(Note: I loathe using Apple as an example of anything within the context of business because of their status, but they really are a shining example in this respect.)
Apple is one of the most innovative companies by any measurable standard. Their products make their customers salivate, and more ink is spilled speculating on what the next game changer out of Cupertino might be than on the product line of any other company.
People think Apple is the company it is today because Steve Jobs was a visionary who believed in the power of amazingly designed products to change the world. And that is all true.
But it is not the reason Apple is the company it is today.
iRobot built a vacuum cleaner that cleans your house for you... Think about that: they built Rosie from The Jetsons? How is that not one of the most inventive and innovative products ever built?
The answer is that it is, but iRobot does not come close to being the juggernaut that Apple is. Why is that?
My answer, and the answer I riffed about on the discussion board for this class, can be summed up in one man, and his name is NOT Steve Jobs.
It's Tim Cook.
For reference, here is the riff about this topic I posted on Blackboard:
In my mind, innovations at a broad, general level, fall into one of two categories: Product Innovation and Operational Innovation.
You could also model these as 'Customer' and 'Corporate' innovations; 'Sexy' and 'non-sexy;' 'Demand-side' and 'Supply-side.' Ultimately the question comes down to which side of the transactional unit of business the innovation in question delivers value to. The consensus seems to be that smaller firms (i.e. startups) are better able to innovate on the side of adding customer value (i.e. sexy, product-centered innovations) whereas larger firms innovate 'under the hood;' they tweak their business model or value proposition or operational apparatus to deliver more/better value than their competitors. This does not necessarily mean churning out sexy new products every 6 months, but it can mean revamping your product testing paradigm to be more efficient, thus freeing up capital to either a) invest in new ventures, or b) stay competitive on price with your current offerings and adding value this way.
My beef with the HBR piece is that it trivializes this second sort of innovation and comes very close to demonizing it as corporate bureaucracy and greed. As a business student with an operational bent, this is abhorrent to me. I once said in an argument with a friend over several pints at a bar that Tim Cook played as big a role in making Apple the juggernaut that it is today as Steve Jobs. I hate using Apple to draw corollaries because it's such a copout, but it's the best example I can find. Shire Pharmaceuticals is another.
Operational innovations are not just eking out a few more cents on the margin; it can be a radical fundamental overhaul of any part of the firm. Just because it does not deliver tangible value into the customer's hands today does not make it any less of an innovation, or any less bold.
Apple has shone as a company that innovates on both sides of this coin: their products delight their customers, but their operational apparatus is one of the best and most efficient that's ever been built, and that is the work of Tim Cook.
Fortune Magazine ran a dynamite profile of Tim Cook back in '08, when Steve Jobs' health first started to decline (http://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm); this article really underscores the impact Tim Cook had on Apple's bottom line, and how, if the company does not have the cash they saved by adopting Tim's operational methodology, they don't have spare earnings to plow into product development, which is what they're known for.
So when Max Wessel laments that 'Big Companies Can't Innovate' it upsets me because it undermines and marginalizes the kinds of innovations that enable companies to be better at what they do, and make more and better investments in products and technology.
As with any good argument there are good support for either side. Innovating can be many things, and you are right, innovating business strategies and operational efficiency is beneficial. Wessel focuses on the organizations that have a difficult time with change or stepping outside of their own box. I think that the 2nd and 3rd part of Wessel's blog are a good example of ways that big companies can in fact innovate. I am sure there are a number of examples where companies are in fact doing this. I think i will go back a re-read the blogs with more of a critical eye -which I normally do, but did not because I personally agreed with Wessels statement from personal experience.
ReplyDeleteHaving worked for 24 years in Operations and personally come up with innovations that significantly affected my company's ability to communicate intelligently with their customers or most efficiently process customer requests/orders, I can sympathize with you. Did I invent some new product or service? No. However, I think I did give our customers have more reason to want to do business with us, as we were actively and constantly trying to be the solution to their problems. I don't think Wessel was intentionally excluding this kind of innovation in his article. He was just focused on the creation of new products and services, which I think is critical in the continued and healthy existence of a firm.
ReplyDelete