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Apple & disruptive innovation: 4 questions innovators need to ask before moving forward!
Steve Jobs thought that most people live in a small box. “They think they can’t influence or change things a lot.” Jobs urged his staff to reject that philosophy as untrue.
Disruptive innovation is seen by many companies as a threat to them – but not by Apple who are happy to embrace disruptive technologies.
An interview with Tim Cook, Apple’s CEO, in FastCompany magazine shows that things are not as simple – and this offers lessons for all companies looking at new technology.
The key points are that Apple doesn’t go for every new technology. First they need to understand and have faith in the primary technology behind an innovation. They then consider two questions:
What can Apple add to this – and will it be embraced by society or be seen as something positive. These are interesting questions as a new technology will only be disruptive when people view it as adding to their overall well-being (even if initially people don’t fully understand the innovation – as was the case with first iPad where pundits said “so what” and “why do I need this”). Apple then looks to see if they can be the leader in technology – to own it. If they can’t they leave it to others.
This explains why often Apple isn’t first with something new. For example, they’ve just launched the Apple Watch. It’s too soon to say if this will be a success (although initial signs suggest it will be). Again critics have complained about it. It’s also not the first wearable on the market.
Essentially what’s being said is that to launch a truly disruptive product you need to answer four questions?
1) What is the new technology – and do we understand it?
2) Can we play in this market?
3) Will this innovation / technology / product or service contribute to society i.e. enable people to do things more easily or better than they could before or do things they couldn’t do at all before?
4) Can we be a primary player in this market?
If the answer to any of these 4 questions is no, Apple won’t enter the market. These are great questions that any company should consider before entering a new market. (The third question is perhaps the most interesting in respect of Apple – as what did the iPad offer people that other then existing devices couldn’t do. In retrospect, the answer is obvious but that’s hindsight. Spotting that the iPad, launched in 2010, gave you much more than the iPhone or the Amazon Kindle that predated it by 3 years, and that a laptop wasn’t as transportable, or easy to use was the genius of the device.
Leave your comfort zone!
The Biblical Abraham was one of the world’s most successful individuals. (It doesn’t actually matter whether or not Abraham really existed – from a Biblical critical perspective. He is revered by at least half the world’s population who belong to one of the three Abrahamic faiths – Judaism, Christianity and Islam. As such his influence has been immense). In the Bible, the story of Abraham starts in Genesis – chapter 12. God commands him to leave his country, his extended family and his father’s house and to move to a land that God would show him. In return, God promises that Abram (Abraham) would become a great nation, and that he will be blessed.
Of course the Biblical commentators have a field day looking at the wording and what was being said. However I think that in fact, the idea is quite simple. Abraham was being told to take a risk and to do something new. In return, he was promised success in his venture. This is a lesson that businesses and individuals can learn from – and perhaps governments too.
- Where is the safest place for an individual? Generally the parental home.
- Where can one expect help from when things go wrong? From close family and friends.
- Where are you most likely to know your way around and know the “system” – and least likely to get lost physically, or metaphorically in bureaucracy? In your home town and country.
Abraham is commanded to leave each of these – in reverse order, with the easiest first, and the place you feel most safe last. In terms of business the same lessons apply.
Igor Ansoff is famous for the Ansoff matrix.
Existing Product |
New/Modified Product |
|
Existing Market |
Penetration | Product Development |
New/Modified Market |
Market Development |
Diversification |
When you have lots of opportunities in your home market and your product is doing well the objective should be to increase sales with this product to this market. However when things start to change – perhaps most people in your current market already have your product – then you need to move outside your immediate comfort zone and look to a new product or a modification of your existing products. You need to be willing to take a risk. Failing to change is likely to lead to eventual corporate failure, as the market becomes totally saturated, and profit levels reduce as the only way to compete becomes price. Product enhancement gives you the choice to differentiate your product and maintain profitability. Leave you father’s house and try something new.
This also applies in many other circumstances. The recent phenomenon known as “boomerang kids” is not just a problem for parents having to cope financially with adult children returning to the nest, but also the children themselves. Although living at home can be comfortable and secure, it becomes difficult to move out when all your needs are being met and to become truly independent. It means that such children are less likely to be successful – until or unless they do leave home.
The next stage is when even product variations don’t work – as your current market sector is saturated. You need to look for new markets. In Biblical terms – Leave you family and friends and try something new. In business this means looking for new markets. These can be different industry sectors or geographies. Again, being scared of taking the risk will lead to failure – as your current customer base ceases to purchase your products in sufficient quantity for you to make profits.
Globally, many people are now in this stage of the cycle. Their opportunities in their home countries are poor – for various reasons, and emigration to another market promises a better chance in life. Historically this has often been the case – with emigrants being highly successful and also enriching the cultures and life in their new countries. In contrast, their compatriots who stayed at home often continue a cycle of poverty or lack of success. I believe that many governments see emigration as a threat – and I think that they are correct, as often emigrants are the very people who should be encouraged to stay as they are the innovators and the risk-takers within society. If emigration is a problem in a society it means that the society itself has problems, and perhaps the government should look to itself as to why people want to move. Conversely the antipathy to immigrants in the destination countries is also misplaced – as many immigrants contribute massively to their new homelands, especially when welcomed and encouraged to integrate into the new society.
The final stage is the most difficult and also may appear the riskiest. However if the markets (old and new) for your current product lines are stagnant then the only hope is to move into completely new areas – with new / enhanced product lines targeting new customers and markets. You need to diversify away from your home products, your home markets and move to a new area -i.e Leave the location you are now in and try something new. In fact this promises the best chance of all for success – as it allows you to capitalise on both current product lines and markets and also the new ones. Companies that manage to diversify into new markets are likely to grow at a much faster rate than their “stay-at-home” competitors. Of course how to manage a successful diversification programme is a different question – requiring research, planning and strong, thoughtful and innovative management. The willingness to try and to leave comfort zones should help prepare management for this stage – so that when the time comes, they are willing to take risks necessary to protect their organisations.
Only by being willing to change, and move away from your comfort zones can success be guaranteed. Do it right, and like Abraham, you can succeed and make a name for yourself.
© Arthur Weiss / AWARE, 2005-2010
The importance of lateral thinking!
The supermarket tried various conventional solutions to solve the problem: fences, increased security, and the like. Nothing worked long-term and, moreover, they were all expensive. Then somebody thought that perhaps a different approach might work.
The gangs were all trying to look cool, and the supermarket car-park had gained a reputation as a cool place to hang out at night. So what did the supermarket do? They thought about what could make the car park an uncool place to be, and started up a loud-speaker system piping the music of Mantovani over the parking spaces. Quickly the problem disappeared – as what kind of “cool” 16-18 year old wants to be associated with visiting a location that plays the kind of “easy listening” music beloved by their grandparents!
I teach a weekly diploma course at Thames Valley University, as part of the UK’s Chartered Institute of Marketing‘s Marketing Research & Information module. One of the joys of teaching is that you often learn a lot from your students. Last week was no exception, and provides another great example of lateral thinking – combined with a crucial awareness of the importance of ensuring customer satisfaction while still making money!
One of my students had spent some time working as a hospitality manager in a Greek hotel. He was working the night shift, when a package group of 15 tourists arrived at the hotel. They’d just landed, and the time was 3.00am. All were tired, having had a delayed flight, and all were looking forward to the rooms that they’d paid for. Except because they hadn’t turned up, they had been treated as no-shows, and their rooms had been sold on.
Overbooking is a not-infrequent problem faced by hotels. Normally the way round is to find another equivalent hotel, and transfer the overbooked guests there. Nobody is particularly happy about the arrangement.
- The guests are unhappy as they had been expecting hotel A and got hotel B – and have to move on, when they were looking forward to resting from their journey.
- The hotel is unhappy as the replacement hotel needs to be as good, if not better than the original. This means that the hotel has to pay for its mistake – financially, and if the replacement hotel is not better, in good will and reputation as well, which can be even more important.
Christos found another way.
The locality ran regular cruises to the Greek island of Santorini – which necessitated an early morning start, and a couple of nights on the island.
Santorini is one of those magical islands that, once visited, you never forget. It offers all that is best of the Greek islands – white washed villages, great beaches and views, fun restaurants, archaeological sites, monasteries and churches. However this is not all – it also has a volcano in the middle of the archipelago, with regular trips to see its caldera. This volcano has been attributed to the destruction of the Minoan civilization on the nearby island of Crete, and even the cause of the plagues that the Biblical book of Exodus mentions as having led to the release of the Israelite slaves from their Egyptian servitude (so, for example, the plague of darkness resulted from a cloud of ash that fell from the volcano). This eruption, 3500 years ago, was undoubtedly one of the largest ever volcanic eruptions during human history – much bigger than the infamous 1883 eruption of Krakatoa. The island has even been linked to the legend of Atlantis.
Christos knew that there were always places on this trip. He also knew that the costs of the trip, including the island hotel costs, would be considerably less than what would need to be paid to competitors to find beds for the group so early in the morning, as well as the less tangible costs in lost goodwill and so on. Accommodation on Santorini was much more basic and low cost – but the surroundings compensated for this.
Rather than apologizing to the group, and then getting on the phone to search for replacement hotels at 3.00am – a depressing and tedious task – he welcomed the group and said that they were really lucky. They were the hotel’s 1000th tour group and as such had qualified for a superb prize – a free trip to Santorini to start their holiday with a bang. The tour bus that would be taking them to the boat would be arriving shortly so there was no point in checking them in. They’d check back into the hotel in 2 days time, after their mini-cruise.
The tourist group may have been tired. But tiredness evaporates in such circumstances, and instead of an unhappy and probably angry crowd, you now had customer satisfaction par excellence. Instead of a short-night’s sleep and then a day recuperating by the pool, this group had been chosen to visit one of the highlights of any trip to Greece – for free. The tour group were overjoyed at their lucky break.
Next morning, the day-shift manager queried why the hotel was paying for 15 tourists to go on the Santorini trip. This was normally seen as a profit center by the hotel – as the margins were considerable. Christos explained the situation: how, instead of paying out to competitor hotels to accommodate the overbooked tourists, the hotel had covered its costs by just diverting the payments already made to the tour. Quickly the wisdom of the decision was realized, and it is now part of the hotel operating manual.
More importantly – this second story shows some of the skills all great marketers need:
- Ability to be able to think quickly, laterally and if needed, sidestep conventions and rules;
- Awareness of the importance of customer satisfaction: a happy customer leads to a strong reputation, and repeat purchase;
- Awareness of the importance of profit and that customer satisfaction needs to be balanced by an ability to make money.