Apple’s Systemic Approach to Innovation Apple is widely considered as the #1 innovative company in the world. The company’s innovation strategy involves terrific new products and innovative business models. The company delivers consumers with a succession of presents – great software in fabulous hardware in beautiful packaging (“really good ideas wrapped up in other really good ideas,” as Michael Lopp, senior engineering manager at Apple puts it). Apple also pioneers into a new business spaces and creates new market niches. The company created game-changing innovations such as the iPod, iTunes, iPhone, and iPad. Apple innovation leaders think in terms of platforms and pipelines and relentlessly push the pace of innovation. Competitors that chase Apple’s latest release find themselves behind when just a few months later Apple introduces its latest and greatest offering. Focusing on where they can make a significant contribution Apple hires great innovators who want to make the best things in the world.
Apple created many stylish innovative products that propelled the company to the top of its industry. But the shift was not only a matter of product innovation. Innovation lies also in Apple’s innovative business models – new ways to create, deliver, and capture value. For instance, the iPod and iPhone would not have had nearly as much impact if they hadn’t been matched with iTunes and the App Store respectively. Systemic innovation integration is at the heart of Apple’s success. Apple works across traditional industry boundaries to create a successful innovation-friendly ecosystem. The company is in hardware, in software, in entertainment, and in logistics, and has mastered parts of all those industries. The App Store, for instance, the world’s largest collection of mobile applications, offers hundreds of thousands ways to make iPhone even better.
ITunes, innovative software with a powerful business model, shows that people would pay for music if the price is right and the interface is simple enough. Apple’s innovative value proposition “The product as an experience” stimulated great ideas when company leaders were contemplating a new business model. For instance, Apple pioneered into a new business space and defined a workable business model for downloading music. Another key driver of Apple’s financial success is growing adoption of Apple products for business use. Saving time and minimizing frustration are the essence of Apple’s brand promise. This value proposition converts PC and Blackberry users to the Apple brand. Apple’s innovation strategy also involves great in-store service. Apple’s Innovation System
Apple’s commitment to innovation is cultural, not process driven. The most successful products at Apple were started with only a few people with no formal structure or hierarchy and little corporate oversight. Yet, “to turn really interesting ideas and fledgling technologies into a company that can continue to innovate for years, it requires a lot of disciplines,” says the late Steve Jobs. Apple has built an effective innovation system to harnesses creativity in its people, stimulate new ideas, streamline the design process, and launch successful, profitable new innovations. Apple’s Design Process
Apple’s innovation strategy involves terrific new products and innovative business models. Genius ergonomics make Apple products effortless to use. “Design is not just what it looks like and feels like. Design is how it works,” said Steve Jobs. Apple has repeatedly demonstrated with its innovation management what a success user friendliness and design can generate. How can Apple ‘get’ design when so many other companies try and fail? Here are some key elements of the Apple’s design process
a) Matching Top-down and Bottom-up Strategies: Senior managers describe their dream products and outline what they want from any new application. In response, design teams select and present the best ideas from the paired design meetings to leadership, who might just decide that some of those ideas are, in fact, their longed-for new products. In this way, the dream products morph into deliverables. Top managers are also involved in the development process to ensure that there are no nasty mistakes down the line. b) Paired Design Meetings: Every week, design teams at Apple have two meetings: a right-brain creative meeting and a left-brain production one. At the creative meeting, people are to brainstorm, to forget about constraints, to think freely, and to go crazy. At the production meeting, the designers and engineers are required to nail everything down, to work out how this crazy idea might actually work. This process and organization continues throughout the development of any application. The balance shifts as the application progresses. Options are kept for creative thought even at a late stage. c) Developing Perfect Mockups: Creating a full-size model of a design or a device requires a huge amount of work and takes an enormous amount of time, but it removes all ambiguity.
That might add time up front, but it removes the need to correct mistakes later on. d) Apple’s “10 to 3 to 1″ approach: “Quality is more important than quantity. One home run is much better than two doubles.” ~ Steve Jobs. “I’m as proud of what we don’t do as I am of what we do,” used to say Steve Jobs. Apple’s strategy for innovation demands that design ideas to be generated in multitudes. They are all run through a sort of artificial natural-selection mechanism that kills off the weak and only lets the strongest ideas rise to the top. Apple designers give themselves room to design without restriction and come up with 10 entirely different mockups of any new feature. Later they whittle that number to three, spend more months on those three and then finally end up with one strong decision.
Apple leverages its diverse culture, innovation processes, partners and networks to seize the new opportunities in the marketplace and grow its business exponentially. Innovative partnerships are an important part of the Apple’s innovation strategy. Apple’s Venture Acquisition Strategy and Practices
Apple’s venture investing and acquisition strategy is not very aggressive to stay ahead; Apple usually over-invests in its supply chain. The company is reported to pay a significant portion of the factory construction cost in exchange for exclusive rights to the output for a set period of time, and then for a discount once this period expires. Not only does this allow Apple to come out with new components long before rivals, but these components are very difficult to duplicate. The company makes fewer acquisitions than their competitors. When Apple does buy companies, it’s almost always tight lipped about how they will fit into its strategy and how easily their technologies can be integrated into existing company projects. Yet, some acquisitions stand out in terms of adding important features to existing product lines or opening doors into new markets. The company made its first acquisition in 1988 when it purchased Network Innovations. Apple’s $429 million acquisition of NeXT in 1997 helped the company move smoothly from PowerPC to Intel processors. This deal also brought Steve Jobs back to Apple. In 1998, Apple acquired the intellectual property and the development team from Macromedia to make Final Cut Pro one of the top video desktop editing programs on the market. In 2002, Apple’s acquired a German firm Emagic for $30 million.
The Mac version of its high end audio recording and production application Logic was further developed by Apple to produce Logic Studio. The PC version of Logic was buried. By acquiring Finger Works, a developer of gesture recognition technology, in 2005 Apple added a significant patent and engineering value to its multi-touch technology package. PA Semi was another essential acquisition. Apple which is now referring to itself as a mobile device company wants as much of the value chain under their control as possible. Purchased in 2008 for US$278 the chipmaker startup was tasked with making system-on-chips for iPhones and iPods. Apple’s $275 million acquisition of mobile advertising firm Quattro Wireless in 2010 reflects the company’s desire to strengthen its mobile technology portfolio. Quattro deal gives Apple an alternative to Google’s entrenched dominance in mobile advertising. Quattro is a counterpart to Ad Mob, the mobile advertising firm that Google acquired in 2009 for US$750 million. With Quattro, Apple is able to deliver advertising to mobile devices while improving the measurement and execution of digital ad campaigns