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One cannot talk about innovation without mentioning Apple Inc. Here, we Apple’s
innovation strategy which is arguably one of the most valuable companies in the
world in terms of market capitalization.
Introduction
“If we have money left over, we look to see what else we [can] do, We acquire
everything that we need that can fit and has a strategic purpose to it. And so we
acquire a company on average, every two to three weeks. Apple is primarily
looking for talent and intellectual property,”
Tim Cook, CEO, Apple
Like most large corporations with a healthy bank balance, Apple goes on the hunt
for acquisitions from time to time. It often makes more sense to buy up a company
and absorb its technology than try to compete against it, spending money to do
the same research and potentially end up falling foul of patent laws.
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Apple led the global technology market by developing innovative products such as
the Mac, the iPod, the iPhone, and the iPad which redefined their respective
markets. Since the year 2000 Apple has shown strong results. In 2000 Apple
revenues were about $8 billion (EBTIC, 2010). Apple posted net profit close to
$800 million Increase revenue more than 450% in 8 years… Increase net profit
more than 1700% in 10 years (EBTIC, 2010)
Introduction
The trend continued In 2010 Apple revenues were over $65 billion Apple posted
profit of over $14 billion Increase in revenues more than 800% in 10 years
Increase in revenues more than 170% in 2 years Increase net profit more than
1700% in 10 years Increase in net profit more than 230 % in 2 years (EBTIC,
2010).
Apples strategy is hinged on selling the strongest product line, using the most
talented employees and the best customers in our industry. And as t 2008 apple
had $25 billion of cash safely in the bank with zero debt,” Steve Jobs, CEO of
Apple, October, 2008.
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Apple has acquired 108 entities from it’s inception. The following
thought and questions are posed before acquisitions are made:
Strategy Thought Process
Acqui-hire: Getting the human talent with niche skill-sets or with
expertise in technologies at nascent stages, eg Siri, to build
their version of the technology integrated in Apple’s products
and services
Faster Product/Technology/Service GTM(Go To Market):
Acquiring the product/service/technology of the target firm which
would take longer time to build on it’s own Ex: Beats Music,
Intel’s modem business
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Out of the Big Five companies, Apple has the fewest
acquisitions over $1 billion. Its largest purchase was for Beats
Electronics, which it acquired for $3 billion in 2014.
Strategy Thought Process
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Strategy Thought Process
In an intriguing recent turn of events, Apple recently announced
it will acquire the majority of Intel’s smartphone modem
business. This $1 billion deal will allow Apple to build all of its
devices in-house, and better prepare the iPhone for the
upcoming 5G push.
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1. Put people first:
“We’re a group of people trying to change the world for the
better, that’s who we are. For us, the technology is a
background thing. We develop products in such a way that we
infuse humanity into them. We take our values very seriously,
and we want to make sure all of our products reflect those
values.”
Tim Cook
Innovation Strategy Rules
2. Align corporate culture with innovation strategy
Since the days of Steve Jobs, Apple has worked hard to
establish a corporate culture of innovation that deploys human
resources to support the company’s strategic objectives.
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3. Hire smart people, then empower them
“It doesn’t make sense to hire smart people and tell them what
to do, we hire smart people so they can tell us what to do.”
Steve Jobs
4. Balance structure and flexibility
For Apple, churning out great innovations is a question of
balancing structure and flexibility.
5. Take the time to get things right
This steady-as-she-goes development process helps reduce the
risk of products misfiring, and limits the possibility of any
embarrassing missteps.
Innovation Strategy Rules
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6. Remember, customers are jewels
“Customers are jewels. Every day I read a fair number of
customer comments. It’s sort of like checking out blood
pressure. I care deeply about what our users think.”
Tim Cook
Innovation Strategy Rules
7. Look past crowd thinking – and tune out the noise
The key to churning out great products, year after year?
Listening to customer feedback, while also tuning out unhelpful
noise.
8. Have the courage to say no to great ideas
If the company threw its weight behind every great idea
proposed by its designers and engineers, it would risk spreading
its resources far too thin. Instead, Apple has the courage to say
no to some great ideas every once in a while.
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1. The new device was same as the old one; different, but
same.
Apple’s Catalyst for Success
2. Apple’s Radical Innovations also came with a high level
of consistency.
3. Apple did not solely rely upon clever strategic moves or
innate sense of market timing, but lay deep
commitment to understanding people i.e. their market.
4. Apple kept its eyes on the core computer business for
long while.
5. Even through difficult times, the core commitment to
product design and development stayed alive.
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1. Apple’s Innovation revolves around the ‘Play-To-Win’
Strategy. Thus ensuring it Drives Growth, Maintain
Market Leadership, Build its brand and Looks out for
Market Markers and New Industries. This connotes
Radical Innovation.
Arrow’s Efficiency Effect
Analysis (Apple)
2. This Innovation strategy makes it less (but not entirely)
affected by Sunk Cost and Replacement Effects. As
much as possible Apple get ahead of the curve and
buys into developed ideas and companies.
3. To be on the positive side of the Efficiency effect, Apple
ensures it snaps up, buys into and/or become fastest
GTM(Go To Market) firm at play.