In our previous series of posts we have been discussing how to get technology from the research phase to the product development stage and ultimately to the market. So why have we spent this much time on the topic? Innovation drives growth. Cost cutting doesn’t. When Steve Jobs came back to Apple in 1997 he assessed the situation by saying “The cure for Apple is not cost cutting. The cure for Apple is to innovate its way out of its current predicament.” That statement should be a rallying cry for companies facing an uncertain future. Looking back, it is clear that Apple figured out how to innovate.
A recent article in the May 2012 Harvard Business Review by Ann Marie Knott entitled “The Trillion-Dollar R&D Fix” presented evidence that many big name companies are seriously under spending on R&D and that it is costing them profits and growth. She completed a simulation that showed if the top 20 firms traded on the US exchanges had optimized their R&D spending in 2010 using her mathematical simulation, the collective increase in the market cap would have been an astonishing $1 trillion. Wow. It’s a great article, so head on over to HBR.org if you want more details.
So what is innovation? My former company (ICI) used to call innovation “the successful commercialization of invention.” Another is “innovation is the process of successfully identifying, developing and implementing new ideas which create value.” There are many more in the same theme, with the literature consensus is that innovation requires three main components:
- Added value
So how then did Apple “out-innovate” so many companies? Did Apple invent the PC? Did Apple invent the mp3 player? Did Apple invent downloadable music content? Did Apple invent the cell phone? Did Apple invent the tablet computer? The answer is no to all of these. In innovation terms, Apple is a fabulously successful “fast follower.” The genius was to integrate design and ease of use into their products.
So looking at the three elements above, what did Apple do to create such a powerhouse corporation? There is no doubt about Apple’s creativity. The user experience is just wonderful. I remember the first time I used my brand new iPod, downloaded iTunes, ripped in some of my favorite music CD’s and plugged in the iPod. Bingo! Everything sync’d easily and it was so simple. Next came the iPhone and iPad, again, the designs are elegant and the user-friendly aspects are unreal. Apple has gotten a lot of flak over their suppliers (mainly the Foxconn subcon in China), but they are masters at execution.
And finally, nobody has to ask about did they deliver value. Just look at the sales and stock price! So how can you learn from Apple?