Four Ps applied to Apple Computer - Assignment Example

? Table of Contents Introduction........................................................................................2 Apple, Inc. History...............................................................................2 Four Ps Applied to Apple, Inc..............................................................4 Products......................................................................................4 Position........................................................................................5 Paradigm.....................................................................................7 Process.........................................................................................8 Evaluation of the Quote by Gary Hamel............................................10 Conclusion...............................................................................................12 References...............................................................................................13   Apple Inc.: A Study in Innovation Introduction             The Four Ps of innovation is defined in his paper as product, process, position and paradigm (Mobbs, 2010). Innovation, in general, consists of common words that might include the word “new,” “introduction,” “markets” and “process,” and is marked by a willingness to take some risks and celebrate the failures. Innovation also can be incremental or radical. Incremental means that something existing is made better. Radical means that the company is doing something completely different (Mitchell, 2010). Incremental innovation could be extremely beneficial to an industry  - for instance, in the television industry, the advent of flat screens and high definition has radically transformed that industry, for the better (Phi, 2012). Perhaps no company has exemplified the principles of innovation better than Apple, Inc. Its i-Tunes and i-Pod radically changed the music industry, then its i-Phone and i-Pad did the same for the computing and cell phone industries. They have led the way in developing products that could be considered radical, not just a “tweak” on a product that has already been in place. In the process, they have become one of the most, if not the most, exciting company to watch. Although there are some that might say that Apple has peaked, the company does not buy into this, and innovation continues to be their cornerstone. This paper will examine the company, then examine how the four Ps of innovation apply to it. Apple, Inc. History             According to Chapman et al. (2012), Apple began its life in 1976, the brain child of Steve Jobs and Stephen Wozniak. The two men were high school mates, as well as former collaborators. Wozniak had been working on combining computers with video monitors, with an idea towards making computers accessible to the masses and user-friendly. Wozniak was working at Hewlett-Packard at that time, and brought his ideas to HP. HP, however, did not think that personal computers had a future, so rejected Wozniak's ideas. Jobs, however, saw the future, and decided that he was the right partner for Wozniak to begin selling computers. Their first computer was known as Apple 1, and was built in the garage of Jobs' parents. This computer was only intended for hobbyists, as it didn't have an exterior casing, and only was a circuit board. The name of the company was Apple, because Jobs had a job in an orchard while he sought enlightenment, and neither man could think of a better name. The Apple II soon followed, and the duo was able to expand after finding new partners for their expansion plans (Chapman et al., 2012).             The Apple II was a hit, according to Chapman et al. (2012), as it was the first computer that had a sleek plastic casing and color graphics. The annual sales for the fledgling company was $10 million in 1977, and thousands of employees were added. By 1980, the company was public, and its stock increased, on the first day of trading, from $22 to $29.  By the end of that year, sales had reached $100 million. In 1983, the Macintosh was released, and this was a notable computer, as it was the first to have a graphical interface and a navigation mouse. This computer sold very well, and the company had sales in 1984 of $1.5 billion. However, the company soon was fighting with Microsoft for dominance, as Microsoft had compatible software, and Apple didn't (Chapman et al.,  2012).              According to Chapman et al. (2012), Steve Jobs had left the company in 1985 over a dispute over company direction. Towards the late 1990s, the company was flailing. This was halted when it acquired NeXT, the company founded by Steve Jobs after he left Apple, which effectively brought Jobs back to the company. The company introduced the PowerMac, PowerBook, iMac and iBook, and the company was once again on better financial footing.                                     Four Ps applied to Apple Computer Products             The Apple products were not limited to personal computing, of course. Chapman et al. (2012) stated that Jobs was a visionary who saw that digital was the future, so he set out to change the way that people received digital products. He started with music – iTunes was invented as a way for people to get music digitally in a legal manner, and the iPod was invented as a way for these people to listen to their music on the go. iTunes soon branched out as a way to provide not just music for digital downloads, but also TV shows, movies, apps, games, podcasts and audiobooks. The iPod, which his the device that plays all of these various media has four different styles – shuffle, classic, nano and touch (Chapman et al., 2012).             Even more exciting than revolutionizing our digital world, and the way we can play music was when Apple revolutionized our phone with the iPhone, effectively combining a cell phone with a computer. Chapman et al. (2012) states that the iPhone effectively combined the phone with the iPod and the Internet. Its interface was also revolutionary, in that it was multitouch, and its software was likewise radical, in that it could be operated with a touch of the fingers. Apple sold one million of the iPhones in the three months after its launch. Apple then set about revolutionizing the computing model with the iPad, which was Apple's answer to the portable computer. It featured the same type of touch screen display, and gave the users the opportunity to use it not just for accessing the Internet and playing videos and games, but also users were able to use it as an e-reader. Users could also buy a keyboard dock to use the product much like a laptop (Chapman et al.,  2012).             While this product is already on the market, it also reflects, in part, the future of Apple, Inc., and that is the iCloud, which stores all the users information on any Apple device that they have (Digman, 2013). Brockman (2012), states that people can look for five different Apple products which will be new in 2013. The first one is Apple Radio. This is a free radio service that is slated to be a direct competitor to Pandora Radio. Pandora Radio is a radio that listeners may customize, so that they can listen to the music that they want to listen to by selecting specific artists for stations. For instance, if the user selects the Barry Manilow station, the music that is played is Barry Manilow and similar artists. The iPad mini with retinal display is another product. This product makes the screen images crystal clear. iOS 7 is also in the pipeline, in part because the Apple maps, which was the maps that was offered with the iPhone 5, was so bad that the new CEO, Tim Cook, had to issue an apology to iPhone 5 users, along with encouraging them to download other map apps until the problems could be fixed. YouTube was another app that was eliminated with the iOS 6, so this is another issue that will presumably be addressed in Apple's new operating system. The iPhone 5s is expected to roll out in September, which will look the same as the iPhone 5, but will feature a better camera and more battery life, along with different features inside. An Apple Television is expected to possibly roll out in November, 2013.                  Position             Apple is currently seeking to expand its position, in that it is looking to find new target consumers. For instance, one of the objectives and strategies for the innovation plan for Apple is an expansion into China, penetrating even more into that country than it already is. Dilger (2013) states that the company is growing in China, with the sales increasing over $10 billion every year.             Gustin (2012) states that, in addition to further penetrating the Chinese market, Apple's main objective in innovation is to continue the vision of Steve Jobs. Since developing more disruptive products, such as the iPhone, iTunes, iPod and iPad, is not necessarily on Apple's radar, the innovation objectives and strategies of Apple's future will be much more low-key. Gustin (2012) states that the future innovation strategies and objectives includes aggressively dealing with supply-chain problems – Apple was manufacturing products in China using workers in poor conditions, and Cook has moved to aggressively address this issue. Jobs had also put limits on matching corporate philanthropy, and Gustin (2012) states that Cook has loosened these limits. Cook also indicates, according to Dignan (2013), that it will be concentrating on the tablet market, stating that the tablets popularity is just beginning and that the iPad represents the “whole of Apple” (Dignan, 2013). These moves will improve Apple’s positioning with its target markets, in that concentrating on social responsibility, such as ensuring that the working conditions for people making the products are improved, and making the company more philanthropic, has shown to boost sales when consumers organize “buycotts” to reward companies who are socially responsible (Friedman, 1996).             Kotelnikov (2012) states that the innovation strategy of Apple does not include acquisitions of other companies, at least in comparison to other major corporations. It makes much fewer company acquisitions than does its competitors. Instead, it invests in its supply chain – it pays a significant portion of the factory construction costs in exchange for exclusive rights to that factory's output for a set period of time. This investment is crucial to innovation, because it allows the company to come out with new components long before rivals, according to Kotelnikov (2012). This enhances Apple’s positioning with its target market as well, because if it is able to create upgrades and innovations before its rivals, then it will have the advantage of being first.             In this category, it is also important to look at competitors for Apple. All of Apple's products have competitors. Chapman et al. (2012) sizes up the main ones. Apple iTune's competitors include Napster, which was the first music-sharing site. It currently offers unlimited access to its library for $5-$10 a month. Kazaa is another music sharing site that is accessible on the Apple products, including iPads and iPhones.  The competitors for iPhones include Motorola, whose smartphone the Milestone XT720 was the first smartphone to running the Google Android system to offer Xenon flash for taking pictures and shooting videos. The Google Android system, which is the operating system on a multitude of smartphones, is the most popular in the United States, with a 29 percent market share in 2011. It was followed by Apple and Blackberry operating systems, at 27% each. The iPod dominates the MP3 player market, but it, too , has competitors, including SanDisk Sansa and the Sony X-Series Walkman (Chapman et al., 2012).           Paradigm             Paradigm refers to the framing of the company. Paradigm is undoubtedly more complicated for Apple because of the death of Steve Jobs. Steve Jobs was Apple, therefore the entire company was framed by his vision. Chapman et al. (2012) state that the charismatic founder of the company was the face of the company, and was essential for the company's public relations and promotions. He had a good relationship with the press, constantly cultivating new relationships with magazine editors, and maintaining the relationships he had. Moreover, he was good with the public – when there was a problem with the products, Jobs was out front, ensuring that the public knew that he was listening to them and concerned with their issues – an example of this is when Apple cut the price of its iPhone by one-third three months after the launch of the product. When customers who bought the product at the higher price complained, Jobs promised these consumers a $100 Apple store credit. Moreover, Jobs was known for his obsessive attention to process and detail, sending products back to the lab if they didn't meet his exacting standards, and never putting out a product that didn't meet these standards (Chapman et al., 2012).  Jobs “marketing, communications, and salesmanship skills are unsurpassed” (p. C-22).             That said, Apple, Inc. is framed by the people it hires, for the people are now the center of the company. They are the ones who innovate and design, and will create “the next big thing.” People is probably Apple's most winning innovative strategy (Hall, 2012). Richards (2012) states that the culture of Apple is that the accountability comes from the bottom up – team leaders and members are responsible for their actions internally, and this accountability breeds a relationship with the public. Apple also seeks employees who are experts, who also have the ability to work in cross-functional teams. The teams innovate products which are simple, intuitive and engaging. The employees are treated well, being one of the first companies to give nap rooms and allow the employees to telecommute. Richards (2012) also says that Apple had a program called “Apple Masters,” that brings in creative types to contribute to Apple's creative development. The “consultants” who were brought in for this endeavor includes Harrison Ford, Michael Crichton, Bryan Adams, Terry Gilliam and Jennifer Jason Leigh.  Shaughnessy (2013) states that part of the reason why Apple was at the forefront of innovation is because the Apple teams compete against one another for select projects.             Morrison (2009) states that Apple is able to turn out its innovative and elegant products because it cares and feeds its creatives. Its most valuable and productive employees are carefully cultivated. The Industrial Design Group is the group that gives Apple products their distinctive designs. Behind the doors of the Apple's main campus, the IDG employees are free to work without distraction or interference, and the IDG gave the impression to a visitor that it was a small design firm, not a part of a large conglomerate like Apple. These employees work behind opaque glass with music playing in the background. Yet, the finished product is not seen by these designers, only the executives, according to Morrison (2009). The executives are a tight group that is in on every important design decision of every new product.  Kotelnikov (2012) adds that the successful Apple products are designed by a few people who are not a part of a formal structure or hierarchy and have very little corporate oversight. Process             According to Bry (2011), Apple designs its products to be complete, self-contained ecosystems. This means that the software and the hardware are self-contained and cannot be separated. When the products are rolled out, they are done so in secret. Therefore, the process for developing products is developing not just a product, but a line of products  - for instance, the iPod and iTunes are an ecosystem that fits elegantly together and cannot be separated.  The Apple operating system only works on the Apple computers. The Apple App store works with the Apple iPhone and iPad. And so forth.             Bry (2011) states that another process that Apple goes through to innovate products is ensuring that the new products have an elegant design. For this, the company employs individuals who specialize in aesthetics to design their products. For instance, the designer Jonathan Ive, who designed bathrooms, had the ideas for the look of the iPod and iMac products, and these ideas were imposed upon the engineers of the products and incorporated. This made these products friendly, not just user-friendly, and helped these products create an emotional relationship between the product and the user.             Morrison (2009) states that the heart of the Apple innovation process is an unwavering commitment to excellence. Products have undergone costly overhauls before coming to market if they were not up to Jobs' standards, and other products were entirely canceled because they do not fit into the Apple line or perform up to par. Apple also innovates because because it does not acknowledge competition or fads, preferring to think differently. An example of this, according to Morrison (2009) is the fact that Apple has not designed a cheap netbook, releasing instead the Air, which is more in line with the Apple style. Evaluation of the Quote by Gary Hamel                         The quote by Gary Hamel essentially says that many industries have such thin profit margins and hyper-competition, therefore they must invest in radical and non-linear innovation, instead of incremental innovation – “Most companies long ago reached the point of diminishing returns in their incremental improvement programs. Radical, non-linear innovation is the only way to escape the ruthless hyper-competition that has been hammering down margins in industry after industry.” Perhaps more than any other company, Apple relies on its innovative products to shore up its bottom line. As Chapman et al. (2012) note, innovation and making different products is the core of its ingenuity, which has allowed it to succeed in an industry that has low profit margins and has been dominated by cost-cutting. As they note, “while competitors do everything they can to keep costs down, Apple does what it can to make its product different” (p. C-19).                         Gustin (2012) states that innovation is at the very heart of Apple, and that is why it has led the way with so many products. The motto of Steve Jobs was to “skate where the puck will be” (Gustin, 2012). This was a motto of Wayne Gretzky, which essentially means to be where the market will be going, not follow trends, but create the trends. Jobs stated that Apple must not just rely on what the customer wants, but to give the customer what he didn't even know that he needed. An example of this is the iPod – prior to the development of the iPod, customers were happy enough with their Sony Walkmans, but after the iPod was developed, the people had to have it. The same was with the smartphone – people were happy with their flip-phones, but once the iPhone was developed, people had to have it as well.                         Morrison (2009) states that Apple makes innovation a priority on its own terms. It doesn't rush products to market, and marches to the beat of its own drummer. Its moves are not telegraphed to the society at large – for instance, the iPod and the iPhone were both rumors until they hit the market, and Apple sought to quash these rumors when they cropped up. This shows the wisdom of Hamel’s quote – Apple has succeeded in an industry that has a low profit margin, simply because it radically innovated products. On the flip side, Apple today is also proving Hamel’s point. There are several stories about Apple, all of which are critical of the company because it is now incrementally innovating its existing products, instead of attempting to innovate new products, Hamel does seem to have a point. For instance, Timberg (2013) states that Apple's stock is sliding because of flat profits, and blames the flat profits directly on the fact that Apple is no longer leading the way with radical innovations, and there are no plans for such in the near future. The article points out that it has been three years since Apple radicalized the world of consumer electronics with the introduction of the iPad, and, since then, the competition has grown fierce with other companies creating their own tablets. Timberg (2013) states that the company has lost some $250 billion in value in a matter of months, in part because there is uncertainty as to whether Apple has the ability to create another blockbuster innovation.             Nocera (2012) makes a similar argument. He states that Apple might have peaked, in part because Jobs is no longer around, looking over everybody's shoulders. He states that, instead of innovating revolutionary products, it has taken to antagonizing Google by making it a rival as opposed to an ally, and Samsung, with its patent litigation regarding Samsung's design concepts. These moves have nothing to do with innovation, and everything to do with protecting its turf. Nocera (2011) states that Apple might be susceptible now to companies who are creating new things, instead of milking the old, proving Hamel's point exactly – if a company does not radically innovate, that company will lose out to companies who will. Since Apple is no longer radically innovating, Hamel fears that it will go the way of Blackberry, which collapsed when it failed to keep up with the smartphone revolution. Further, the fact that Apple has to institute lawsuits to protect its turf, instead of using all its energies in creating the next big thing, also proves Hamel's point – a company that is not radically innovating has to keep its market share by pummelling its competition. And Apple's obsession with pumelling Google has led to its disastrous decision to replace Google Maps with the Apple map app, which has angered iPhone 5 users (Thompson, 2012). Therefore, since Apple isn't innovating, it has to crush its competitors, which means that it has to create inferior products because it is no longer allied with the best products on the market.             Tellis (2013) concurs that companies must radically innovate or lose market share. He states that companies that do radically innovate – like Sony, Hewlett Packard and Kodak in the past – have toppled when they failed to continue to innovate and became complacent, preferring to incrementally innovate their existing products instead of attempting to create new ones. The reason for this is these companies become risk-averse and prefer to sit on their laurels. Consequently, they are not prepared for the new waves of products that sweep through the country, and are unable to keep up. Yet the radically innovative products were available to all these companies before they hit the market, yet these companies did not capitalize upon them – they put these innovations on hold, ignored them or belittled them (Tellis, 2013). Tellis, in other words, also affirms the wisdom of Hamel's words, that incremental innovation is not enough to stay afloat. Companies must radically innovate to stay ahead of the pack.             Conclusion             Apple Inc. has been the leader of innovation since its inception. In the early 1980s, they were the first to come out with a what you see is what you get (WYSIWYG) interface. Later, they revolutionized the music industry, the computer industry, and the cell phone industry with their inventions. These products came out of the era of Steve Jobs, who was known for his exacting standards. The Apple culture encouraged this innovation, from the top down when Jobs was CEO. However, Apple does not have any new and revolutionary products planned – in 2013, their slate includes tweaking current products, and a rumored Apple Television. The Apple Television might represent something revoluntionary, but, generally, the company is making incremental innovations. Because of this, there are already articles claiming that their time might be through. This remains to be seen, but, if Apple does lose its luster, and the stock prices plummet because of this, it will be living proof of Hamel’s quote  - that corporations must make radical innovations or die. For proof of this, see Kodak.   References Bry, N. (2011) “Same Exterior, Different Innovation Engines.” Available at: http://nbry.wordpress.com/2011/06/06/google-and-apple-same-exterior-different-innovation- engines/ Chapman, R., Hoskisson, R. & Christian, G. (2012) “Apple Inc.: Keeping the I in Innovation.” Cengage Learning, Inc. Available at: http://www.cengagebrain.com.mx/content/9781133516491.pdf Dignan, L. (2013) “Apple CEO Cook: We’re Unrivaled in Innovation.” CBS News. Available at: http://www.cbsnews.com/8301-205_162-57568929/apple-unrivaled-in-innovation-still- growing-cook-says/ Dilger, D. (2013) “Tim Cook: Apple’s Culture of Innovation Refuses to Recognize Any Limits.” Apple Insider. 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(2010) “A Model for Driving Innovation in Your Organization.” American Management Association. Available at: http://www.amanet.org/training/articles/A-Model-for-Driving- Innovation-in-Your-Organization.aspx Mobbs, CW. (2010) “What Is Innovation?” Innovation for Growth. Morrison, C. (2009) “How To Innovate Like Apple.” CBS News. Available at: http://www.cbsnews.com/8301-505125_162-51330240/how-to-innovate-like-apple/ Nocera, J. (2012) “Has Apple Peaked?” The New York Times. Available at: http://www.nytimes.com/2012/09/22/opinion/nocera-has-apple-peaked.html?_r=0 Phi, L. (2012) “Want to Be Innovative? Think Lean.” Innovations in Piping Systems. Available at: http://innovationsinpiping.com/2012/12/03/want-to-be-innovative-think-lean/ Richards, K. (2012) “How Apple’s Culture Seeped Into Silicon Valley’s DNA.” Fast Company. Available at: http://www.fastcompany.com/3003291/how-apples-culture-seeped-silicon-valleys- dna Shaughnessy, H. (2013) “Who Has the Winning Innovation Model, Google, Apple or Samsung?” Forbes. Available at: http://www.forbes.com/sites/haydnshaughnessy/2013/03/07/who-has-the- winning-innovation-model-google-apple-or-samsung/     Read More