the people and the new few innovators, this is just one company looking at the world from different timelines. That’s a managerial effort. And I think it’s also leadership, leadership, job number one, right to win the now and to create the future.
John Corcoran: 15:30
And that idea of going and having your top people give you feedback to you what you think the obstacles are and maybe some ideas around it, you know, is that something that you see other companies doing, or is that pretty radical to do? Because, you know, it seems like a lot of companies might not take the time to do that.
Frank Mattes: 15:52
Yeah, it’s radical, but I guess that’s where I fit in in the greater scheme of things. So let me take an example also. I mean, I’m working with a truck company these days, right? And most of the trucks they’re selling now are still gasoline-powered. Diesel powered. Right. Yeah. But the shift to electric is coming.
John Corcoran: 16:11
Yeah.
Frank Mattes: 16:11
It’s inevitable.
John Corcoran: 16:12
So how do you make it?
John Corcoran: 16:13
And self driving as well?
Frank Mattes: 16:16
Yeah, exactly. So so in this case. Yeah. And it turns out that the customers of these electric and autonomous vehicles will be the customers of today’s customers. In other words, there’s a channel conflict right. Should you circumvent your current customers, which are the dealers, truck dealers to win these new customers?
How do you organize that? In that case, John, it was rather straightforward, let’s put it that way, because they will get fined by the European Union for their CO2 footprint five years down the road, which will be so massive that they must change. But nevertheless, you need to have some. The chemist would say activation energy to get that transformational process going.
John Corcoran: 17:05
Yeah, that’s a fascinating one, because I was telling you before the interview that the CEO of Mercedes Ola is his name, came to speak to our EO San Francisco chapter. And it was a fascinating conversation because while they are simultaneously really bought into the vision of, you know, we’re going to have electrification of vehicles that’s going to take over, you know, or the majority of our cars that we sell at the same time. Their vision was it’s really going to take another like ten years or so for this to really take place. And so they have to innovate for their internal combustion engines. Now they have to put investments into creating new platforms and new innovation.
And you know, they just can’t give up on it quite yet. And so they have to figure out how much of a bet to place to use your language on the now, versus how much of a bet to place on the new. And if they place the wrong bet, or if something like tariffs comes along, or global disruption or supply chain issue or another war, you know, those sorts of things could really, you know, throw a wrench in that process.
Frank Mattes: 18:14
Yes, yes. I mean, and at the end of the day, innovation, meaning the balancing of the now and the new is about making those tough decisions.
John Corcoran: 18:23
Yeah.
Frank Mattes: 18:24
Right. And the decisions that play out on a ten year, maybe even 15 to 20 years time scale.
John Corcoran: 18:31
Yeah.
Frank Mattes: 18:31
It’s not an easy job for those large companies.
John Corcoran: 18:35
Not at all. You mentioned. So it’s a different matter for a Mercedes. It’s like a 100 year old company, 120 year old company or something like that, versus like a Tesla. That’s like a newer company. Good and bad.
They don’t have that, you know, established way of doing things, but also they can do something new and innovative. What do you think about a company like Tesla that is, you know, now they’re investing in like robot robots, building these robots that, you know, I don’t know if they’re going to be functional in the next five years. I wouldn’t be surprised if it’s not ten years before they actually create something functional.
Frank Mattes: 19:09
I mean, there’s a point to this story. And as you may know, they are also using those robots in their own core processes. So I mean, we can look at this play that they’re playing about extending leveraging their capabilities that they have. Right. But it’s a different story right.
It’s more going from a it’s you’re going into the home. Right. That’s a different consumer that buys a Tesla car every 3 or 4 years with a major investment for most of the people. Right. And the whole say, psychological side of having a robot walking around in your room doing this and that.
I mean, it’s not yet discovered, right? Think about Google Glasses, for instance. I mean, it’s a fascinating idea, right? Maybe a couple of years too early. So it was a timing issue as well.
Google Glass found its niche in B2B environments, right? When people are working in warehouses and the glasses tell them where to pick the next thing or give them instructions, etc., right? But that’s a different context.
John Corcoran: 20:13
Or the Apple Vision Pro is a similar one. I tried, I tried, I did a demo of them in an Apple store and I was blown away. I was like, this is absolutely amazing. I didn’t buy one for $3,500. Yeah, yeah. But I was blown away by it. But, you know, the press has been pretty negative on that saying that, you know, it hasn’t been a success so far.
Frank Mattes: 20:32
No, it hasn’t, it hasn’t. But if you read the signs, if you read the blogs of the people that follow Apple, they will certainly go up one level down. Right. The glasses are for the average person, so to say, not just for the people who say, well, I put it in my bag, it’s 3500. Who cares? Right? That’s a different audience, isn’t it? Right. Right. But nevertheless, it’s also about the context and the behaviors. Yeah, right. Us as humans, we like to stick to our behaviors because it burns less energy in our brains.
John Corcoran: 21:09
Yeah. It is very difficult to sell a solution that requires behavior change. I’ve learned that the hard way in my career. You know, talk about a leadership challenge. You had 100 different people contribute to this book. How did you manage to do all that and to leverage, you know, and rally so many people? That just sounds like an amazing amount of work.
Frank Mattes: 21:33
Yeah, it was a very interesting story. First, First, John, why do I think what this space is about saying out of the box right. Which could be closer to what is now or could be what Google calls Called moon shots rather far, far away and how to win there. And also and in a way, win in a way that makes sense for the company.
Right? I mean, that Google failed with its moon shots, right? With the crazy ideas of putting balloons up in the air that will provide internet connection, etc.. I mean, we could debate how much this relates then to a company that made its fortune by selling ads. Right.
Adds a layer of ads. Yeah. On the search engine. So I mean, the point is there’s no textbook knowledge yet. I’m sure as we look down the road, another ten, 15, maybe 20 years from now, innovation and innovation management will be as codified and as robust as today. For instance, quality management. Right. So it’s an emerging practice. That’s the point that I would like to make. Right.
And so there’s a lot to learn. And in particular, the way to look at what needs to be learned differs a lot from from industry to industry. So one of the contributors, for instance, came from SAP heading new ventures there. And the way software companies approach that thing differs fundamentally from the way, for instance, automotive companies look at the world because they say we do have a heavy engineering process when we think about the new stuff. Right.
Some online services that will be packed into a box and a box will be put into the car at the manufacturing line of Ola. Right. And at Mercedes. So first of all, I mean that that was the foundation and also the value proposition for the experts that are participating here. There’s a lot to learn.
And by sharing best practices on the 1057 issues that are in here, we can all contribute. What I learned also with my previous books is you cannot go into grassroots democracy, right? You cannot ask 100 plus people, what do you think about this and what do you think about that? You need to come up with a kind of skeleton, if you will. Right.
And some proposals. Right. And then have the hungry wolves jump on it and make it better and say, well, this might be true in certain cases, but in order to identify the cases, you need to keep in mind A, B, and C, right. And from these kinds of iterative processes, the whole thing grew.
John Corcoran: 24:29
I know I’m mindful of the clock because we don’t have too much time left. But I want to ask about two companies before we run out of time. One is Amazon, which you write about in the book, and the other is Amadeus. Let’s talk about Amazon first. Tell, tell, tell, talk a little bit about them. You know what we have to learn about now and new from Amazon.
Frank Mattes: 24:50
Okay. I mean, Amazon probably is the world champion in new business building, right? Starting as an online retailer now being one of the largest figures in the IT industry and all the other things that they’re doing. I looked in the book, and there was a specific question that triggered my interest. The year was 2007, right?
That was 13 years after Jeff Bezos founded Amazon and the year when the iPhone came out. Right. And this iPhone also had a deep impact on Jeff Bezos. And he said the media industry will go digital. I mean, at that time, we keep in mind that it was seven years after digital photography took over analog photography, right?
We had those napster’s, etc., where music was illegally traded. We had iTunes already, so Jeff Bezos was quite clear. The media will go digital. It’s up to us to decide if we want to be a bystander or if we want to be a driving force there. So the Kindle that they created in 2007, 2008 was actually a piece of hardware.
Keep in mind, they were a software industry online retailer, if you will. Amazon Web Services wasn’t born at that time. Just an internal project. And he said, I bet the farm that media will go digital and we want to play a role here. Roles that these days include Prime and the content that they are producing.
Amazon Music, etc. you name it. From some triangulation. You can say it’s a $77 billion business, but that originates to that point. So what interested me, what interested me is what did Amazon do to disrupt itself, right. And to create that new business that would even cannibalize the existing business.
And maybe just to make one point without losing ourselves in detail. When the Kindle project got delayed, right, and there was budget overrun and they had 150 engineers sucked off from the existing business, the critical voices came. Right. Is that really what we want to do, and can we afford to do that? And to which Jeff Bezos, the story goes, looked at the chief financial officer and said, I will stick to this.
How much money do we have left? Right. That kind of determination, that kind of linking your personal success and your reputation to the success of the new? That’s what I call one of the success factors of senior New managers skin in the game.
John Corcoran: 27:47
And then talk about Amadeus’ next wave. That’s another company you’ve worked closely with.
Frank Mattes: 27:53
So I mean Amadeus, for those of you who do not know, it is a major force in the back office of the travel industry, if you will. So if you buy a ticket, at least in Europe, and to some extent also in the rest of the world, chances are very, very high that your ticket information is processed by Amadeus. Right. And so it became clear to Amadeus some 5 or 6 years ago. First of all, they were a technology company, but what they really wanted, and they saw this as a missing piece here, is traveler centricity.
Right. Putting the traveler in the focus here and developing solutions for travelers to be used by their customers and kind of B to B to C play, if you will. Right. And this is what we did. What we’re working on bringing in traveler centricity in a technology-dominated world.
John Corcoran: 28:47
Yeah. And that’s. That’s fascinating. I know we’re almost out of time here, so I want to wrap up. Frank. This has been great. Really interesting to, you know, to think about these ideas. As we head into the rest of the year. But, you know, I’m a big fan of gratitude. I’m a big fan of, you know, practicing gratitude and also giving my guests a little bit of space at the end here to acknowledge any peers or contemporaries in particular, maybe mentors that have been there in the journey, in your journey, in your career and helping you along the way?
Frank Mattes: 29:19
Yeah. So in the present, it would certainly be my wife, right? She’s my biggest fan and my sharpest critic, so to say.
John Corcoran: 29:26
Right.
Frank Mattes: 29:27
And I mean, I would express my gratitude to those people just for being there and directing my life in a different direction, like this professor or one particular teacher while I was in elementary school. So thank you for that.
John Corcoran: 29:44
Yeah. Great. Frank, where can people go to learn more about you and learn more about NOW and NEW: How Companies Can Use Their Capabilities For Scaling Innovation and Generating New Growth. Is that the name of the book?
Frank Mattes: 29:55
That’s the book. So I’m available in all channels, Amazon and on Amazon channels. But why don’t you head to leanscaleup.com. There’s a subpage called book and on that page you can download a free chapter. There’s an AI generated podcast.
And it might be also interesting for one or the other just to listen to what I summarize and explain the concepts. There’s a case study there and there are some testimonials there. I think that would be a good landing spot.
John Corcoran: 30:26
Excellent, Frank, thanks so much.
Frank Mattes: 30:28
Thanks for having me, John.
Outro: 30:32
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.