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Steve, Clarence, Thomas and Topsy

October 6, 2011
by Patrick Love

There must be a more innovative way of topping Topsy

We all agree that Steve Jobs was a marketing genius, persuading the gullible to pay extravagant prices for bright, shiny things because they’re bright and shiny. But unlike Thomas Edison, the man Jobs is often compared to, he never electrocuted an elephant. In 1903 Edison fried Topsy from Coney Island’s Luna Park and captured the event on film.

Why? Topsy had killed three men, including her abusive trainer, and was going to be executed anyway, but Edison saw a chance to score points against his rival George Westinghouse. Edison’s company was producing electricity in over a hundred power stations by the end of the 19th century, but his DC system could only supply customers within a couple of kilometres from the plant. Westinghouse’s AC system, based on Nikola Tesla’s ideas, was capable of transmitting current over hundreds of kilometres. Edison started a “war of currents” to prove that AC was too dangerous to be allowed into homes, and killing Topsy using AC current was supposed to prove this.

Topsy died in vain of course, and elephanticide hasn’t been tried as a sales technique since, although Edison did develop the electric chair. Another Edison idea that proved successful was his Menlo Park laboratory, the first industrial research lab, working on everything from the phonograph to iron ore separators. Jobs’ genius is similar to Edison’s, if on a lesser scale,  in that both men recognised then potential of improving existing products and making them widely available.

Apple actually spends less of its revenue on R&D than Microsoft or Sony (4% versus 17% and 8% respectively) but it spends far more than Sony on each individual product: $78.5 million versus 11.5 million, while Microsoft spends a lot of its $9 billion research budget on general research that may not lead to a specific product.

Jobs understood that success depends on innovation, and that doesn’t mean just invention. Innovation can mean changing a product’s composition, for example removing the cocaine from Coca Cola, or the way it’s sold – in cans or bottles from machines as well as over the counter at drugstores.

Another great American entrepreneur who understood this too was Clarence Birdseye. He didn’t just invent an industrial method of copying the Inuits’ way of fast freezing fish, he also invented much of the machinery that made mass marketing of frozen products feasible. In a stroke of marketing genius, the Birdseye company supplied shops with the open-top freezer units to display and sell their products. This has since been copied by firms the world over.

Edison, Birdseye, Jobs and the like are obviously important assets for their company. But can you measure their value in the way you measure non-human capital? An OECD project on “intangible assets”, also called intellectual capital or knowledge capital, sets out to answer that question, in order to “provide structured evidence of the economic value of intangible assets as a new source of growth”.

If you’re wondering what Topsy was worth, take a look here.

Useful links

OECD work on innovation

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