When Amazon came after mobile-payments company Square in 2014, launching a competing product that was cheaper, it felt like “a death sentence,” says Jim McKelvey, co-founder of Square.
“When Amazon copies your product and undercuts your price, you die,” he says.
But Square didn’t die. In fact, it won. One year later, Amazon exited the market.
McKelvey describes the saga in his new book, “The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time” (Portfolio/Penguin Random House). He credits the series of interconnected solutions, which he calls an innovation stack, with protecting Square against Amazon and allowing it to continue to dominate the market today.
“Maybe 1 out of 1000 companies actually has this thing called an innovation stack,” he says in an interview with Publicis Sapient. “Every time I found one of these examples throughout history, the company dominated its market and not only fended off attack but in some cases, survived these cataclysmic extinction events.”
In his book, he examines the innovation stacks of Bank of Italy (which later became Bank of America), Ikea and Southwest Airlines, detailing how their founders disrupted an existing market and came to dominate it.
In the wide-ranging video interview, McKelvey shared why an innovation stack is essential to legacy businesses and start-ups, as well as entrepreneurs and CEOs.
“Throughout history, innovation stacks basically protected companies forever from competition,” he explains. “If they keep doing things the same way, they become bulletproof.”
Watch the full interview with Jim McKelvey above.