Bloomberg TV broadcasted “Game changers: Steve Jobs” on Oct 14, 2010. In this episode Mike Moritz, one of Silicon Valley’s leading venture capitalists, described that “Apple has done the biggest turnaround in the business world.” He is absolutely right, because back in 1996, no one believed that Apple would become the largest tech company in the world. Apple was a total mess inside: its product lines made consumers confused; no one wanted to buy its products; Apple’s stock fell sharply; and it almost went bankrupt, but Apple did at least one thing right, it brought Steve Jobs, the legendary co-founder of Apple Computer, back to the Apple.
In fact, Steve Jobs has so thoroughly reinvented the company that Apple Computer changed its name to Apple, Inc. in 2007 to reflect the changes. So how did Steve Jobs reinvent Apple? I find that Jobs made amazing changes that affected everything inside Apple. He used lots of innovative ways to build an entire strategy not only for external threats, but also for creating a strong internal system. Here is what I learn from Apple:
Marketing Innovation (Think Different Campaign, I’m Mac.)
When we talk about Apple’s marketing campaigns, it is hard to distinguish between innovation and strategic competitiveness and we believe Apple did both. When Steve Jobs came back to Apple in 1996, he found out that its product line was bad, but the brand still had good value, and this was an important asset for Apple. When Steve Jobs was interviewed by TIME (TIME: Steve’s Job: Restart Apple, Aug 18, 1997) he said “What are the great brands? Levi’s, Coke, Disney, Nike. Most people would put Apple in that category, you could spend billions of dollars building a brand not as good as Apple.” Jobs wanted a big, bold marketing campaign, so held a competition between three advertising firms. The winner, TBWA/Chiat/Day, had created the legendary 1984 Super Bowl ad for the first Mac: “Why 1984 won’t be like ‘1984’”.
For Apple’s 1997 marketing campaign, TBWA created the “Think Different” advertising slogan. The idea was to celebrate the persons whose ideas changed the world, featuring black and white photos of forty famous people such as Albert Einstein, Bob Dylan, Martin Luther King Jr., John Lennon, Picasso etc. The ads said “The people who think they can change the world are the ones who do.” There were no computer pictures in this advertisement and it was a bold statement to associate a downtrodden Apple with luminary thinkers, scientists, and artists. Such a campaign had never happened in the PC industry to that time and it worked to acclaim Apple as still having uniqueness, creativity, and ambition. The widely commented “Think Different” campaign vaulted Apple in a higher esteem for its customers and also brought back Apple’s core values for its employees and restored their confidence.
Product Line Innovation (I-series product such as iMac, iPod, iPhone, iPad, etc.)
Apple is known for its distinctive products, and people recognize Apple as the most innovative company because of its unique product line. Apple is similar to luxury or fine art, with relatively inelastic demand, as we mentioned in our above discussion about strategic competitiveness and a differentiation strategy. As matter of fact, one of their products, Apple PowerMac G4 Cube, has already been accepted into the Museum of Modern Art in New York.
When we look at its product line history, we think Apple followed the “Not Invented Here” mindset, because compared to Google or Microsoft, Apple acquired fewer companies and Apple has always wanted to be the market leader. Apple wants to build breakthrough products that nobody has created, mostly to great success. The Macintosh product brought graphical user interface to the mass market, the iPod changed the entire MP3 and music industry, and the iPhone has highlighted the new era of the smartphone. Apple conducts R&D in its own labs and wants to create a new market, but unlike other companies that release a product as soon as possible to capture profits, Apple always wants to create the best products in the segment.
We continue to look deeply to ask why Apple does distinguish itself from its competitors? First, Apple is very serious about design. When iMac G3 was released in 1998, many in the PC industry were shocked by its appearance, because prior to the iMac, all desktop computers looked the same: khaki color, boring design, separate display and system unit, and the iMac appeared to be from different world. The iMac was made with translucent colour plastic, and it was an egg-shaped all-in-one computer, with Apple providing a sleekly designed keyboard and mouse. The iMac was a big hit for Apple. According to a Macworld speech by Steve Jobs in 1999, only four and half months after the company released the iMac, it had already sold 800,000 iMacs at a very important juncture for Apple because this product kept the company financially solvent and able to produce more innovative products in the future.
Design is not only for the product but also the whole company. Design is inside Apple’s DNA. According to an interview by tech blog “The Cult of Mac” editor Leander Kahney on Oct. 14, 2010, former Apple CEO John Sculley said, “a friend of mine was at meetings at Apple and Microsoft on the same day…recently. He went into the Apple meeting (he's a vendor for Apple) and when he went into the meeting at Apple as soon as the designers walked in the room, everyone stopped talking because the designers are the most respected people in the organization. Everyone knows the designers speak for Steve because they have direct reporting to him. It is only at Apple where design reports directly to the CEO.” From this we know Apple has its own design team, and that team members participate in every product development, working closely with the engineers. Together, the engineers and designers try to match the best design and product structure not only externally, but also internally. For this reason, we believe Apple’s structure is more organic and more flexible. Many other firms have their hardware, software, and design teams discuss products together, but Apple puts an emphasis on design.
Secondly, Apple’s product is all about details. When you look closely into their hardware and software, you will notice that everything is fitted and polished. For example, the first generation iMac’s power cord is translucent, and the power button, keyboard, bottom of the iMac all matches this style, showing that Apple genuinely cares about its products! According to an interview by Marcus Fairs, iconeye.com, July/August, 2003, Jonathan Ive, the senior vice president of Design, said “I think one thing that is typical about our work at Apple is caring about the smallest details.” And we think Apple really does not comprise on that.
Third, besides the appearance and design, we think another important factor why Apple’s products are so innovative and popular is the user experience. Consumers notice that Apple’s products are easy to use, have a low level to entry, and are fairly intuitive. According to the article “The seed of Apple’s Innovation” by Peter Burrows, Business Week, Oct. 12, 2004. Steve Jobs said “You need a very product-oriented culture, lots of companies have tons of great engineers and smart people, but ultimately, there needs to be some gravitational force that pulls it all together.” This means that even though a company may build great hardware, it will not create a good user experience, if the hardware is not integrated with the software or is complicated to use. When customers buy a product and are frustrated when using, the product will quickly become obsolete. So finally, we think the most important innovation Apple has created is for the user experience: the interactive interface, the buttons, the navigational menu, the setup steps are all factors that add to buyer value. When we think in terms of strategic competitiveness, customers become very satisfied with Apple’s products and become loyalists, even though Apple’s product are priced higher than its competitors.
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