Apple – a master of innovation

by Fredrik Savin on 25/06/2007 · 0 comments

Entrepreneurship, innovation and a continuous focus on delivering quality to customers are key elements in today’s globalized and diversified economy. Globalization itself demands entrepreneurial behaviour. Firms have to identify new ways of doing things faster, better and less expensively.

The Economist, a weekly news and international affairs publication, published a leader and an in-dept report last week on one of todays perhaps most interesting large companies to follow in terms of innovation, Apple Inc.

Steve Jobs, the company’s CEO who was forced to leave the company he ones founded in 1986, returned in 1997 and reinvented it into a consumer electronics firm. Apple is now performing better than ever thanks to products such as the iPod, its portable music player.

Apple, which will shortly join the S&P 100 index, will release its latest product, the iPhone, on the 29th of June in the US. However, the iPhone is not the first mobile phone the company has made. The company did produce a music phone in conjunction with Motorola, a telecommunications company, which flopped. The new phone has received enormous publicity world-wide but Apple should not take success for granted. The iPhone has some technical drawbacks and the entry price of $499 may prove too expensive for many. Successful or not, Apple’s way of working is of great interest for other companies and business students to study.

The Economist has defined four lessons to teach other companies about innovation based on Apple’s way of working:

Firstly, innovation can come from within or without the company. Apple puts together its own ideas with technologies from the outside, and then merges the result together with well-designed software and design. The idea for the iPod was initially invented by a consultant that Apple hired to run a project. And iTunes, a digital media player application, was acquired from a company called Casady & Greene and later improved by Apple in-house.

Secondly, Apple recognises how important it is to design new products around the needs of the end-user rather than the demands of the technology. Many technology firms tend to develop too advance products. As a result, engineers design products for engineers disregarding the needs and skills of the end-user. What Apple does is to design good technology which is easy to use with a focus on simplicity. An example of this is the iPod, which was not the first digital-music-player on the market, but Apple made processes such as transferring and organizing music as well as purchasing songs online easy to use for almost anyone.

The third lesson to be learnt according to the Economist is that companies sometimes should ignore what the market says it wants today. User-centric innovation and using feedback from customers to develop new products are not a waterproof strategy for success. The iPod was not a direct success when it was first launched in 2001. In April 2007, six years later, the company announced that the music player had sold over 100 million units.

Lastly, when companies fail, they should do so wisely. Companies ought to learn from its mistakes and try again. The Macintosh (now called the Mac) was based upon Lisa, a similar product that initially flopped. Its recent personal computers are based on technology developed by a company called NeXT. Steve Jobs founded NeXT after being fired from Apple but the company did not do very well. Apple later acquired the company in 1997 which brought back Mr. Jobs to the company – a move that later turned out to the very beneficial for Apple. Steve Jobs is today seen by many as one of the most influential people in the computing industry.

None of the points above will guarantee success. It is possible for a company to acquire good ideas from the outside, focus on simplicity, ignore feedback from customers and fail wisely – and still go bankrupt.

Whatever the outcome of the iPhone, Apple is a true master of the art of innovation and should be seen as a great source of inspiration for people within all type of industries.

Reference list:

THE ECONOMIST (2007) “Lessons from Apple”, June 9th 2007, London (pp 11)
THE ECONOMIST (2007) “The third act”, June 9th 2007, London (pp 75-78)

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