Competitive Strategy and Innovation - Essay Example

Competitive strategy and innovation “Every day we are saying, How can we keep this happy? How can we get ahead in innovation by doing this, because if we dont, somebody else will” Bill Gates quotes (American Entrepreneur and Founder of Microsoft Co., b.1955)1 “Innovation distinguishes between a leader and a follower.” Steve Jobs quotes (American Entrepreneur Apple co-Founder, b.1955)2 As already mentioned above, we see that innovation can somewhat be linked to the great saying that “necessity is the mother of creation”, well in the 21st century innovation rather seems the key for product and service oriented organization catering to the masses of consumers at hand. So the question that arises is that where does innovation begin, how it executed and what are the end results and how one measure does or understand the true value of the innovation at hand, under monetary terms. Well to begin with we can first have a look at a few people at hand who have understand it better than anyone else in humanity, such as Steve Jobs, Michael Dell, Bill Gates and others. So what made them so different from the rest in the corporate jungle to bring about rather such exquisite products or service offerings that consumers lapped up them in time? The answer well lies in the fact that these guys are not only great entrepreneurs, techno honchos, and brilliant chaps but rather they always understood that to stay ahead in the rat race of corporate tussle; you have to keep a tab on the pulse of the consumers. The key always lies among them. Again a different perspective can very well be that these guys were great practioners of marketing principles and understood the 4Ps’ of Marketing very well enough to always come up with great products and services which mapped the consumer needs so well that today they are all in the list of Forbes 500. These people could create an idea which held the attention of millions together and then they had the brilliance to turn the attention into a long term association and loyal purchase. Apart from corporate and organizations, we also certainly can’t ignore the everyday innovations we make in our daily lives, from mending a simple broken cigarette to finding ways how to make life simpler by implementing certain simple and unthought-of of innovative ideas and processes which actually makes life simpler and smoother. On the whole what I am trying to say is that innovation can be brought about by virtually anybody at any place and at any point of time, but to commercialize it one necessarily needs to take the corporate route. So let’s see and understand how certain key players in our society have unraveled innovations to make life simpler and technologically progressive. To take a prime example we’ll concentrate on Mr. Steve Jobs the CEO for Apple Inc. He along with Steve Wozniak started Apple Computers in their garage in 1976. From their onwards to revolutionizing the computer world with iMacs’ and the music industry with his concepts in music download i.e iTunes’ and iPod. We have seen a man change from being extremely bull headed to becoming one of the foremost leaders of the 21st century. From getting ousted from Apple to starting up NEXT and Pixar Animations, this is one person who has learnt from his own mistakes and has decided to take Apple to newer heights and as once envisioned as a young entrepreneur. When Steve Jobs was ousted from Apple Inc, it was pretty well known as to why he was removed from his post as Chairman. His overbearing and prejudiced management style and constant conflict with then CEO John Sculley (Steve Jobs Transforms Apple), as result by the time he left it was assumed that Apple was in good hands now. But the company may have had taken the decision in haste as it had removed one person from the organization whose core skills lay in product innovation. As a result when he joined back again in 1997 it was very well known that the organization needed some new product offerings apart from iMac Slim and its desktop variants. As a result by 2005 he had come out with new offerings like iTunes’ which piecemealed songs and sold them via iTunes and later came out with the various variants of iPod, so much so that they even came out with iPod Nike (Exchange ActiveSync).3 One thing is certain by the end of the first decade that Apple truly has overhauled its systems, management style, and processes to constantly come up with newer and innovative products and services. So let’s understand as to how Apple came up with such new and innovative products like the iPod, which is not only rich in features but also is highly user friendly beating almost all the MP3 variants available in the markets. From technology to style it’s truly a gem of an ingenious innovation. Let’s first understand how the product innovation came about. As we all know by the early 2000’s piracy was affecting the music industry in big ways by acting as big drain on their resources. This is where Steve Jobs and Apple stepped in to bring a transformation in the music industry by piecemealing songs from and album and letting consumers download them and pay for them via iStores. Along the process came the developmental cycle for the iPod which basically started from an insight that a new product in the domain of mobile music device would be the need of the hour. Later the concept of research, discovery and development came in, followed by patenting, product engineering, pilot testing, full scale manufacturing and then product launch. The process started by a bunch of incubators led to the innovation of a device whose sales today are increasing at an average rate of a 15%. So what were the true underlings behind this innovative process? The answer probably lies in the managerial processes in place in an organization and the true picture can be understood better if we have a closer look at it. The concept of product innovation pertains to the whole process of bringing a new product or service to the market and which include the stages of product conceptualization, design and development. The process can be termed as technology-push versus market-pull. To go deeper first let’s have a better insight by reviewing the product itself which shows up a device with very clean features, a dial, a control panel, an operating system and a very handy battery source of power which provides just the right amount of power to be going on for hours even when you don’t really have access to charging points. The color schemes and the various design formats shows altogether how versatile Apple have been in the innovation process altogether. It’s a pure case of technological innovation which has come in very handy for Apple when it was being virtually eaten up in the pc-share market by Dell Computers, which has certainly earned the distinction of being the lowest-cost producer of personal computers in the world. All over the world we have been seeing technological innovation in the form of technology, processes, products, services but hardly have we come across an innovation where almost all the formats are in place and well covered to actually leave any loop holes. The idea that now comes is that how does one start on such an innovation process and where does one begin. The answer lies among the consumers and the best way to judge is by keeping a constant tab on the life blood of such consumers and understand what a certain consumer wants and how does one satisfy those needs over a period of time or even if one looks from the point of an industry, well if one really tracks it well enough like a business analyst he or she can pin point at the numbers and the areas where development or the lacunae can be covered by serious research and development followed by a product or service launch. But to understand such ridges and troughs or highs and lows of the market one should have a keen eye for details. This I where a business analyst or a researcher comes in handy and fills in the required ideas or thought incubation process in place or say a problem at hand which needs some serious attention or else some other competitor might step in to take up the lead position. So how does one build such competitiveness to overcome such hurdles or imposing problems to better serve the market, is it sorely through a state of the research and development laboratory or establishment, or is it the processes involved or is it the people working in the organization having the requisite skill sets or rather the finances to actually go ahead with the innovation required to stay alive in the ever changing market conditions, cause if one doesn’t then certainly it maybe the end for the organization. Well the answer is pretty simple enough it’s the appropriate mixture of all the above and one doesn’t need to be genius to figure out what may be the core competencies of an organization which will push it to the helm of success. As in the case of Apple it’s core competencies lies in product development and mind it it’s always innovative enough to keep the corporation chugging along without any second thoughts. Academics have identified three different criteria’s of design success to iPod which consist of a visceral, behavioral and a reflective component (Malester, J. 2005,Mello, J.P. 2005), and how the entrepreneurship has depended upon the personal component of an object attached to it by the owner rather than the designer or manufacturer, although the manufacturer or designer can try to promote this form of attachment through the three criterias of design, cognition and emotion which are integral to a product like iPod , in varying degrees. (Malester, J. 2005,Mello, J.P. 2005), Much can also be attributed to customer ideas and the way the entrepreneurship has driven to adopt a rather holistic approach to it to consumer understanding where the customer has become the central figure in the companys product development efforts. This has been verified to its attempt as a market leader in understanding how customers connect with products from the market leader and a large amount of qualitative research. (Malester, J. 2005,Mello, J.P. 2005), Also regarding the development of the iPod it can be seen that it was based on product innovation and enhancements of existing products and how this combination of enhancements and innovations to secure its position as a market leader. For example if we look at Apple’s strategy it has been changing successful models with different variating, such as the “iPod mini” that was replaced in September 2005 with a much smaller model called the “iPod nano”. (Malester, J. 2005,Mello, J.P. 2005). Inspite of low storage capacity it was seen that nano did very well in the market and rather added great value to the iPod revenue and brand equity. Innovation and Entrepreneurship is often associated with the technology-push approach which is evident within the several organizational aspects of Apple. It uses the market-pull route to emphasize requirements of the targeted market. (Malester, J. 2005,Mello, J.P. 2005), Thus these product development approaches in the marketing research of the iPod played a dominant role in the market-pull approach but being responsive to consumer demands (demands. It seems that Apples approach to new product development has tended to be more towards the technology-push route but without neglecting what the market actually demands. (Malester, J. 2005,Mello, J.P. 2005). The primary reason for iPods success is however, the company’s ability to perceive what the market demands and what are the customer requirements. Apple has constantly innovated on its product line to match the customer desires and thereby all the innovations have been accepted amiably by the consumers. (Winters, R. 2002), The foundation of the innovation has been borne to be research in the case of iPod, the company has been known for its qualitative and quantitative market research, that it organizes before it sets in any feature into iPod. This helps them understand the customer’s preference and taste better. Also the quantification helps them prioritize one attribute over the other. (Winters, R. 2002), The iPod on itself is treated as a style icon in today’s era. Thereby its cult marketing strategy infuses the feeling of loyalty and sense of belonging into its customers. It organizes various online surveys to gain information from the customers to storm ideas about further improvisation in the brand. (Winters, R. 2002), In essence the it can be seen that Apple has redefined the portable music market thus effectively creating an entirely new market segment by becoming a consumer phenomenon and a much sought after life style product (popularly referred to as an elegant method of promoting individual choice.) (Winters, R. 2002), Apple has also been cautious enough to not overload it’s feature setup and have tried to keep it as simple as possible without overloading the entire setup with too many functional aspects, thus keeping the product extremely user friendly and virtually usable by even a 4 year old. The universal acceptance of the product shows the ingenuity in simplicity and the way it has been executed in the product setup. The iPod campaign has benefited immensely from its control elements (like menu for navigation – essentially to find the songs and so on) and design. The company uses the business score card approach to understand the external environment and it thereby draws a strategic plan to align its internal policies and goals in congruence with the external forces. (Winters, R. 2002), The set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objectives of an organization, involving decisions pertaining to products, location and the organization structure are all formulated with utmost care. This determines the survival of the organization in the short as well as the long term. These are reflected in the company’s mission and vision statements. The internal forces are to be regulated by the company as they can be monitored by the board and the shareholders and used to strengthen the company’s stance in the market. However, the external forces are beyond the comprehension and control of the board so they should at least control their end well. Thereby a business scorecard approach used for iPod helps them monitor the external (social, economic and regulatory) changes, as well as gain a clear perspective on maintaining a thriving board which formulate strategies after analyzing the environment. The internal management strength together with the high technological and design strength of the product, iPod over the rest of the competitors makes the marked difference in the product popularity. Most consumers connect iPod to be a cool product to own. Thereby the cool outlook together with the ease of operation, technological advancement and the beautiful exterior appeal adds to customer’s affinity towards the product. Apple approach towards the development of the iPod has been extremely cautious and well measured and fits the bill of a perfect combination of simplicity and ingenuity and design and ease of use. As a result its runaway success has been a sensation world over thus putting the company on the top of the innovation index with the likes of 3M, Dell and IBM to name a few giants. Apple has used the technology available and has been able to create a very strong brand image for itself. The company has been known for the use of technology and excellent branding. The branding technique used by the company is one which has created a strong emotional approach to its customers and thereby has built a strong name for itself among its customers (Mitchell, 1996). Some marketers like Marc Gobe have also noted that the branding in some ways has grown to become very powerful and also has become as strong as religion "Peoples connections with brands transcend commerce" (Kahney, 2002). Apple’s success in terms of marketing has been mainly due to the use of technology to the fullest. The company has used a very new technique in their advertisements and this mainly revolves around building a comparison of the Apple computers when compared to other similar computers and how the company is better than its competitors. Besides the marketing and product based initiatives, Apple realized that customer in today’s era are very particular about their safety. So they were among the initial companies who have a customer privacy policy which is mentioned in details on its website. The information contained by the company during any form of interaction as on at the time of purchase or on an interaction with the support staff or during website visits is all entailed under this act. The best part of the communication is how they have structured the page. They first explain the need for collecting information at all. In current age, people like to perform activities only when informed the need to do the same. Thereby, Apple understands this need and mentions that the information is collected so that they can provide superior service to its clients and also so they can personalize purchases according to customer requirements and tastes. The personal information of Apple customers are passed on within the corporate circuit they hold, i.e. within Apple and to some of their strategic alliances and companies. However they justify the issue of the information by saying that “These companies may help us process information, extend credit, fulfill customer orders, deliver products to you, manage and enhance customer data, provide customer service, assess your interest in our products and services, or conduct customer research or satisfaction surveys.” It also specifies that these companies are also bound by the policy to respect and safeguard the information passed on to them. The Apple website uses a system “secure sockets layer” encryption which can be accessed through SSL enabled browsers like Safari, Netscape Navigator 3.0 and all the information thus stored keeps the information secure in their database. The policy also specifies the use of cookies and they explain the usage as a way to understand their performance and an initiative to perform better service. The site also provides information as to remove the cookies from the site. A look and the vast attention given to the customer policy b Apple will be visible. Gaining customer confidence is the key to a successful business and most business firms are realizing that. (Apple, 2007) iPod here, there, and everywhere. “iPods here, there and everywhere: Home. Work. And any place in between. Your iPod syncs easily with your life” iPod claims to be a part of every miniscule activity that a person is concerned with to the most crucial one. The close association apple iPod has created with the audience can be understood by its raging demand. iPod associates itself with sports(partnered with Nike), it claims to be your “gym instructor”. On the road to work one can listen to the songs stored in his iPod and with all the innovative features and built in sound system iPod acts as a perfect partner to accompany a person on a tour out of town. The player has inbuilt clock, the ability to store several videos and photographs, along with eBooks and yes primarily it has high quality sound. (Apple,2008) Thereby Apple has been able to incorporate innovative ideas keeping in mind what the requirements of the customer are. The alignment of creativity with the customer centric focus is what sets iPods a class apart from the other competitors in the market. References Apple, 2007, accessed on 2/05/09 available at http://www.apple.com/legal/privacy/ Baden-Fuller, C. and Pitt, M. 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(2002) Inventing the 20th century: 100 Inventions that Shaped the World, British Library Quittner, J., Winters, R. (2002), "Apples new core", Time, Vol. 159 No.14 January, pp.46-52. Appendices: 4 Read More