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By Root 1594 0

to secure a career. Now, Starbucks employs baristas with master’s degrees and PhDs. Engineers used to be in great demand, but with universities in India and China turning them out in droves, an engineering degree is no longer a guaranteed ticket to success. 8 As a company, proximity to your customers used to provide a competitive advantage, allowing you to deliver goods or services more cheaply than competitors that were more remote. Now, you find yourself competing against suppliers from around the world, and the equation is often reversed. To succeed in a crowded, global market of companies and people, we must find a way to differentiate ourselves from the competition in an enduring fashion. As the market becomes more crowded, however, the possible areas of differentiation become fewer, creating new questions about the personal qualities the new world requires of us in order to thrive.

Leaders in twentieth-century capitalist enterprises historically differentiated themselves by WHAT they did. We used to be very inventive ; those who could invent something and patent it won, and those who could not do so gleaned the fields for survival. I call it Innovating in WHAT. The market provided great incentives and protections to Innovate in WHAT. That is where the spoils went, that is where the publicity went, that is where government protection was focused, and those inventors made the front cover of Forbes and Fortune magazines. We used to celebrate them, the people who made the best WHATs—like Chester F. Carlson, who in the late 1930s was puttering around in an improvised lab he had set up in the back of an Astoria, New York, beauty salon owned by his mother-in-law when he got some fungus spores to transfer from an electrostatically charged sheet of metal to a piece of wax paper. After patenting the process, he tried to sell it to 20 of the largest corporations in the country. They all turned him down. In 1947, a little photographic products manufacturing company in Rochester, New York, called Haloid bet a quarter of its yearly profit (profit of $101,000 on $6.7 million in revenue) on developing the idea. In 1959, Haloid introduced the first practical application of Carlson’s invention, which Haloid called the Xerox 914. Two years later, revenue topped $60 million. Four years after that, Xerox was a half-billion-dollar corporation.9

Or people like Noah and Joseph McVicker, who in 1956 invented a pliable plastic composition they hoped would clean wallpaper. When their sister, who taught preschoolers, seized on the stuff to replace the modeling clay her students found too difficult to play with, they formed the Rainbow Crafts Company to manufacture the stuff as a toy. To date, Hasbro, the corporation that eventually bought out Rainbow Crafts, has sold more than two billion cans of Play-Doh. Its odor has been named one of the top five most identifiable smells in the world, and it is one of the most successful toy products of all time.10

Innovating in WHAT powered twentieth-century capitalism, but those days are gone. If the McVickers came up with Play-Doh today, someone could take it to China, reverse engineer it in a week, and deliver it around the world at a fraction of the price. A Xerox machine might suffer a similar fate in just a few months. It is difficult to invent a better product in a world of commodities, and that is where we find ourselves. Starbucks unleashes a newfound appreciation for coffee drinks, and now every diner and greasy spoon serves caffe lattes. Dell makes an inexpensive personal computer, and Hewlett-Packard is soon doing likewise. Johnson & Johnson finds a way to protect the integrity of Tylenol, and nearly instantly every analgesic bottle has the same antitampering device.11

It is harder now to Innovate in WHAT. It takes a lot of luck and money to be a pioneer, and even if you pull it off, the ability for someone to reverse engineer you in six months and not in six years eliminates a lot of the incentive for doing so. In 1999, two companies, ReplayTV and TiVo, simultaneously rolled out the first