Is Apple forcing us to rethink on how to innovate


There is something very disturbing about the success of Apple. Many a management guru has talked about the importance of openness, listening to customer and building partnership in fostering innovation. Here are 3 strongly held beliefs which Apple had been ignoring with impunity.

  1. Openness and diversity fosters innovation
  2. Listening to customer is stepping stone to great product
  3. Building an ecosystem around your product is prerequisite for market domination

Just look at these actions of Apple in the recent past.

These steps appear to be whimsical and there are unhappy users who are even willing to switch. Here is one – “…I used to feel that, to get the best Smartphone software and hardware experience, I had to live in Apple’s walled garden. Now, the walls are getting higher and life outside the garden looks better and better…”Apple is erecting a walled garden around its platform. If Apple wanted they could have easily retained these people – all they had to do was to relax the iron grip a little. Also, Apple could have taken several steps to increase their market share like signing up with more carriers.

So … Is their success “because of” or “in spite of” these actions?

It depends on what you define as success. Though there is lot of commotion in the internet about Apple overtaking Microsoft on market cap, if you take a dispassionate look their financial success is not really spectacular.

  • Market capitalization – It is like saying Juan Martín del Potro is more successful than Roger Federer because he has beaten Federer in 2009 US Open. Microsoft had held that position for years. Only during the dotcom boom in 2001 Cisco overtook Microsoft for a brief period. Microsoft.
  • Revenue – Apple is definitely not the leader. Top 5 IT companies are HP, IBM, Dell, Microsoft & Oracle!
  • Profitability – There is a company called Google whose profitability is 35%+ compared to Apple which is around 20%.
  • Market share – I vaguely recall that there is a company called “Research In Motion which” has 7% more smart phone market share compared to Apple.

So, Apple’s success is not very unique if you only take these financial parameters into account. However, if you measure it by the loyal fan following, I do not think anybody can come close to Apple.

Here are 3 interesting quotes I have picked up from a post by Farhad Manjoo – Invincible Apple: 10 Lessons From the Coolest Company Anywhere

  • “…That’s Apple’s audience: high-end mainstream, the folks who buy — or aspire to buy — Porsches…”
  • “…Apple cultivates religious fervor among its adherents in a number of subtle ways, including its mysteriousness and its suggestion that customers are among the chosen ones…”
  • “…If you want to live in the creative universe where anyone with a cool idea can make it and give it to you to run on your hardware, the iPad isn’t for you…”

Apple chases away customers who are not diehard Apple fans. Apple fans will gladly pay premium for anything. Apple is also systematically plugging holes for possible revenue leakage. What Steve Jobs is saying is – “I am only interested in the premium segment and I do not want to share any part of the kitty”.

Should we learn from and emulate them?

Farhad offers 10 lessons but what he forgets to say is that to make use of this advice you need to…

  1. … be a genius like Steve Jobs (there is no doubt that he is a genius – nobody else in the history has designed 5 path breaking product)
  2. … hit upon a technology which your competitors cannot match even after 2 years (nothing yet comes close to iPhone/iPad touch screen)
  3. … be at the right place at the right time where you can redefine a product category (iPhone did exactly that)

Otherwise, it would be wiser to stick to the traditional mantra of “Openness”, “Listening to Customer” & “Building Eco-System” for product innovation. Even Apple does not always get it right. They always designed beautiful products but it did not help them to get even 10% market share in the PC market.

Finally – If you are an Apple fan DO NOT read this – Apple’s iPhone 4: The joke’s on us.

Udayan Banerjee on Google+
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Comments
3 Responses to “Is Apple forcing us to rethink on how to innovate”
  1. Steve says:

    “Here are 3 strongly held beliefs which Apple had been ignoring with impunity.

    1. Openness and diversity fosters innovation
    2. Listening to customer is stepping stone to great product
    3. Building an ecosystem around your product is prerequisite for market domination”

    The first two could be argued as to definitions (you really think Apple ignores input from its rabid customers? Fail!) but #3 is Apple’s hallmark–no one else anything the scale of the App Store or the iTunes Store, not to mention the huge ecosystem of third party software developers and hardware/accessory manufacturers. Think how many other companies have made millions of dollars just from add-ons to the iPod line, and iPhone and iPad will quickly surpass even that market.

    “Also, Apple could have taken several steps to increase their market share like signing up with more carriers.”

    And it is very likely they will–when the well-known (except perhaps to you) exclusivity contract Apple has with AT&T is up. At the time, no other carrier would agree to the network improvements, revenue sharing, etc., that Apple required for the iPhone. I’m sure you also know that the US does not have a single wireless standard like most countries do–all of which have central government control of such matters.

    “If you are an Apple fan DO NOT read this” and naturally, the link is to an outdated blog that doesn’t reference all the factual analysis reported on other cellphones with internal antennas, nor on Apple’s free case offer…

    On reflection, this blog is wrong on so many obvious levels that it is clear the primary purpose is to generate responses. Wonder who is selling ads now?

    • Udayan Banerjee says:

      Steve: I think you have missed my main point – that is – “Steve Jobs is a genius … do not try to emulate his strategy unless you are also one”

      BTW: My blog is not ad supported!

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