Wednesday, November 30, 2011

Apple – the shark of the blue ocean

When I read the article – “Blue Ocean Strategy”, the one and only company that stood out to me was Apple and how effectively they have applied this strategy. Eccentric, visionary, rash, overly detailed, etc. are some of the adjectives associated with Steve Jobs, the late CEO of Apple. However, he was one of the greatest proponents of creating the blue ocean – giving people something that they don’t even know they want. As I am currently reading Steve Jobs’ biography, it is easier for me to look at the various strategic moves of the company and try to understand this concept.

The Blue Ocean

When Apple launched the iPhone and subsequently the iPad, they practically created a completely new segment where one didn’t exist. Though mobile phones were prevalent, there wasn’t such a device that captured the imaginations of such a huge population. It was a device like no other and created a whole new space for mobile networking and mobile-device Internet access. Though such devices already existed and was hugely competitive, Apple created a whole new area where it became convenient to do so. With the launch of the iPad, they moved away from competition but creating a segment of tablet computers. [2] Even though companies had tried it before, the sheer quality of the device made people crave one, even if there was no perceivable need for it.

As I look at the company, it seems to me that a single company can use more than one strategy as mentioned in the “Types of Strategy – Which fits your business?” article.[3]

Differentiation

Right from the offset, Apple tried to differentiate itself by making products look good and intuitive. Even though they didn’t really make the technology (the GUI idea was taken from Xerox PARC), the execution and the overall final product made the company stand out. The attention to detail and the kind of technology that was built into the original Macintosh machines made it one of a kind.

Customer Relationship

By aiming to be the best in whatever they do, and also by being detail-oriented, Apple has setup the award-winning AppleCare system, which provides service to the various products they sell. Given the kind of volume that Apple deals with, being customer-oriented and making sure that the customers get the best service is something that is ingrained in each activity.

Network Effect

By creating the iTunes store for downloading music and by creating the App store for mobile applications, Apple was successful in creating two really huge networks that are growing each day. Apple reaps benefits of positive network externalities that make the whole network more valuable as more people join in. The developers get more money as more customers join and given that the App store has a huge number of apps already available; it gives users the incentives to join. The recently launched iMessage will add to the network effect that is present. [4]

I conclude by stating that no matter the size of the company or the domain, a successful company can choose to follow more than one strategy at the same time, however by making sure that each of the strategies are aligned to the overall goals of the company.

References

  1. Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne
  2. Apple launches the iPad, Jan 27th 2010, http://www.apple.com/pr/library/2010/01/27Apple-Launches-iPad.html
  3. Types of Strategy – Which fits your business, excerpted from Strategy: Create and Implement the best strategy for your business.
  4. Apple launches iMessage, Ysolt Usigan, Oct 23th 2011, http://www.cbsnews.com/8301-501465_162-20119854-501465.html
  5. Steve Jobs, Biography by Walter Isaacson

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