Filed under: Innovators
By Pete Mortensen
With Apple sailing on an all-time high stock price and mere weeks from the launch of its absurdly anticipated iPhone, the serious business press is turning even more attention to the little-Cupertino-company -that-could than normal.
Take, for example, The Economist, which has placed Apple on the cover of its most recent issue for a story titled “Apple and the art of innovation.” It’s a pretty good story, nothing careful watchers of Apple don’t already know. It does, however, get one aspect quite wrong, based on a simple misunderstanding of how Apple likes to work:
In fact, its real skill lies in stitching together its own ideas with technologies from outside and then wrapping the results in elegant software and stylish design. The idea for the iPod, for example, was originally dreamt up by a consultant whom Apple hired to run the project. It was assembled by combining off-the-shelf parts with in-house ingredients such as its distinctive, easily used system of controls. And it was designed to work closely with Apple’s iTunes jukebox software, which was also bought in and then overhauled and improved. Apple is, in short, an orchestrator and integrator of technologies, unafraid to bring in ideas from outside but always adding its own twists.
This approach, known as “network innovation”, is not limited to electronics. It has also been embraced by companies such as Procter & Gamble, BT and several drugs giants, all of which have realised the power of admitting that not all good ideas start at home. Making network innovation work involves cultivating contacts with start-ups and academic researchers, constantly scouting for new ideas and ensuring that engineers do not fall prey to “not invented here” syndrome, which always values in-house ideas over those from outside.
Well, yes and no. Apple has largely gotten over its opposition to “not invented here” technologies, sure. Macs now use motherboards and chips found in virtually every PC on the planet. But it is a shocking mistake to claim the iPod is essentially a leveraged version of off-the-shelf hardware. At a component level, the iPod is quite obviously made up of chips and boards that Apple just buys. But throwing those components into a bag does not an iPod make.
Apple is a pure design-driven company. By that I mean that they rarely produce an idea that is truly new, but when they launch a product or service, it tends to be so much better than existing products in the category that it comes off as legitimately innovative and create new markets. Personal computers existed before the Apple II, but they sucked. The Macintosh was not even Apple’s first attempt at a computer with a graphical user interface (that was the Lisa), let alone the first ever (the Xerox Alto). The iPod was far from the first Mp3 player, the AppleTV is not the first living room media set-top box, and the iPhone is about as far from the first cell phone as you could get.
Yet each product has been or could prove to be truly ground-breaking. Is it because Apple continually looked out to the world and saw a great solution in the world they could buy, brand and ship, as P&G famously did with the Crest SpinBrush? Of course not! The Microsoft Zune is a much better example of Network Innovation than the Apple iPod — the Zune is simply a Toshiba media player with a slightly different interface, new software and Zune branding. The iPod was invented whole cloth, even if it used individual pieces of tech that existed in the world.
This is where Apple excels. They take ideas that people have invented — adequate functionality, a modest market of hobbyists — and turn them into innovations by fitting them into what people need. No matter the nascent market, once Apple gets there, their solution will be simpler, prettier and just more lovable than existing ideas in the market. And that’s about building a better mousetrap, something Apple does better than anyone in the whole wide world.
It’s awesome. But it’s not a primary strategy of Network Innovation.
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