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.
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