Ford Model T - Value to Employees

Imagine for a moment that the year is 1915. You are 23 years old. You started your working life on a on farm in the state of Michigan making $1.00 a day or approximately $250 a year.

You've heard that there are better paying jobs in the city and so you move to Highland Park where you're lucky enough to get a job at the Ford Motor Company. Although the work is hard you can now make $5 a day or $1200 a year, five times what you made as a farm worker. Even more exciting is the fact that you now own a car.

When you began your working life on the farm cars cost around $3500 and were only available to the rich. Now the very car that you help to produce everyday sells for $400 and whereas as a farm worker it would have taken you 14 years wages to purchase a car you can now do it for just 4 months wages. The value you find in owning a car is enormous. The freedom you now have would have unimaginable when you were a farm worker. You now have the opportunity to drive where you want, when you want. No more waiting for trams, buses or trains. By contrast the Ford Motor Company selling a lot of cars.

Reducing the World's Poverty

... the upswing in the Chinese and Indian economies has, in the last 30 years, wiped out about 25% of the worlds destitute poverty....both countries have become hugely entrepreneurial.

Carl J. Schramm - President of the Kauffman Foundation

Innovation, Value and the Ford Model T

The Ford Model T was introduced in October 1908, selling for $850.00

By August 1916 the price had dropped to $345.

Innovation was the key to Ford's Success

Other companies were trying to produce low priced cars but Henry Ford used innovation to drive down the price.

Although Ford is generally recognized as a pioneer for mass production techniques his company developed many other innovations that helped to produce this dramatic price decrease. Its important to recognize that he and his company looked for every opportunity to make improvements and reduce costs - he used process improvement before the term was invented as well as product innovations to reduce the price of the model T.

Data Source:

Ford: The Men and the Machines

Challenge

Following Inter Milan's victory over Bayern Munich I was intrigued by rumors about manager José Mourinho suggesting that he would be leaving the club and moving on to manage Real Madrid.
In the normal course of events you might imagine that a person would not want to throw away this pinnacle of success but keep going with a reputation and a winning formula.

By contrast, Mourinho, in his often oblique way, has talked of fresh challenges. "When I win I don't stop and here [in Italy] I have won everything. I've won the Champions League with two clubs and I can do it with three," he reflected on Saturday night.

link: BBC - Phil Minshull’s Blog: Is Mourinho making a Real mistake?

In perhaps a tenuous way this has undertones of "Creative Destruction" and the need to continually be reinventing.

This is an important element of the creative process and another reason that it has to be part of a companies culture, as opposed to a one time event.

Start-up Ideas: Leveraging Resources

Ideas for leveraging resources
"a platform that allows companies to tap into labor on demand."

Startup Sessions Video: In Conversation With Lukas Biewald, Co-Founder, CrowdFlower:

Is The US Losing Its Way?

Reflections from Bruce Nussbaum at Business Week:

 

When I began the Most Innovative Companies annual survey with BCG’s James Andrew, nearly all the top 50 companies were American. This year, more than half of the most innovative companies in the world came from Asia and Europe. Despite all hoopla and blah-blah about innovation among CEOs in the US, the actual building of the rituals and processes that produce innovation is increasingly taking place outside America. With the S&P 500 stuck at 1999 levels, the profit proof is in the pudding. There has been an innovation mirage in the US over the past decade, perhaps two. [From Innovation & Design Blog - BusinessWeek]

 

Revisiting an earlier creative period

In this interview Mick Jagger discusses the process of working on some tracks recorded in the period of “Exile on Main Street”. The challenge to bring the tracks up to publishable standard is that some tracks needed lyrics and Jagger is faced with recreating the mindset he had in the early 70’s when the material was created. He also outlines the various sources from which he gathers the words and ideas for songs.

Ways To Avoid Building Value

Our behaviors and social culture might prevent us from seeing opportunities and ways to create a differential advantage. This video from Youngme Moon at Harvard expresses the point in a lighthearted manner.

Why Do We Educate Children

Its easy to come up with trite answers in response to this question but watch this video from the TED Conference to see a more strategic perspective.

Would You Be Able To Live Without Innovation?

Can You Take The Innovation Challenge?
Here is the challenge. When you wake up tomorrow morning before you get out of bed vow to spend your day living a life that doesn’t make use of something that at one time was an innovation.
Well you’ve immediately failed because unless you are lying out on the savanna curled up under a tree you are probably lying on some form of bed - a contraption that someone invented, refined, refined and refined again until the product that you are now sleeping was born.
If you wake up warm and comfortable its probably because you are in house that is heated or cooled, so many innovations here we would quickly lose count.
Its unlikely that you will head out to the woods to collect wide eggs or kill a pheasant for breakfast. Instead you will sit down to food that was bought at the supermarket, food that will be easy and quick to prepare - and may or may not have a lot of nutritional value.
Take a shower before you leave the house and....
Get in your car or catch a bus and....
Well you get the idea.
Virtually everything we do in developed countries uses something that no matter how familiar to us was once innovation.