After 35 years of disruptive innovation, Reggie Fils-Aime, retired president and COO of Nintendo of America (Redmond, Wash.), urged leaders at a virtual business summit this month to find success by breaking the rules.
Then he gave them his playbook, “The Innovator’s Rulebook for Breaking the Rules,” which included the following points:
- Innovation is a culture and a mindset, and it involves consistent work.
- Innovate from your core strengths.
- Innovate with unexpected relevance.
- Innovators must over-communicate.
- Innovators truly understand their markets.
- Innovators fail. Learn to fail forward.
- Innovation is a leadership function.
“I’ve been fortunate to have had the opportunity to disrupt global markets for over 35 years in a variety of different industries, from consumer packaged goods to the restaurant industry to the durable goods industry, and the entertainment industry. In my practice of disruptive innovation, I’ve seen what works. I’ve seen what doesn’t work,” he said in the keynote speech at the virtual summit. Titled “Breaking the Rules: Innovation in Action,” the summit was organized by EisnerAmper, an audit/accounting/tax advisory firm with offices in Princeton, Iselin and Pennington.
“For 15 years, I was a senior leader with Nintendo, running their largest subsidiary as a member of their executive officer group. And during that time, Nintendo disrupted the entertainment market with global innovations like the Nintendo, the Wii, the Nintendo DS and the Nintendo Switch,” he said.
Culture of Innovation
“Innovation is not a one-time exercise for an organization. To be truly innovative, there has to be a culture of innovation. It needs to be a mindset in every facet of the organization, from the engineers to the product managers and the marketers and finance business development.”
Fils-Aime had many success stories while at the helm of Panda Express, VH1, and Guinness, among others, and ultimately at Nintendo of America.
From 2006 to 2019, Fils-Aime was responsible for Nintendo’s greatest successes: the Nintendo Wii, Nintendo DS and most recently the Nintendo Switch.
Recognition in the gaming community followed, snowballing into celebrity status among gamers. Even Dwayne “The Rock” Johnson took to Twitter to congratulate him when news broke of his retirement from Nintendo.
Fils-Aime was inducted into the International Video Game Hall of Fame in October 2019. He was the 2019/2020 leader in residence at Cornell University’s Charles H. Dyson School of Applied Economics and Management, and he’s a board of directors member at Brunswick Corporation (Mettawa, Ill.), GameStop (Grapevine, Texas) and Spin Master (Toronto, Ontario).
“This is really important for the audience that we have here today, which may include a lot of people from a financial background, or people from nonmarketing or nonproduct-development backgrounds,” he said, addressing viewers at the summit.
“Everybody in an organization needs to feel responsible for innovating, for creating something new, something that’s never been done before.”Reggie Fils-Aime, former President of Nintendo of America
“Everybody in an organization needs to feel responsible for innovating, for creating something new, something that’s never been done before.”
Nintendo took shape in 1889 as a manufacturer of decorative playing cards. “Even back then, Nintendo was always thinking about how to disrupt their market. They were the first to have plastic-coated playing cards. They were the first company in Japan to license someone else’s intellectual property onto their playing cards. Interestingly, it happened to be Walt Disney, who they partnered with back at that time,” he said.
“Personally, I believe the best innovations are not linear. Rarely giving someone exactly what they want is a breakthrough. You need to be relevant, but unexpected,” he added.
“There’s a book. ‘If You’re in a Dogfight Become A Cat!: Strategies for Long-Term Growth.’ And yes, this is an actual book. And the basic idea here is that, rather than charge in and be another dog in a crowded fight, adapt and innovate your way into your own territory, your own turf. Become a cat, and approach it all on your own.”
A Big Miss and A Bigger Hit
During the talk, Fils-Aime noted Nintendo’s innovative hits, one big miss, and a hit because of that miss.
One of the most popular innovations was the Wii remote and console.
“The core innovation here was this remote that had motion controls built in, so that you could play a game of tennis by swinging the remote the same way you swing a racket in real life. It really changed the interface between how the player and game could create experiences and it enthused not only current players, but brand-new ones. What was great from a financial perspective was that the technology wasn’t overly complex. Motion sensors and gyroscopic sensors have been in the marketplace for a long, long time,” he said.
“The availability of this technology and the relatively low price helped lead to very favorable economics, and that has to be part of your innovation thinking. The consumer reaction was astounding. And the financial performance was stellar as well,” he said.
The “learn to fail forward” rule applied to the lackluster reaction to the Wii U console and its GamePad, which paved the way for the successful Nintendo Switch, he said.
“Not every new product, not every new way of doing business is going to be successful in the marketplace. Innovators who are pushing the edge and pushing the envelope are going to have failures. Their mentality has to be to run towards risk, not to shy away from it. To fail forward, to learn quickly from the misstep, and then to innovate again. This time, successfully,” he said.
“And, yet, the Nintendo Switch now is the fastest-selling system in the current generation of gaming. Nintendo Switch created success that allowed new types of software, created by Nintendo as a company, but also enabled other game developers to create content for the system, and to be successful as well,” he said.
“The last rule: Innovation has to be a leadership function within the organization,” he said, pointing to his difficult call to bundle a copy of Wii Sports with every new Wii system purchased in the Americas. Europe followed this approach, but not Japan.
“Leaders have to be the ones who push courageously, and at times make very, very tough decisions,” he said. “It was a gutsy call. And in the end, it’s unlikely that the system would have achieved the same level of success without this decision.”