Sunday, March 31, 2013

Change or perish : The importance of Innovation


The article "Reinvent Your Business Before It's Too Late," Paul Nunes and Tim Breene brought two fortune 500 companies to my mind, HP and Apple.

Consumer electronics and software companies that constantly produce cutting edge products to solve a customer’s problem have almost wiped out conventional, change-resistant product and sometimes even companies from previously dominant positions. An example of this is HP’s declining market share in the PC business1. The number of innovations in the PC business is few, and smaller companies have been able to do what HP has been doing, far more profitably. HP should have invested in “the next big thing”! This is easy to say, but what is the next big thing?

From the “The lost interview” – The interview of Steve Jobs by Robert Cringley in 1996, Steve Jobs talks about how he was introduced to the “Graphical User Interface” (GUI) at Xerox in the late 1970s. But, the lack of foresight and investment in the GUI by Xerox, proved an opportunity through which Apple made its fortune. Had it not been for Steve Job’s vision, judgment and focus on developing the GUI, this would not have been possible.

So, how does a company strategize to achieve a vision? This can be seen again, from HP and Apple as examples.

HP has been a late entrant in the tablet space 2.They launched the HP Touchpad but failed3. The product was not bad, so why did it fail?
The reasons were found to be:
  1.  The product was too slow to market.
  2. WebOS supported too few apps in comparison to Apple’s AppStore and the Android Marketplace.
  3.  Low differentiation from competition.
  4.  Inadequate promotion.
  5. Exclusive software relationships that turned away potential users.
  6. High Price


Apple is the market leader in this space. They have successfully created an Apple ecosystem that users do not want to get out of4.  Android devices have entered this space and are steadily gaining market share. How is Apple going to counter this?

From the above examples, we see that in technology companies (especially those in consumer electronics), strategy must revolve around innovative products. Innovation could be interpreted as solving an existing problem but with an alternative approach.

Steve Jobs, in the “Lost Interview”, emphasizes the importance of continued innovation. As an example, he talks about how the Macintosh was way ahead of all other operating systems and computers when it was launched. But, Microsoft through its partnership with Intel caught up especially because “Apple stood still”.
How should a company time a product launch? When is it okay to launch a product with minimal functionality and gain the first-mover advantage?


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