The Apple Exception

I’ve been drawn to the many tributes and obituaries of Steve Jobs in recent days, and particularly enjoyed this excellent piece from Stephen Fry, and also this interesting article which makes the case that his greatest contribution was changing Capitalism, through defying a customer-led approach:

“Take the old adage that the consumer is king. In some ways, this is as true for Apple as it is for anyone else. It stands or falls on the basis of whether people will buy its stuff. But Jobs’s success was built firmly on the idea that in another sense, you should not give consumers what they want because they don’t know what they want. No one thought they wanted the first desktop Mac, iPod, iPhone or iPad before they existed. Jobs repeatedly created things that people came to want more than anything else only by not trying to give them what they already wanted.”

Whilst I agree that Jobs and Apple had the vision to create a new approach to technology, the article essentially reiterates the famous Henry Ford quote, namely “If I’d asked people what they wanted, they’d have said ‘faster horses’ “ which has been nicely discected previously by JP Ranganswami (and others) here.

And the Fry article nicely details the near fanatical secrecy with which Apple goes about their business in a famously ‘closed’ way:

“The so-called “walled-garden” approach whereby Apple make the hardware, the software and control third party access to the APIs and architecture of each device may madden many but they are precisely what allows the devices to work so well, so cleanly, so fluently out of the box.”

When it comes to open innovation, the mere mention of Apple frequently incites vehement discussion. We ran a competition a few years ago called the Open100. The purpose was to find the 100 most openly innovative companies in the world, and Apple was on the list, albeit not very high up. However it’s very precedence sparked angry and heated debate about their inclusion.

I argued then, and feel more strongly now, that Apple are an anomaly that reinforce the shift towards more open innovation in three ways, as follows:

1. Firstly, one of Apple’s great triumph in recent years has been to build and mobilise an enormous external workforce of apps developers (4 x the size of the company according to Fast Company) who not only work for free, but give up 30% of their revenues to Apple. This is often portrayed by people as exploitative, but building such a massive and productive eco-system of external partners is a very smart move and exactly what open innovation is all about in my view.

2. Secondly, Apple’s other great triumph is the way that it mobilises fanatical followers who consistently sell their products for them. I am by no means a huge Apple fanatic and have only been using a Mac and iPhone for about a year, and do like them. However mobilising others to sell your products is so much more powerful than any sales and marketing you do yourself.

3. Finally, just as only one company can compete on price, so too can only one company compete on talent. So whilst Bill Joy is famously quoted as saying “Not all the smart people work for you” as justification for tapping into people outside of the company, Apple have been able to hire many of the best people in their field so have had less need to do so.

The success of Apple is, of course, due to a complex array of factors and it will be fascinating to see how it evolves post-Jobs. However I would make the case that arguably his greatest achievement was to unlock the power of customers, suppliers and partners, and so were open innovation pioneers, despite being very closed and secretive in many areas of their business.

In other words, Apple are the exception that proves the rule.

by Roland

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