INTERVIEW

VIEW Interview

INTER Adaptive Innovators

An Interview with John Sculley III

Moonshot! is about the timeliness of the Middle managers were put in place to imple- opportunity, and it describes in detail exactly ment those missions and improve upon them, but how companies are handling it. they weren’t there to necessarily disrupt them. This is a book based on conversations with Innovation is going to be shaped by com- the founders of entrepreneurial companies and panies that exist for the sole purpose of doing those that invest in them, and why certain trends something better, and not those trying to pre- John Sculley III are going to happen again and again over the serve what they’ve done in the past. coming years. What is unique about this era is the speed EDITORS’ NOTE John Sculley was President of Is entrepreneurial spirit still alive and at which innovation is occurring, be it PepsiCo, Inc. until he became Chief Executive well? with the cloud, mobility, data analytics, or the Offi cer of Apple in 1983, a position he held un- The only net job increases that the U.S. Internet – it’s shifting the market radically from til 1993. Sculley is recognized worldwide as is experiencing now, and that it will experi- producers to customers. an expert in marketing, in part because of his ence in the foreseeable future, is from small I always think about innovation through early successes at PepsiCo. Today, he continues and medium-size businesses, particularly the the eyes of the customer. How does one cre- to speak and write about disruptive marketing entrepreneurial companies that are driving in- ate such an exceptional customer experience strategies. Sculley is currently invested in a num- novation. Big government is not adding net that it motivates customers to tell others ber of high-tech start-up companies, including new jobs, and the large enterprise corporations about it? 3C Interactive, Zeta Interactive, Infl exionPoint are not bringing about a net increase in work- When Uber went to San Francisco, the Acquisition Corp, Mobeam, OpenPeak, Obi ers either. taxi industry was at $150 million per year. Mobiles, and Pivot Acquisition Corp. He is also For the future of the economy, we have to Five years later, Uber had a $400-million an investor in several U.S. healthcare compa- make it easier to build companies. Adding un- business just in San Francisco. They didn’t nies including SleepMed, MDLIVE, Rally Health, necessary regulations and limiting growth for have to destroy an industry to create a new Misfi t Wearables, and FlexPharma. entrepreneurial companies is not smart policy. one. Customers loved it and they told other There are so many talented people who customers about it, and Uber is now valued at Would you talk about the mission behind have the ambition to create new companies. about $45 billion and it’s only fi ve years old. the writing of your book, Moonshot!? But it’s not necessary to be a founder. One can Is the U.S. still a leader in innovation or The timing was right because I have been be a joiner or an independent contractor. More is it losing its edge? in a lot of interesting places, and I have been people are working as part-time independent The U.S. still has the best higher educa- fortunate to have had fascinating experiences contractors or consultants for entrepreneur- tion system, the best role models for innova- that have given me a perspective to appreci- ial companies. There are many different roles tive companies, and the best environment, even ate just how signifi cant a given moment can be available. with increasing regulation. We’re also willing to from the many moments I’ve had over the past In Moonshot!, I describe those whom I let people make mistakes. decades. call “adaptive innovators.” The future is in the In other parts of the world, it can take a There is an unprecedented amount of hands of those who can see opportunity and few years to start a company and it’s even high-tech innovation going on right now, which who have the skills to adapt to the conditions harder to fi nd working capital to expand busi- includes a series of innovations in parallel with that make it possible to create entirely better nesses. If people make a mistake, in many cul- the cloud, mobility, data analytics, and the customer experiences, products, and services, tures, they’re fi nished. Internet. and do it at a disruptive cost. The issue is that our country is so big that With all of these exponentially grow- Is it possible for companies to main- we tend to focus on what is going on inside ing technologies, it’s the marketing impact tain their entrepreneurial cultures once our borders and assume everyone else wants that I’m focused on – not the technologies they reach a certain size and scale? exactly what we have. In reality, there is a new themselves. This involves a power shift from There are a lot of very talented people in middle class that’s developing in the emerg- large incumbent companies that have domi- large organizations. Yet, the chance of a large ing markets and they want an aspirational nated industries for decades. Customers are organization being an innovator for many of the lifestyle but they want it on a much thinner now paying closer attention to the opinions new things that are going to happen is not as budget. of other customers than to those of the es- high as it is for the newer companies or the We may have to learn from them how to tablished incumbents. If companies have small and medium-size businesses. Every large find less expensive ways to provide prod- a great innovative product or service, cus- organization, no matter the industry sector, has ucts and services, because the model in the tomers will tell other customers about it. The one thing in common: it has empowered its U.S. is not sustainable for a large part of our power of viral media is enabling new com- middle managers with the authority to say “no.” population. panies to challenge the incumbent – even It’s very hard to get a “yes” answer in large or- Close to half the country is challenged with monumentally successful incumbents – if ganizations because those large organizations lower wages than they had 15 years ago and are a new company has a disruptive product or have become large by having very focused facing a lifestyle that won’t be better than that service that customers perceive as better. missions. of their parents. VOLUME 38, NUMBER 3 POSTED WITH PERMISSION. COPYRIGHT © 2015 LEADERS MAGAZINE, INC. LEADERS 21 Should more be done to raise the People need to have the aspiration, the pas- awareness of how critical entrepreneur- sion, the sense of urgency, and the knowledge ship is for economic growth? instilled in them so they desire to become part Twenty years ago, about 5 percent of the of the innovative process. This is best done workforce was part-time. Currently, it’s 15 per- through role models and mentoring, and work- Being an entrepreneur cent of the workforce. Over the next fi ve to 10 ing for entrepreneurial companies. years, that will probably double to 30 percent. If I were coming out of school today, I There has been a shift in the workforce wouldn’t work for a large corporation. I would is not about asking to where more people are now self-employed. try to get into an incubator and learn from Instead of working for a single company and that experience. Hands-on work experience is being promoted, an employee can take his skill even more valuable than all of the education how one can make a and market it as a service to a lot of different that one can get formally from an academic companies on a per-project basis. As a result, institution. lot of money. It’s about the way we think about the workforce changes. Are institutions of higher learning If one is self-employed, is he an entrepre- training the future workforce in the right neur? I guess so. On the other hand, he could skill set? being passionate about work for a large corporation on a per-project basis Many of these professors are truly brilliant and still bring the perspective of a self-employed en- but they aren’t necessarily preparing people trepreneur. There are going to be new models of to go into the world to work in the kind of something and fi nding what corporations look like. Americans are very companies that will maintain the type of growth pragmatic – we tend to adapt. economy that America needs to thrive. I would still bet on the U.S. – it’s still the Many of our politicians have never gained the noble cause. best place to build transformational businesses. the necessary experience either. Their instincts How much of that entrepreneurial are to solve problems through a government mindset can be taught? program or a regulation, or through redistribut- Being an entrepreneur is not about asking ing wealth from one group to another. The how one can make a lot of money. It’s about only way we’re going to continue the incredible What was the most rewarding aspect of being passionate about something and fi nding economy and lifestyle that we’ve enjoyed for so writing the book? the noble cause. many generations in the U.S. is to keep building Writing the book was a learning process Everything in my work experience until I and growing. But how do you get politicians for me because it forced me to become very came to Apple was about competing and tak- and academics who don’t understand what it focused on exactly what I think is going on. I ing away market share from someone else. Bill means to work in an entrepreneurial economy can’t explain something to someone else with- Gates and Steve Jobs focused on empowering to convey to the future workforce what they out understanding it fully myself. knowledge workers to be more productive in need to know to be prepared for this type of I had to make choices because there are the information age, and they began to change world? so many things happening in the world to talk the world one person at a time. Business schools are focused on the skills about. I had to determine what I had direct ex- The future of business is not about com- one needs to be a senior executive in an estab- perience in or fi nd people with direct experi- petition but about building and even creating lished corporation, but it’s the accelerators and ence who would talk to me. entirely new industries. If that’s how we defi ne incubators that are doing a better job of prepar- I focused on the marketing effect of the incred- the game, then the U.S. is still in a very powerful ing people for the entrepreneurial companies. ible technological changes going on. Then I looked position, because it plays to our strengths. Ernst & Young has done a spectacular job at it from the perspective of the middle class. One can learn to be an entrepreneur, but of recognizing role model companies. This can I questioned what the impact was going it has to be about more than taking instructions. have a systemic impact across the economy to be from the growth of the emerging middle because entrepreneurs want to be recognized class that is taking place outside Western coun- for building something. The EY entrepreneurial tries. The more I delved into that, the more I awards are well-known and highly respected by started to realize that they’re going to be moving people who have won them. into the middle class economy but it’s going to EY is an example of how a large institution be quite different from the middle class in the in an established industry can help create part U.S., and it’s going to have a huge impact. Hands-on work of the learning experience and elevate aware- I used to think that all of the innovation came ness of examples for a broader population. from the U.S. and it was exported around the world. What’s the difference between innova- It became clear to me that this isn’t true. Many inno- experience is even tors and disruptors? vations, including frugal management of companies, Innovation is about fi guring out a way to which allows for products to be sold at incredibly more valuable than make something better. It doesn’t always have disruptive prices, will develop outside the U.S. to be disruptive, which indicates that a trend These concepts will be imported back into the U.S. suddenly sparks a non-linear event. because we need that type of change here given all of the education A perfect example is digital photography. that a large portion of our population can no longer Kodak is the expert in fi lm processing and cam- afford the high-priced middle-class products and eras, and they have the best brand in the world services we produce today. that one can get for traditional fi lm. They are focused on the Do you take time to refl ect on your past single-use camera. They doubled down in verti- achievements or are you always looking to cal integration and in fi lm processing to be even what’s next? formally from an more competitive when Walmart decided to go I do what I do because I have an insa- into the single-use camera business. That was tiable curiosity about what is going on in the academic institution. at about the same time Steve Jobs introduced world. I’ve been fortunate to have been ex- the iPhone. He was focusing on things already posed to some of the most talented people out in motion. It was no longer a linear increase. In there during each of the decades I’ve been in a few years, the whole photography industry business. I want to be able to pass those experi- changed. Kodak fi led for bankruptcy and Apple ences on in a way that is understandable and, won the future with digital photography, which hopefully, compelling to the next generation of is now being done on digital phones. businesspeople.• 22 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2015 LEADERS MAGAZINE, INC. VOLUME 38, NUMBER 3