In The Innovation Stack, Jim McKelvey explains how to “build an unbeatable business one crazy idea at a time.” He introduces a mindset and methodology that drive a process of stacking sequential innovations.

He focuses on four firms: Bank of Italy (later renamed Bank of America), IKEA, Southwest Airlines, and his own company, Square.

Here’s how innovation worked at Bank of Italy. The first of 16 “crazy” ideas led to 15 others:

1. Focus on “the little fellow.” A.P. [Giannnini, founder] said “It is our purpose to make a specialty of the interest of the small depositor and borrower. We consider the wage earner or small business man who deposits his savings regularly, no matter how small the amount may be, to be the most valuable client our bank can have.” But many “small business men” were not men, so they had to have…

2. Banking for Women > 3. Low Rates > 4. Direct Sales Force > 5. Advertising > 6. Low Minimums etc. You get the idea.

One innovation required another in what became an on-going process. McKelvey discusses how sequential innovations helped Giannnini and his Bank of Italy to establish a significant competitive advantage. He also examines each of the other three and their own innovation stack. Details of the methodology are best revealed in context, within the narrative.

Innovation stackers are not wanderers. They have a specific destination in mind, and when attempting to reach it, usually encounter all manner of questions to answer and problems to solve. McKelvey prepares his reader to follow a process that will reach the aforementioned “entrepreneurial moment when you first realize that you are attempting to do something new” and are attempting to “solve a problem that no one has solved before.”

The Innovation Stack was published by Portfolio/Penguin (March 2010)

The Innovation Stack, Jim McKelvey, how to “build an unbeatable