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adrw // Andrew Alexander

The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time

Books, Author(Jim McKelvey)1 min read

2020 | Jim McKelvey

This entertainingly written book by the cofounder of Square details the early days of the company and the unlikely pattern stumbled upon that have defined many entrepreneurial companies including Southwest Airlines, IKEA, and Bank of Italy (now Bank of America) of one necessitated innovation necessitating another... and another until a moat of innovation has allowed one innovative company to soar above the competition (and in some cases invent a new industry standard way of being).

Written with great wit and amusing footnotes, this book stands out from many other more serious business books I've read, though still has some good insights into how entrepreneurial companies often need not be "disruptive" but instead expand the industry to include new customers through innovative low prices, onboarding experience, more engaging experience or other factors.

Additionally, the point on low prices was intriguing when thinking about cross industry how consistently low prices, unoptimized at every possible point to maximally extract from customers, builds up significant customer trust and employee culture that the company does what's best for the customer, not always trying to thread the needle of prices just low enough to win the sale but as high as possible to maximize revenue. Square's 2.75% processing (vs industry 4%), Southwest's tickets often in the < $100 range (vs industry $400+), IKEA with affordable yet good quality furnitue, and Bank of Italy providing affordable accessible banking to the masses (vs industry focusing on big businesses and high networth individuals) all were potent examples of this working. In the cases of Southwest and Bank of America, their eventual raising of prices to maximize revenue soon enough tanked their customer trust and reputation as customers could no longer assume that they were going to be good value.

"[...] the pattern: find a problem and learn how others have solved it. If nobody has, try something different even though this will feel weird. When your new solution creates new problems, repeate the process. Copy what you can, but invent when necessary. And keep going until you finally have a solution, knowing that the accolades will arrive only after they are irrelevant. Our knowledge of the Innovation Stack helped us move. And movement is the key." – p258

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