Product strategy lessons we can learn from Apple - delivered at ProductCampRTP April 2014
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This document appears to be a slide deck presentation about lessons learned from Apple's product strategy. It discusses Apple's three layer model of distinguishing features, reputation, and commodity over time. It also covers Apple's transitions from 1997 to 2011 in terms of their strategic control points and competitive advantages. Key aspects discussed include Apple focusing on a niche with iTunes/iPods before expanding, their approach to mass customization through incremental innovations, and avoiding common mistakes like guessing customer needs rather than understanding them.
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Product strategy lessons we can learn from Apple - delivered at ProductCampRTP April 2014
- 1. gregoryhopper.com Product Strategy Lessons from Apple, Inc. ProductCampRTP April 12, 2014
- 2. gregoryhopper.com 2 Innovation Management Strategic Planning Speaking & Training
- 4. gregoryhopper.com “We believe people with passion can change the world for the better…and that those people who are crazy enough to change the world, are the ones who actually do.” 4
- 7. gregoryhopper.com 7 Apple: 1997 Distinguishing Features Reputation Commodity Web, documents, email
- 8. gregoryhopper.com Apple: 2000 8 Distinguishing Features Reputation Commodity Web, documents, email
- 9. gregoryhopper.com Disruptions 9 No floppy drive Ethernet port Color
- 11. gregoryhopper.com “Blue Ocean” Actions 11 Eliminate Which factors that are taken for granted should be eliminated? Raise Which factors should be raised well above the industry’s standard? Create Which factors should be created that the industry has never offered? Reduce Which factors should be reduced well below the industry’s standard? A New Value Curve
- 12. gregoryhopper.com 12 Apple: 2009 Distinguishing Features Reputation Commodity Web, documents, email
- 15. gregoryhopper.com Porter: Generic Strategies 15 NATURE OF COMPETITIVE ADVANTAGE COMPETITIVESCOPE LOWER COST DIFFERENTIATION BROAD NARROW DIFFERENTIATION COST FOCUS DIFFERENTIATION FOCUS COST LEADERSHIP
- 16. gregoryhopper.com Apple: 1997 16 NATURE OF COMPETITIVE ADVANTAGE COMPETITIVESCOPE LOWER COST DIFFERENTIATION BROAD NARROW DIFFERENTIATION COST FOCUS DIFFERENTIATION FOCUS COST LEADERSHIP
- 17. gregoryhopper.com Apple: 2011 17 NATURE OF COMPETITIVE ADVANTAGE COMPETITIVESCOPE LOWER COST DIFFERENTIATION BROAD NARROW DIFFERENTIATION COST FOCUS DIFFERENTIATION FOCUS COST LEADERSHIP
- 22. gregoryhopper.com Market Forces 22 Industry RivalrySupplier Power Buyer Power Threat of Entrants Technology & ! Pace of Change Globalization Threat of Substitutions Government Social and ! Cultural Shifts
- 23. gregoryhopper.com 23 Industry RivalrySupplier Power Buyer Power Threat of Entrants Technology &! Pace of Change Globalization Threat of Substitutions Government Social and ! Cultural Shifts
- 25. gregoryhopper.com Market Forces 25 Industry RivalrySupplier Power Buyer Power Threat of Entrants Technology & ! Pace of Change Globalization Threat of Substitutions Government Social and! Cultural Shifts
- 27. gregoryhopper.com 27 Industry RivalrySupplier Power Buyer Power Threat of Entrants Technology &! Pace of Change Globalization Threat of Substitutions Government Social and ! Cultural Shifts
- 29. gregoryhopper.com Disruptions 29 No optical drive Solid state memory
- 31. gregoryhopper.com 31 Source: Wall Street Journal; Asymco
- 32. gregoryhopper.com AAPL Stock Price: 1997 - iPhone 32 Source: Ycharts.com
- 33. gregoryhopper.com AAPL Stock Price since 1997 33 The Internet “Bubble”
- 34. gregoryhopper.com Comparative Revenues: 1997 - today 34
- 35. gregoryhopper.com Comparative Revenues: 1997 - today 35
- 38. gregoryhopper.com Strategic Control Point Index 38 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone”
- 39. gregoryhopper.com 39 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone” 1997
- 40. gregoryhopper.com 40 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone” 1997
- 41. gregoryhopper.com 41 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone” 1997
- 43. gregoryhopper.com 43 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone” 1997
- 44. gregoryhopper.com 44 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone” 1997
- 45. gregoryhopper.com 45 Profit Protecting Power Index Strategic Control Point High 10 Own the standard 9 Manage the value chain 8 String of superdominant positions 7 Own the customer relationship Medium 6 Brand; copyright; trademark 5 Two year product development lead Low 4 One year product development lead 3 Commodity with 10-20% cost advantage 2 Commodity with cost parity 1 Commodity with cost disadvantage Source: Slywotzsky, “The Profit Zone” 1997
- 48. gregoryhopper.com Competitive Radar: 2004 48 HP Microsoft Lenovo Acer Sony Tower Records Best Buy Circuit City
- 49. gregoryhopper.com Competitive Radar: 2007 49 HP Microsoft Lenovo Acer Sony Nokia LG Samsung Tower Records Best Buy Circuit City Motorola RIM
- 51. gregoryhopper.com Competitive Radar: 2014 51 HP Microkia Google LG HTC Samsung Lenovorola Amazon Facebook RIM Pandora
- 53. gregoryhopper.com 53 MarketValue/Revenue Value Inflow Stability Value Outflow • Limited competition • High growth • High profitability • Competitive stability • Stable market share • Stable margins • Competitive intensity • Declining sales • Low profits 2 1
- 54. gregoryhopper.com 54 MarketValue/Revenue Value Inflow Stability Value Outflow 2 1 ?
- 55. gregoryhopper.com Mac not dead yet (units) 55 http://www.macworld.com/article/2062821/apple-by-the-numbers-mac-not-dead-yet.html
- 56. gregoryhopper.com Mac not dead yet (sales) 56 http://www.macworld.com/article/2062821/apple-by-the-numbers-mac-not-dead-yet.html
- 57. gregoryhopper.com Reinvent, and reinvent again. 57 http://www.macworld.com/article/2062821/apple-by-the-numbers-mac-not-dead-yet.html
- 60. gregoryhopper.com Crossing the Chasm (Geoffrey Moore) 60 Graph from http://www.kzero.co.uk/blog/?p=216
- 61. gregoryhopper.com “The Whole Product” • The minimum set of products and services necessary to ensure that the target customer will achieve his or her compelling reason to buy. ! • Many tech companies were unwilling or unable to admit that their offering was not a “whole product” ! • “Something for everybody” vs. “everything for somebody” ! • This leads to the way to “Cross the Chasm” – find a target market for which you can provide “everything”. 61
- 64. gregoryhopper.com The Bowling Alley Success Model 64
- 65. gregoryhopper.com 65 Seg 1 ! App 1 Seg 3 ! App 1 Seg 1 ! App 3 Seg 2 ! App 2 Seg 1 ! App 2 Seg 2 ! App 1 Whole Product Customer References
- 67. gregoryhopper.com 67 What was the “whole product” for the original iPod/iTunes? ! ! ! ! ! ! ! ! ! What was the niche?
- 68. gregoryhopper.com 68 iPod/iTunes Mac only iPod 2G Mac+PC iPod mini Mac+PC Firewire (1394)
- 69. gregoryhopper.com 69 iPod/iTunes Mac only iPod 2G Mac+PC iPod mini Mac+PC iPod 3G iTunes MS Firewire (1394) USB iPod Photo iTunes MS iPod nano iTunes MS
- 70. gregoryhopper.com 70 iPod/iTunes Mac only iPod 2G Mac+PC iPod mini Mac+PC iPod 3G iTunes MS Firewire (1394) USB iPod Photo iTunes MS iPod nano iTunes MS iPod 4G iPod mini 2G iPod ShuffleiPod nano 2G
- 71. gregoryhopper.com 71 iPod/iTunes Mac only iPod 2G Mac+PC iPod mini Mac+PC iPod 3G iTunes MS Firewire (1394) USB iPod Photo iTunes MS iPod nano iTunes MS iPod 4G iPod mini 2G iPod ShuffleiPod nano 2G iPod Touch iPod 5G iPod nano 3G iPod Shuffle 2G iPhone App Store
- 72. gregoryhopper.com Bowling Alley Success • Own a niche with a whole product –THEN… ! – Find other niches for the same whole product AND ! – Find other (incremental) whole products for the same niche ! ! • You cannot be opportunistic – you can’t do random niches – No leverage and huge costs 72
- 73. gregoryhopper.com Find an attractive niche • Be first in your niche, not 2nd in somebody else’s niche ! • Two criteria: – The segment has a compelling reason to buy (you solve a problem) – The segment isn’t well served by anyone else 73
- 75. gregoryhopper.com Mass Customization • You are tailoring a commodity product with extra features or attributes that appeal to a unique niche – over and over again ! • Not about technology breakthroughs ! • It is about perceptive design enhancements! ! • You can make new tornadolettes – niches are small, so you can’t spend a lot on R&D – Drives focus on incremental innovation 75
- 76. gregoryhopper.com Marketing, Not Technology • Too many companies fail to realize the end of the tornado – Cram more technology at the market – Market doesn’t want it and won’t pay for it ! • Doesn’t want more ADVANCED technology, it wants more ACCOMODATING technology ! • There are no new customers on Main Street. – Develop niche-specific extensions to the base product/platform for existing customers – The “Whole Product +1” 76
- 77. gregoryhopper.com Inside the Tornado: Organizational Imperatives 77 Product! ! Leadership! Customer! ! Intimacy! Operations! ! Excellence!
- 78. gregoryhopper.com Apple Picks All Three 78 Product! ! Leadership! Customer! ! Intimacy! Operations! ! Excellence!
- 80. gregoryhopper.com “Tuned In”: Resonator ! ! A breakthrough product or service that buyers immediately understand has value to them, even if they’ve never heard of you or your product. 80
- 81. gregoryhopper.com Common Mistakes • Three of the most common mistakes companies make that cause products or services to fail: ! – Guessing ! – Assuming ! – Telling ! • Stop making these mistakes by unlearning Six Business Myths 81
- 82. gregoryhopper.com Six Myths 1. Customers know best. 2. This is a commodity business. 3. Innovation is everything. 4. We’re smarter. 5. Field of Dreams development. 6. Revenue cures all. 82
- 83. gregoryhopper.com Apple’s Answers 1. Customers know best. 2. This is a commodity business. 3. Innovation is everything. 4. We’re smarter. 5. Field of Dreams development. 6. Revenue cures all. 83 1. Seriously? 2. Nope. 3. If it helps the customer. 4. OK, we are. 5. Get real. 6. Revenue follows.
- 84. gregoryhopper.com 84 The worldview he was describing perfectly echoed Land’s: “Market research is what you do when your product isn’t any good.” And his sense of innovation: “Every significant invention,” Land once said, “must be startling, unexpected, and must come into a world that is not prepared for it. If the world were prepared for it, it would not be much of an invention.” Thirty years later, when a reporter asked Jobs how much market research Apple had done before introducing the iPad, he responded, “None. It isn’t the consumers’ job to know what they want.”
- 85. gregoryhopper.com Definition ! ! ! Innovation is the creation of new products, services or offerings that create value for customers and contribute to growth. 85
- 87. gregoryhopper.com Create a “Resonator” 87 Find unresolved problems Understand buyer personas Quantify the impact Create breakthrough experiences Articulate powerful ideas Establish authentic connections
- 90. gregoryhopper.com Design an experience 90 Discovery Breakthrough ! Experience! Packaging Service UsingBuying
- 91. gregoryhopper.com Summary • Vision and values ! • Timing ! • Targeting and “whole product” ! • Near-flawless execution and systematic growth ! • Attention to detail 91