How to Innovate Like Apple
How to Innovate Like Apple ByChri sMorri son publ i shed on BNET.com 8/10/2009 Apple makes it look easy. From the sleek design of its personal computers to the clever intuitiveness of its software to the ubiquity of the iPod to the genius of the iPhone, Apple consistently redefines each market it enters by creating brilliant gadgets that put the competition to shame. What’s the secret? Apple has built its management system so that it’s optimized to create distinctive products. That’s good news for would-be emulators, because it means Apple’s method for innovation can be understood as a specific set of management practices and organizational structures that — in theory, at least — anyone can use. This Crash Course outlines the techniques Apple uses to make the magic happen. Things you will need: • Itmaytake severalyearsto cul ti vate new ski l l sand rebui l d yourproductl i neup. • You’ l lneed fundi ng to create a dedi cated i nnovati on team and suffi ci entcapi talto rethi nkyourproduct l i neup. • Strategic clarity: Innovati ng effecti vel ymeanscreati ng yourown opportuni ti esi n a crowded marketpl ace to avoi d both medi ocri tyand commodi ti zati on. • Patience: Creati vi tyi sa fi ckl e thi ng,and i tdoesn’ tal waysfol l ow the cl ock. Fal se startsand the occasi onal fl op are partofthe processand mustbe accommodated. • Strong leadership: Innovati on doesn’ thappen bycommi ttee. Vi si onari eswi th effecti ve managementski l l s are hard to fi nd,butthey’ re a cri ti cali ngredi entforsuccess. Clear Your M ind GOAL: Understand what it takes to create truly rem arkable products. The word “zen”i soften appl i ed to both Appl e’ sproductsand the company’ shi ghl yfocused CEO,Steve Jobs. And whi l e the compl i mentusual l yrefersto the beautyofthe company’ s mi ni mal i stproducts,enl i ghtenmenti smore than ski n-deep. “In mostpeopl e’ svocabul ari es, desi gn meansveneer. It’ si nteri ordecorati ng. It’ sthe fabri cofthe curtai nsorthe sofa,”Jobs hassai d ofhi sproductphi l osophy. “Butto me,nothi ng coul d be furtherfrom the meani ng of desi gn.”Desi gn i sa “fundamentalsoul ,”Jobssays,thatexpressesi tsel fthrough an end resul t — the product. W hati sAppl e’ sfundamentalsoul ? The company’ smotto,“Thi nkDi fferent,”provi desa hi nt. Appl e mai ntai nsan i ntrospecti ve,sel f-contai ned operati ng styl e thati scapabl e ofconfoundi ng competi torsand shaki ng up enti re i ndustri es. Forexampl e,Noki a,once consi dered the -1- undi sputed l eaderi n mobi l e phones,neveranti ci pated thata si ngl e productfrom a computer makermi ghtthrow i tsascendancyi nto questi on. Internal l y,Appl e barel yacknowl edgescompeti ti on. It’ sthe company’ sabi l i tyto thi nkdi fferentl y abouti tsel fthatkeepsAppl e atthe head ofthe pack. Currentand pastempl oyeestel lstori es aboutproductsthathave undergone costl yoverhaul sj ustto i mprove one si mpl e detai l . Other productsare cancel ed enti rel ybecause theydon’ tfi ti n ordon’ tperform up to par. Appl e’ scul ture hascodi fi ed a habi tthati sgood foranycompanyto have buti sespeci al l y val uabl e forfi rmsthatmake physi calthi ngs:Stop,step backfrom yourproduct,and take a cl oserl ook. W i thoutworryi ng abouthow much workyou’ ve al readyputi nto i t,i si treal l yas good asi tcoul d be? Appl e asksthatquesti on constantl y. Build Your Fortress GOAL: Create the infrastructure you need to innovate. From the outsi de,Appl e’ soffi cesl ookl i ke those ofj ustaboutanyl arge modern Ameri can corporati on. Havi ng outgrown i tsheadquarterscampusat1 Infi ni te Loop i n Cuperti no,Cal i f., Appl e now hasempl oyeesi n otherbui l di ngsscattered acrossthe town and around the worl d. Si ze and sprawlare formi dabl e chal l engesthatmostcompani esmanage gracel essl y,ei ther byspl i nteri ng i nto di sorgani zed,undi sci pl i ned communi ti esorbyl ocki ng empl oyeesi nto ti ght,sti fl i ng bureaucraci es. Appl e tendstoward the l atter,buti tdoesso i n a uni que waythat general l y(butnotal ways)pl aysto i tsadvantage. Ati tsworst,Appl e’ scul ture resembl esthe cl osed paranoi a ofNorth Korea. Forexampl e,one Appl e source who agreed to be i ntervi ewed anonymousl yforthi sstorybacked outatthe l ast mi nute. W hy? He feared thathi sempl oyerwoul d exami ne hi sphone bi l land fi nd hi m out. Anotherspoke on background butmenti oned the possi bi l i tyofa l awsui ti fhe were quoted byname. These are common fearswi thi n Appl e,and theyreal l ydo keep the company’ s empl oyeesqui et. The obsessi on wi th secrecyi sa doubl e-edged sword,however:Itgi ves Appl e a vi talel ementofsurpri se i n the marketpl ace,butthe never-endi ng game ofi nternal spyvs. spyi sdrai ni ng forrank-and-fi l e empl oyees. Indeed,the corporate cul ture came under scruti nyrecentl yafteran empl oyee ofa forei gn suppl i er— reportedl yundersuspi ci on for l eaki ng the prototype ofa new i Phone — commi tted sui ci de i n Shenzhen,Chi na. Beyond the secrecy,whi ch affectseveryone,Appl e’ sapproach i shardl yone-si ze-fi ts-al l . Rank-and-fi l e empl oyeesare often gi ven cl ear-cutdi recti vesand cl ose supervi si on. Proven tal entgetsa freerhand,regardl essofj ob ti tl e. -2- Checklist Managing Different Overti me,Appl e hasbui l ta seasoned managementteam that’ sopti mi zed to support bol d new producti ni ti ati ves(and recoverfrom the occasi onalfl op). Here are a few ofthe techni quesAppl e’ smanagementusesto make the magi chappen. 1.Ignore fads.Appl e hashel d offbui l di ng a cheap mi ni ature l aptop to respond to the “netbook”fad,because these devi cesdon’ toffergood margi ns. Instead i trel eased the ul trathi n,ul tra-expensi ve Ai r,a productmore i nl i ne wi th i tsown styl e. 2.Don’t back down from fights you can win.Appl ei sa tough partnerand a ruthl ess enemy. In 2007,Appl e pul l ed NBC’ stel evi si on programsfrom the i TunesStore afterthe networktri ed to doubl e the pri cesconsumerspayto downl oad shows. NBC backed down wi thi n days,and eversi nce,gi antmedi a congl omerateshave been hesi tantto face off wi th Appl e overpri ci ng. 3.Flatten sprawling hierarchies.Compani eswi th extended chai nsofauthori tytend to pl od when i t’ sti me to act. Mostofthe deci si onsatAppl e come from Jobsand hi s i mmedi ate deputi es. 4.Pay less attention to m arket research and com petitors.Mostfi rmsdevel op thei r productsthrough a combi nati on oftouchy-feel yconsumerfocusgroupsand effortsto i mi tate successfulproductsfrom othercompani es. Appl e doesnei ther,and the i Pod and i Phone are cl earproofofthat. Cultivate Your Elite GOAL: Em power your m ost valuable em ployees to do am azing work. In trul ydespoti csoci eti es,both artand sci ence sufferterri bl y. Appl e,on the otherhand, rel i abl ychurnsoutthe i ndustri alequi val entsofda Vi ncipai nti ngsand Hokusaiwoodcuts. Thi s hasl i ttl e to do wi th how the companytreatsempl oyeesi n general . Rather,i tstemsfrom the meti cul ouscare and feedi ng provi ded to a speci fi cgroup:the creati ves. Appl e’ ssegmented, strati fi ed organi zati onalstructure — whi ch coddl esi tsmostval uabl e,producti ve empl oyees— i sone ofthe company’ smostformi dabl e assets. One formerAppl e consul tanttel l sofan eye-openi ng i ntroducti on to Appl e’ sfi rst-cl ass treatmentofi tscreati ves. The consul tantvi si ted Appl e’ sIndustri alDesi gn Group,the team thatgi vesAppl e productsthei rdi sti ncti ve,gl ossyl ook. Tucked awaywi thi n Appl e’ smai n campus,the IDG i sa worl d unto i tsel f. It’ sal so seal ed behi nd unmarked,restri cted-access doors. W i thi n the IDG,empl oyeesoperate free from outsi de di stracti onsand i nterference. “It di dn’ tfeell i ke worki ng atAppl e,”oursource remembers. “Itfel tl i ke worki ng ata smal ldesi gn fi rm.”Some compani esare famousforperks— Googl e,forexampl e,wi th i tsfree massages -3- and gourmetl unches. Appl e focuseson atmosphere,nurturi ng i tsbestdesi gnersbehi nd opaque gl assi n a hi dden sanctuarywi th musi cpl ayi ng i n the background. Despi te thei rfavored status,Appl e’ screati vessti l lhave no more i nsi ghti nto the company’ s overal loperati onsthan an Armypri vate hasi nto the Pentagon. AtAppl e,new productsare often seen i n thei rcompl ete form byonl ya smal lgroup oftop executi ves. Thi s,too,worksas a strength forAppl e:Instead ofa sprawl i ng bureaucracythatnew productshave to be pushed through,Appl e’ stop echel on i sa smal l ,ti ghtl ykni tgroup thathasa hand i n al mostevery i mportantdeci si on the companymakes. Case Study Nurturing Innovation at Cisco Otherfi rmshave al so found successbyseparati ng i nnovati on from busi nessasusual . Here’ swhatDavi d Hsi eh,vi ce presi dentofmarketi ng atCi sco,hasto sayabouthi s company’ sEmergi ng Technol ogi esGroup: “Bi g compani eshave a tendencyto eatthei rown chi l dren. Theygetafrai d ofdi srupti ng thei rown revenue stream wi th a new uni t,orsomeone hasa greati dea and an executi ve sponsorsi t,butthe momentthe sponsorcomesunderpressure,theydi tch al lthe l i ttl e i ni ti ati vesto focuson thei rcore busi ness. The advantage ofa new uni ti sto i nsul ate i t from peopl e who say,‘ W e can’ tdo i tthatwaybecause we’ ve done i ta di fferentway foryears.’You wantto enabl e a group ofpeopl e to thi nkmore broadl yand creati vel y wi thoutoutsi de pressures. Ci sco’ sEmergi ng Technol ogi esGroup hasbeen i n operati on forthree years,and i t’ screated a numberofbusi nesses. The earl yonesare al lgrowi ng successful l y,even i n a bad economy.” Don’t Rush, Don’t Dawdle Goal: Prevent short-term ,cyclical,or com petitive pressures from overwhelm ing an effective strategy. It’ soften sai d thatpeopl ei n parti cul arcul turesl i ve l i fe atthei rown uni que paces. Ameri cans are seen ashard-dri vi ng and somewhatshortsi ghted — a si de effectofa busi nesscul ture that takesi tscuesfrom the stockmarket’ semphasi son quarterl yresul ts. Appl ei sdi fferentbecause Appl e dancesto a rhythm ofi tsown maki ng. Al though i tsri si ng stockhasbecome a vi talpartofmanyportfol i os,Appl e cancel s,rel eases,and updates productsati tsown speed,seemi ngl yi rrespecti ve ofmarketcondi ti onsorcompeti ti ve pressure. Appl e doesn’ ttel egraph i tsmoves,ei ther:The i Pod and i Phone,i coni cproducts both,each began asrumorsthatAppl e seemed determi ned to quash. -4- Plan B Staying Cool W hen the Heat Is On Yourstockpri ce i sdown,yourcustomersare angry,and i nvestorsare bangi ng on your door. Sure,acti ng l i ke Appl e seemsl i ke a good i dea — unti lyourboard startscravi ng bl ood. How do you mai ntai n a focuson i nnovati on when you don’ thave a few successful quartersto backyou up? Fora vi vi d demonstrati on ofhow to publ i cl yrecoverfrom yourerrors(i n styl e,no l ess), checkoutthe vi deo ofSteve Jobs’1997 Macworl d addressand an associ ated BNET feature,How to PresentLi ke Steve Jobs. Clone Your Own Steve Jobs GOAL: Ifyou put a tyrannical perfectionist in charge,institutionalize his thinking. New adherentsto the cul tofSteve Jobsmaybe surpri sed to hearthi s:The mosti coni cAppl e l aptop,the ori gi nalPowerBook,wasrel eased i n 1991,afterJobshad been absentforsi x years. The smug hi psterswho l i ne today’ scafeswi th rowsofi denti calMacBooksare merel y updated versi onsofthei rcounterpartsfrom the earl y’ 90s. YetJobswasi n no wayresponsi bl e forthi senduri ng i nnovati on. So doesthatmean Steve Jobsi si rrel evant? Ori sJobs— and hi smani acalfocuson bui l di ng i nsanel ygreatproducts— a necessaryi ngredi entofAppl e’ ssuccess? Hi stori anshave l ong grappl ed wi th a si mi l arquesti on:How cri ti calare those rare, worl d-changi ng “greatl eaders”whose effortsseem i rrepl aceabl e? Mosthi stori ansnow bel i eve thatgreatl eadersare made bythei rci rcumstancesand thatthei rgreatdeedsactual l yrefl ect the parti ci pati on ofthousands,oreven mi l l i ons,ofpeopl e. In the case ofAppl e,there woul d be no Mac,no i Pod,and no i Phone wi thoutthe effortsofthousandsofengi neersand vast numbersofconsumerswho were l ooki ng forproductsthatbetterserved thei rneeds. Thatsai d,Jobscutsan i mpressi ve fi gure,and i fhe was“made”byhi sci rcumstances,that processtookmanyyears. Rememberthatthe fi rstedi ti on ofSteve Jobs— the young i nventor who,at21,created Appl e Computer— wasnotthe vi si onarywe know today. Instead,after ni ne yearsatAppl e’ shel m,the young Steve Jobswasousted because ofhi saggressi ve, take-no-pri sonerspersonal i ty,whi ch created a poi sonous,unproducti ve atmosphere when i t pervaded the company. Today’ sSteve Jobsseemsto have l earned how to focusthataggressi ve,take-no-pri soners personal i tymore shrewdl y,and to greateffect. W hi l e he’ ssti l lan essenti alpartofAppl e’ s success,the companyhasal so i nsti tuti onal i zed manyofJobs’val uesto such an extentthat Appl ei snow farl essdependenton hi m. Ti m Cook,forexampl e,worked wel lasacti ng CEO -5- duri ng the fi rsthal fofthi syear,when Jobswason si ckl eave. Butquesti onsremai n. So l ong asthe overwhel mi ng personal i tyofJobsi spresent,can anyone real l ygrow i nto thatposi ti on? Onl ywhen Jobsstepsbackfrom hi srol e permanentl ywi l lwe real l ybe abl e to determi ne how wel lAppl e hasl earned the l essonshe hastaught. OtherResources The Apple Bookshelf W hetherornotJobsi svi talto Appl e,the company’ shi storyi si nextri cabl yl i nked to hi s l i fe. The booksbel ow offera hi story,from foundi ng to presentday,ofthe maki ng of Appl e. Ifyou onl yhave ti me forone: Appl e Confi denti al2.0:The Defi ni ti ve Hi storyofthe W orl d’ sMostCol orfulCompany,by Owen Li nzmayer See al so: The Li ttl e Ki ngdom:The Pri vate StoryofAppl e Computer,byMi chaelMori tz i W oz:ComputerGeekto Cul tIcon:How IInvented the PersonalComputer,Co-Founded Appl e,and Had Fun Doi ng It,bySteve W ozni ak W estofEden:The End ofInnocence atAppl e Computer,byFrankRose Odyssey:Pepsito Appl e:A JourneyofAdventure,Ideasand the Future,byJohn Scul l ey (wi th John A. Byrne) The Second Comi ng ofSteve Jobs,byAl an Deutschman More on BNET: • FourPri nci pl esofAppl e’ sSuccesses(and Fai l ures) • Insanel yGreatMarketi ng • The Appl esofOtherIndustri es Copyri ght© 2009 CBS Interacti ve,Inc. Al lRi ghtsReserved. -6-
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