"Why Apple can create blockbusters?" ~ Re-think: Product Planning

1. - Version 1.0 - re-‐think: Product Planning ~ Why Apple can create blockbusters? ~ Chikafuji, Ryu

2. For persons who are interested in consumer products, services, and markets. – Aug/25/2011 (last revised on Dec/18/2013)

3. chapter 1 tempta5on

4. There is nothing more important task than to ﬁnd out: “what user-experiences the customer looks for, values, and needs”. Everyone knows this, but this isn’t easy task.

5. Instead, many companies give an ear to the industry’s influencers, and oversee compeItors, apart from their target customers. A Company (a consumer products company) Target Customers Influencers (big research firms, oligopoly firms)

6. Instead, many companies give an ear to the industry’s inﬂuencers, and oversee compeItors, apart from their target customers. A Company (a consumer products company) CompeItors Target Customers

7. Curious to say, inﬂuencers provide the vision of the newly deﬁned product category for their customers, the consumer products companies. (*) examples of influencers

8. Actually, many inﬂuencers have global markeIng plaLorms to survey their customers’ potenIal market.

9. Problem is that the inﬂuencers’ happiness doesn’t correspond the companies’ happiness.

10. Everybody Netbook! (with Wintel !!!) The inﬂuencers’ happiness is to spur an intense compeIIon in their customers’ market because such compeIIon brings them huge revenue.

11. The inﬂuencers elegantly lead their customers into a intense compeIIon.

12. The compeIIon makes the inﬂuencers’ hearts sing, while the companies’ hearts be exhausted.

13. It’s Ime to re-‐think.

14. chapter 2 re-‐think

15. Many companies start from products. They improve exisIng products and make the spec table beRer one. New segment Existing market Existing market Sometimes they create a new segment.

16. Fewer companies start from people. They innovate new user experiences and make the people’s life beRer one. Existing market Existing market Sometimes they create a new market. New market

17. My focus here is clearly on the laRer case, “start from people” *Lots of theories, practices, consulting services are available for the former case, such as theory of competition, product management practices, social media marketing, etc.

18. True markeIng says, “These are the user-experiences the customer looks for, values, and needs.” True marketing says, “These are satisfactions the customer looks for, values, and needs.” – Peter. F. Drucker

19. To ﬁnd out ”the user-experiences” is the starIng line for new product planning, however,

20. You can’t go out and ask people, you know, what the next big thing. – Steve Jobs “Steve Jobs speaks out”, CNN Money, Aug/03/2008

21. [This product is “Innova5ve”] means that the product brings far be;er user-‐experience to the target customers.

22. user-experience New trajectory Innovative Product Discontinuity Conventional Products Conventional trajectory (incremental improvement) time In other words, there must be discon5nuity between the trajectory of convenIonal products and an innovaIve product in terms of “user-‐experience”.

23. What ordinary people can imagine is limited to incremental improvement of exisIng products, their imaginaIon can’t beyond this disconInuity.

24. If I had asked people what they wanted, they would have said “faster horses” – Henry Ford Founder of the Ford Motor Company

25. (Around 2000,) We did market survey about the demand for camera-phone, not once, four times. Every time the results showed negative. However, nowadays, camera-phone became standard. – A comment from a marketing director (Martin Cooper’s Keynote Speech at IEEE Wescon 2005)

26. It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it(*) to them. – Steve Jobs (*) From the context, “it” doesn’t mean prototype, “it” means finished product such as shown at Apple’s conference.

27. It’s us who have to answer the quesIon: “what the next big thing”

28. Both Honda-san(*) and I had never started product development from technological point of view. The first and foremost priority was our goal what product we really wanted to make. – Masaru Ibuka, co-founder of Sony Quoted from“The Soul of Monozukuri” Masaru Ibuka, photo from www.sony.net (*) Soichiro Honda, founder of HONDA

29. The idea for the Walkman had come from Ibuka, who was over 70 years old, and Morita(*), himself approaching 60 enthusiastically supported it. Not content to rest on their laurels, both kept looking for new ideas and strove to understand what kind of products would meet the lifestyle needs of young people. – Quoted from “Sony History”, www.sony.net (*) Morita: Akio Morita, co-founder of Sony

30. "It was very nearly fetishistic, in fact – he even had a collection of Sony letterhead and marketing materials," laughs Deutschman(*). "Sony was a company that Jobs instinctively admired and saw as model from the very beginning.” By Jeff Yang, "How Steve Jobs 'out-Japanned' Japan”, SF Gate (*) Alan Deutschman, Author of "Walk the Walk", Professor at University Nevada-Reno.

31. Steve Jobs simply described Ibuka’s way:

32. We figure out what we want. And I think we're pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That's what we get paid to do. – Steve Jobs CNN Money, Aug/03/2008

33. Once we reach a strong conﬁdence that “a lot of other people are going to want it, too”, then most barriers which prevent us from innovaIon are removed.

34. You may have heard the following sentences.

35. “I requested engineering team to implement that feature, but they said it was too diﬃcult and too risky to do it. So, we had to abandon it. However, our compeMtor could do it and we are in for it now. Stupid engineering team!” Marketers

36. “I asked markeMng guys how criMcal to implement that feature for our business. But they didn’t show any compelling explanaMons. So, we had to make it lower-‐ priority task. Otherwise, we could do it! Our markeMng team doesn’t work at all” Engineers

37. Before iPhone, most manufacturers believed that it was impossible to implement full-‐web browser on mobile handset.

38. But just less than one year a^er iPhone, many manufacturers released mobile handsets with full-‐web browser.

39. What does all this mean?

40. We see a lot of similar stories in our history: Transister Radio, Home VTR, Walkman, Personal Computer, Megapixel Digital Camera, Full-‐ﬂat CRT, Large format LCD, Boradband, Tablet PC, … etc.

41. What does all this mean?

42. Barriers against an innovaIon are not so high if we share a strong conﬁdence that “a lot of other people are going to want it, too”.

43. This confidence fires up us to realize far better user-experiences, innovative products, no matter how high the barrier may be.

44. You know, potenIal ability of engineering is much higher than we expect and engineers can be more ﬂexible if they share the conﬁdence.

45. MarkeIng, sales, logisIcs, legal, producIon, PR, IP, HR, or top managements, in whatever secIons, persons in charge can be more passionate and creaIve if they share the conﬁdence.

46. The missing piece for innovaIon is the strong conﬁdence that ”a lot of other people are going to want it, too”.

47. The key to get strong conﬁdence is the ability to understand and share the feelings of target customers, that is, “Empathy”. empathy: the ability to understand and share the feelings of another. (by Concise Oxford English Dictionary)

48. chapter 3 think about

49. Keynote speech, Mar/2011, from Apple.com It's in Apple's DNA. The technology alone is not enough. That is technology married with the liberal arts, married with the humanities, that yields us the result that makes our hearts sing. – Steve Jobs

50. This sentence explains about the advantage of Apple’s products, but it doesn’t explain why they can create such aRracIve products.

51. The quesIon I’d like to ask here is: “How to create such a`racMve products?”

52. The answer must be very basic and obvious.

53. Apple has strong conﬁdence that she gets what the customers want to buy.

54. Apple is always striving to ﬁnd out: “what user-experiences the customer looks for, values, and needs”.

55. Apple spends enough Ime for this task.

56. So, Apple o^en enters the market very late, and she gorgeously re-‐deﬁnes the product which makes customers’ hearts sing as well as herself. Category Inception Apple Product Released MP3 Player 1997 iPod 2001 MP3 Download(*) 1999 iTune Store 2003 Smart Phone 2001 iPhone 2007 Mobile App(**) 1999 App Store 2008 Netbook 2007 iPad 2010 Apple’s blockbusters (*) Napster, etc. (**) NTT docomo, etc

57. The greatest praise an innovation can receive is for people say, "This is obvious. Why didn't I think of it?" – Peter. F. Drucker

58. Looking back from today: The demands for iPod & iTune Store was obvious around 1999. The demands for “Breakthrough internet communicator(*)” was obvious around 2005. The demands for “big iPhone” was obvious around 2008. (*) Steve Jobs’s introducMon words about iPhone

59. It may sound paradoxical, but Steve Jobs says: “We do no market research. We don’t hire consultants.”

60. MeanIme, Apple has been building a huge plaLorm.

61. Apple Store, Photo by Camillo Miller, Flickr Apple Store was launched on May/2001, 5 months before the ﬁrst iPod would be released, two years before the iTune Store would be launched. (*)At that Ime, Apple's annual revenue was only $5.4 billion and loss was $25 million. There were only Notebook and Desktop computers in the Apple Stores.

62. In 2011, Apple has 336 stores in 11 naIons: Switzerland: 3 Germany: 5 UK: 30 Canada: 20 China: 4 France: 7 Spain: 2 US: 240 Japan: 7 Italy: 6 Australia: 12

63. 5.8 millions people come to Apple Stores each week and 610,000 members in “one-‐to-‐one” service. (data from ifoAppleStore.com) One-to-one service at Apple Store Photo by Phil Photostream, Flickr

64. Apple Store Photo by Camillo Miller, Flickr Apple has about 50,000 employees and about 30,000 of them are working at Apple Stores as full-‐Ime employees. 60% of employees are there sharing their vision "Enrich Lives". (*) Gateway, now a subsidiary of Acer, had similar retailing strategy, but they didn't hire their own people, didn't own real estate. On the other hand, Apple does.

65. The only way to enrich their life is to be part of their life. – Ron Johnson Senior Vice President of Retail, Apple

66. Apple Store became the most powerful “empathy” plaLorm on the planet.

67. chapter 4 Empathy

68. The business enterprise has two – and only these two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are “costs” – Peter F. Drucker

69. Empathy: [em-puh-thee] - the ability to understand and share the feelings of the target customers; “the CORE” ability of Marketing Empathy MarkeIng

70. Empathy: [em-puh-thee] - the ability to understand and share the feelings of the target customers; “the Source” of Innovation encourage Motivation (act) Passion (triumph) Empathy Innovation (produce) Creativity (think) inspire Imagination (feel) [ref]“Towards a Definition of Creativity“, Wisconsin Task Force on Arts and Creativity in Education

71. “Empathy” is the very core ability for both markeIng and innovaIon, the two basic funcIons of business enterprise.

72. Some companies already executed drasIc investment for the Empathy as an system.

73. Apple has been building huge and gorgeous Empathy plaLorm, Apple Store.

74. Samsung has “Regional Specialist Program”, a very aggressive Empathy culIvaIon program. (*) see http://is.gd/Eu0Gfy This is very old program, since 1990.

75. Dyson’s engineers home-‐stayed in Japan several months to understand and share the people’s lifestyle before designing DC12. Dyson’s vacuum cleaner DC12, a strategic product for Japan market

76. However, to build the Empathy as an eﬀecIve system is not easy, especially, in this profound changing age.

77. Life Style Connected Society Declining Birth Rate and Aging Population Sustainable Society Diversity & Inclusion Later Marriage …

78. Global Economy Share of Global GDP Ø USA: 31%(2000) -‐-‐-‐> 18%(2015)(*1) Ø BRICS: 8%(2000) -‐-‐-‐> 23%(2015) -‐-‐-‐> 31%(2020)(*2) Share of Global Cell-‐Phone Market(*3) Ø USA market: 50% (1998) -‐-‐-‐> 12% (2015) Ø Asia market: 19% (1998) -‐-‐-‐> 50% (2015) E7 will beyond G7 in 2020 in terms of GDP(*4) (*1) IMF (*2) BRICS Summit (*3) Softbank (*4) PWC

79. Lifestyle changes day-‐to-‐day, market changes globally.

80. Once again, “Empathy” is the very core ability for business.

81. Are you being inspired through target customers?

82. Are you culIvaIng your passion through target customers?

83. Are you and your company ready for the next decade?

84. visit: tansalink.com An answer will be shared here in version 1.0 … to be posted.

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