Innovation Blog

Key Lessons From the Inventor of “Cranium”

By Shlomo Maital

    CRANIUM  

     If “Build a Business, Not  a Product” is our mantra (see previous blog):  Richard Tate is our Exhibit A. [1] 

      Richard Tate is a Scot.  The Scots are tough, proud, independent thinkers.  They invented penicillin, the steam engine, Sherlock Holmes, artificial diamonds, whiskey, radar, Encyclopedia Britannica.  Tate was born just outside Dundee.  As a child he dreamed of creating businesses.  His dissertation for Heriot Watts University (computer science) was a business case.  After graduating Tate went to study management at Dartmouth University, then sought employment. Apple turned him down (no ‘green card’).  Microsoft hired him.  He worked there from 1988, when MS had only 2,300 workers, until 1997.  In 1994 he was chosen Employee of the Year by MS, out of some 34,000 workers.  At MS Tate started 13 businesses, including * client-server computing (an operating system for this), * value added reseller channels (MS went after the huge market of IBM AS400 users),  * CD ROM publishing (Encarta, for instance, and 30 other titles), and * Internet ’94 (consumer online applications, like Expedia).  In 1997 he launched his own startup after leaving MS:  A board game called Cranium, fastest-selling game in history.  His firm became the 3rd largest game company in the world, before being acquired by Hasbro.  

      Here are a few lessons Tate conveys to other entrepreneurs:

1.   Speed! Urgency!  Get to market!  Tate used project management techniques learned and employed at Microsoft.  Cranium came to market in just 6 months.   He consulted with eight product development people from MS. Their advice saved him six months in time.

2.  Prototype and Observe!   Tate and his partner made prototype board games, and “hid behind sofas” watching people play, then asked for feedback. What they learned was invaluable.  It is hard to overemphasize the value of prototypes and pre-beta testing.

3.  A failure, a closed door, is always an opportunity!    Tate says that his opportunities always opened up after a door closed.   After leaving MS he pursued his dream to be a DJ.  A radio station in Seattle threw him out.  That closed door led him to try what eventually became a huge success. “Often, when I’m on the ropes, I’m strongest,” says Tate — spoken like a true Scot.

     Tate had 27,000 copies of Cranium produced, then learned he had missed the annual Toy Fair, where the year’s purchases are made.  What to do with such a huge stock of product?  Tate invented a new business design for board games — sell through Amazon, Barnes & Noble, and Starbucks.  This was crucial for his company’s success. 

4.  NETWORK, NETWORK!  While climbing Kilimanjaro, Tate met Dan Levitan, the investment banker who handled Starbuck’s IPO.  Tate leveraged his link to Levitan to meet with Starbucks founder Howard Schultz.  He suggested that Schultz sell Cranium in his coffee shop outlets.  Schultz, who brought music to become a major Starbucks cash cow, loved the idea.  Tate tried to sell the idea to Amazon. They never returned his calls. He persisted, used his network and ultimately became the first company to sell board games through Amazon.

5.  BOOTSTRAP!  Tate started Cranium with $100,000.   It is possible, often desirable, to launch your own business with only your own funds.  You retain control,  and no Board of Directors can fire you or tell you what to do. 

     Tate’s company went on to introduce 40 game products sold in 30 countries.  Five years out of six, Cranium games were named “Game of the Year”. 

6.  BELIEVE IN YOURSELF.   Tate has enormous self-doubt. And endless people told him: Tate, keep your day job, this will never work.  Despite everything, he persevered, in Scots fashion.  His business innovations (selling through Amazon and Starbucks) were as crucial as his innovative games.

     James Watt, inventor of the steam engine, suffered from depression and had a deeply tragic life.  He once said, “nothing is more foolish than being an inventor”.    Richard Tate provides a career path worth considering.   Work for a large company.  Be an intrapreneur, learn the best techniques for inventing businesses within the organization.  Then, retire at your peak.  And do the same thing you did before, only this time for yourself.  When you do, be sure you use as much creativity in your business design as you apply to your inventive product.

         For information about Cranium: See:

                     http://www.hasbro.com/cranium/en_US/

[1]  Based on Peter Day, “Global Business”, BBC World Service, March 8/2010.