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Business Strategy and IT Strategy to Reproduce Apple Innovation

innovation and strategic direction

I recently read a Fortune Magazine article extolling the virtues, or more the impact, of Apple’s Steve Jobs on business.  Certainly under Steve Jobs’ guidance Apple has come to represent the best of business innovation for several reasons:

  •  Jobs built Apple as an innovative company
  • After he left Apple the company nearly collapsed
  • He returned and turned the company around from the brink of collapse
  • Jobs at Apple, through his innovative guidance, has transformed three primary industries –; personal computers (laptops and desktops), personal music, personal cell phones.

For this and other reasons Steve Jobs’ time at Apple has helped him become the king of American business transformation, at least according to Fortune Magazine.

What are the Apple Innovation Secrets of Steve Jobs’?

Steve Jobs focuses Apple innovation on competitive pressures and value propositions.  It’s basic to his DNA and core to his management style to relentlessly focus organizational energy on customer centered innovation and customer experience.  In a nutshell Apple’s innovation “secret” (if it can be called that) is the relentless pursuit of innovation around the customer experience.  As early as 2002 Steve Jobs told the world what his competitive strategy was, and it is clear that as CEO he was carefully evaluating competitive pressures and opportunities in the marketplace:

For those paying attention after Jobs’ return, the CEO was telegraphing Apple’s trajectory.  “I would rather compete with Sony than compete in another product category with Microsoft… We’re the only company that owns the whole widget–, the hardware, the software, and the operating system. We can take full responsibility for the user experience.  We can do things the other guys can’t do.” (comments to Time in early 2002).

Lashinsky, Adam, “The Decade of Steve – How Apple’s imperious, brilliant CEO transformed American Business,” Fortune Magazine, pg. 96. November 23, 2009.

Apple’s CEO owns the Apple corporate strategy, and he has chosen to do one simple thing that many companies talk about but few execute very well–, Steve Jobs’ Business and IT strategy is 100% focused on customer centered innovation.  He knew that you find business benefit looking outward, looking at market and business drivers rather than at products or services that exist in a silo.

The Direction of Apple’s Innovative Recovery and Company Turnaround

Just after the Y2K scare, while the world was buzzing about the tech bubble burst; speculating about Apple’s survival with Steve Jobs return; watching the AMD and Intel Chip wars heat up–, Apple strategically avoided a battle with its “logical” arch-rival Microsoft.  Instead Steve Jobs made a conscious decision to “take his marbles” and play a completely different game.

Rather than taking a weak company that was struggling to stay afloat and challenge the dominant market maker Steve Jobs defined the Apple innovation strategy to focus on the integration of technology and entertainment.  Apple’s core competence at the time was in PCs and Laptops, but as Jobs said, they were the only vendor that did it all, hardware, software, and operating system.  He took that same approach with music, helping to develop the ecosystem to support the IPod and to transform digital music distribution through ITunes and the online purchase of songs.

The PC wasn’t new, but Jobs’ approach to customer centered innovation was.  The music player wasn’t new, but the IPod certainly was, and it was focused like a laser on the end of Sony Walkman dominance.  Selling music “singles” wasn’t new, but Jobs’ focused Apple’s innovation on the ITunes store together with the widespread use of the IPod.  He created the device to play the music and he created the channel to distribute the music.  The cell phone wasn’t new, and while Blackberry and Nokia owned the market, the IPhone focused like a laser on innovative customer experience.

Start with a gut sense of an opportunity, and the conversations start rolling.

What do we hate?

A: Our cell phones.

What do we have the technology to make?

A: A cell phone with a Mac inside.

What would we like to own?

A: An iPhone, what else?

But Jobs also explained that in this specific conversation, there were big debates across the organization about whether or not they could and should do it. Ultimately, he looked around and said, “Let’s do it.”

I think it’s clear they also benefit from the inauspicious “leak” to the market. By that I mean this overly tight-lipped organization occasionally leaks early ideas to the market to see what kind of response they might generate. Again, what other company benefits from having thousands of adoring designers come up with beautifully rendered concepts of what they think the next great product should look like?

This PragMatic Marketing Post is about the idea that “you can’t innovate like Apple” and I say, BALONEY!

Steve Jobs isn’t dumb, quite the contrary, he’s smart enough to know that you CAN innovate like Apple and that’s why Apple’s internal innovation methods are kept so secret!  Not only that, the ACTUAL workings of Apple’s innovation is a secret and PragMatic article, like so many others, merely speculates about the details of the inner workings.  This article looks at the actual company history and Jobs’ statements.

From the very beginning of any market action by Apple, the corporate strategy is focused on being a market disrupter, and in turn a market maker, by focusing relentlessly on the customer experience.  And not just a focus with existing products or services, new products and services are designed, developed, and relentlessly pursued to please the end customer.  Have you visited an Apple store?  Maybe it’s time you did.

The Apple innovation difference is less about an inward focus on how to squeeze every last penny out of some process or on reducing costs, such as what “Lean” and “Six Sigma” advocates.  Instead, the Apple corporate focus as driven by the CEO was outwardly focused on the marketplace, on the customer, and how to direct that energy into improving revenue and profitability by addressing the frustrations (or needs /wants) of customers.  The Apple innovation difference is where the role of CEO is fixated on customer centered innovation.  Customer experience with Apple products was the center of innovation.  New products, new applications, and new markets all focused on customer experience.

Steve Jobs Innate Understanding of Marketing and Economics

One thing Apple did well was listen to the market, and then shrewdly move marketing programs to create “pent up demand” for a product that had not yet been released.  These new products were designed to elegantly, and as intuitively as possible, address marketplace frustration.

Many commentators have described this as him having a “knack” for making market moves at the right time.  Baloney, Steve Jobs understands the fundamental core concepts of sales, marketing, and economics that few teach today.

Apple’s core of innovation is centered on one thing, market demand.  There is no “law of supply and demand” there is only the law of demand.  The supply side of the economic paradigm is completely irrelevant.  The one thing that is important is the law of demand only. Stop for a moment and think about that, internalize it, and one day I’ll offer some insight that I gained from a wise college economics professor who taught me this.

Where there is marketplace frustration there is internal “pent up demand” for that frustration to be addressed. 

You can see this thinking in Apple’s current move today.  With the deep pockets of several successful product strategies, and on the heels of Microsoft’s dismal Vista operating system launch, Apple is now aggressively going after the company’s old arch rival.  The market has complained about Vista, about Microsoft security problems, about the forced upgrade march, about a whole host of problems Microsoft has experienced lately.  Apple is seizing on the market frustration with Microsoft products and the inherent, pent up demand for an alternative.  Apple’s timing is simply capitalizing on the Microsoft promotion of Windows 7.  Apple’s marketing message is resonating with the general populace and the pent up demand that is inherent in marketplace frustration with prior versions of Microsoft Windows.  That message is that the new Windows 7 operating system is simply another “fix” to a long line of broken operating systems.

At the time Microsoft is bringing out its latest flagship product, Windows 7, to address criticism of the Vista product, Apple is offering an alternative. A very successful and financially healthy Apple is now targeting Microsoft directly.

Steve Jobs as the Apple CEO has become quite skilled at setting strategic direction along a future timeline.  As the calculus of the recent attack on Microsoft’s new Windows 7 operating system shows Steve Jobs is also very adept and skilled at holding back to determine the right timing to attack a market.  Think about it, everyone in the IT world has known about the Windows Vista complaints for years.  And over the last few years that frustration in the marketplace has been building.  And right on the heels of Microsoft’s boatloads of marketing spend to address negative market perceptions with a “new” Windows 7 flagship product Apple then pounces.

None of this is magic, none of it is really that mysterious.  Steve Jobs as Apple’s CEO understands competitive pressures and value propositions.  Steve Jobs gets it, plain and simple he understands that the primary role of the CEO is to set strategic direction and long term goals.  He understands the real reason executive participation creates project success.

Does anyone really believe that the launch of ITunes, and the IPod, and the IPhone, or Pixar, or the latest attack ads on Microsoft were some seat of the pants reaction?  The quality and polish of Apple products, even when there are glitches, indicates that planning and strategy for all of these ventures took place quite some time in advance.  Even rapid development cycles for some of the hardware, software, and operating systems takes quite some time.  Just to get the integration as seamless as Apple products often are is no small task.  So many of these plans were probably several years in the making before being released to the public.

It needs to be said that Steve Jobs’ approach to innovation isn’t really a secret, the specific details may be, but the approach is plain old business and IT strategy–, Steve Jobs gets it! He plain understands business and IT strategy.

What Does All of this Have to do with ERP and SAP?

A properly implemented ERP system, such as SAP, requires a solid corporate strategy that addresses competitive pressures.  To achieve that elusive business benefit from the technology spend it is crucial to have business drivers, business strategy, and the future state direction built into the application.

The underlying ERP and SAP business case for ROI, business benefit, and success must be focused on the intersection IT and business strategy.  The most successful business strategy is always looking carefully for upcoming market opportunities, and for enhancing the value proposition.  In that business strategy there are revenue, profitability, customer retention, and customer acquisition opportunities while focusing on the competitive drivers in the marketplace.  At the intersection of that business strategy is where IT, ERP, and SAP strategy intersect to enable the business strategy.  In the end, like any capital investment it’s all about how the asset is used, or not used, which determines payback and success with its deployment.

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  • totally agree, but somehow it reminds me of one company’s attempt to ‘Outdell Dell’ and we all know what happened. that company has exited PC market. i don’t think it will happen to SAP, but we should never be complacent.
  • No, like you, I don’t expect SAP to go out of business. 

    One of the things that is interesting is to see some of the support pressure that is being put on SAP.  Customers obviously feel as though they are not getting what they pay for and there is “pent up demand” for solutions.  As a result alternative solution providers like Rimini Street are making BIG waves.

    SAP has the size and capital to dramatically “Apple-ize” SAP, both from an application perspective and from a customer support area also.

  • Hi Bill,

    I like your take on Apple’s success story (being an Apple user myself). However, the one point where I disagree with you is your description of “lean”. In my view, Lean is customer-focused along the whole value chain, starting with the “real” customer and going back (“pull”) to all internal customers. Hence, I see no contradiction between the Apple approach and lean at all; rather, they should work hand in hand without difficulty.

    Now let’s see what the Apple tablet is going to be like 😉

    Best, Joerg