APPLE

"There's an old Wayne Gretzky quote

that I love. 'I skate to where the puck
is going to be, not where it has been.'
And we've always tried to do that at
Apple. Since the very very beginning.
And we always will." —Steve Jobs, Apple CEO

Apple innovates through:

• Creativity and Innovation
• Innovation Process
• Innovation in Products
• Innovation in Business Model
• Innovation in Customer Experience
• Innovation and Leadership
• Steve Jobs

Apple has built an Innovation Factory – one that harnesses unbridled creativity from its people,
stimulating bold & enterprising new ideas, and launching successful, profitable new
innovations... time and again! Apple leverages its diverse ecosystem of employees, customers,
suppliers, partners & global networks, proven innovation process, and a winning culture that
doesn't accept second place - to seize the new opportunities in the marketplace and grow its
business... exponentially…
 EXECUTION- How did Apple do it?
• Increase revenue more than 400% in 8 years…
• Increase net profit more than 650% in 8 years…
• Increase market cap more than twenty times to over $170 billion and counting…

Apple's Leadership in Innovation

APPLE PRODUCTS-

Apple's all new iPad

Apple has already sold over 1 million iPads since it's launch. Apple is poised to sell over 4
million iPads in 2010, with revenue of over $2 billion within the first year of launch. Apple iPod,
launched in 2001, made Apple the #1 Innovator, accounting for more than third of Apple's
revenue...
"Apple announced the iPhone on January 9, 2007, and started selling it in June 29,
2007. Time magazine named the iPhone the Invention of the Year in 2007. Released July 11,
2008, the iPhone 3Gsupports faster 3G data speeds and assisted GPS. Apple released version 3.0
of the iPhone OS for the iPhone (and iPod Touch) on June 17, 2009. The iPhone 3GS has
improved performance, a camera with higher resolution and video capability, and voice control.
It was released in the U.S., Canada and six European countries on June 19, 2009, in Australia
and Japan on June 26, and saw international release in July and August 2009."

Apple iPhone is a real example of successful innovation - Apple iPhone sales revenue grew to
over 5% of Apple's revenue within just one year of introduction. Apple iPhone contributes more
than a third of Apple's revenue today, and made Apple a formidable cell phone company within
1.5 years of launch.
Guiding Principles of Apple Innovation
If you had to summarize the guiding principles of Apple's Design and Innovation Strategy what
would they be and how might you embrace them to drive new product designs and create new
revenue streams from new markets?
With the help of Chris Morrison, Bruce Nussbaum, Owen Linzmayer, Umair Haque and Daniel
Turner, I've summarized a draft list of 11 guiding principles that appear to be important to
Apple's innovation strategy.

1. Don't follow your Customers; Lead them

Apple tends to place less emphasis on evidence than on intuition, under the theory that
consumers can’t tell you they want a product or function if they can’t yet envision it. Instead,
they need to be shown a superior alternative. Apple sees itself as being in business to create those
revolutionary alternatives.

2. Temper Engineering with Art

Most companies that try to operate like Apple fail. Often that’s because of who they tap to
spearhead the creative process. High-tech devices are built by engineers — and often designed
by them, too. Unfortunately, engineers tend to design products that they would want to use,
which explains why a typical device is jam-packed with a hopelessly confusing array of features.

3. Focus on the Few to sell to the Many

Instead of trying to satisfy every fringe taste or market niche — other companies that make
laptops, for instance, often sell dozens of models at any given time — Apple focuses on just a
few products in each category.

4. Be your own toughest Critic

Ultimately, Apple succeeds because it not only beats its competitors but also strives each year to
beat itself. As management guru Peter Drucker noted long ago, “Your being the one who makes
your products, process, or service obsolete is the only way to prevent your competitor from
doing so.” In the process of trying to outdo itself, Apple often leaves its competition in the dust.

5. Clear your mind and "Think Different"

Design is a “fundamental soul,” Jobs says, "that expresses itself through an end result —
the product."
What is Apple’s fundamental soul? The company’s motto, “Think Different,” provides a hint.
Apple maintains an introspective, self-contained operating style that is capable of confounding
competitors and shaking up entire industries.
Internally, Apple barely acknowledges competition. It’s the company’s ability to think
differently about itself that keeps Apple at the head of the pack.

6. Build your Innovation infrastructure and Fortress

Apple has flattened sprawling organizational hierarchies. Companies with extended chains of
authority tend to plod when it’s time to act. Most of the decisions at Apple come from Jobs and
his immediate deputies. Rank-and-file employees are often given clear-cut directives and close
supervision. Proven talent gets a freer hand, regardless of job title.
7. Cultivate your "Creatives" - the Innovation Elite
Apple reliably churns out the industrial equivalents of da Vinci paintings and Hokusai woodcuts.
This has little to do with how the company treats employees in general. Rather, it stems from the
meticulous care and feeding provided to a specific group: the Creatives. Apple’s segmented,
stratified organizational structure — which coddles its most valuable, productive employees —
is one of the company’s most formidable assets

8. Institutionalize your "Creatives"

Today, Steve Jobs seems to have learned how to focus his aggressive, take-no-prisoners
personality shrewdly and to great effect. While he’s still an essential part of Apple’s success, the
company has also institutionalized many of Jobs’ values to such an extent that Apple is now far
less dependent on him.

9. Innovation is not Invention

Innovation is creating something new of value. In the business world, that means creating
something new of value that generates revenue and profits. Disruptive innovations that change
the game are often business model innovations that integrate five or six or eight different types of
innovation.

Apple brought together a legal/business innovation (getting the heads of music studios to agree
on 99 cent downloads), a software innovation (the iTunes store) and a great industrial design--the
iPod. That's what makes for powerful disruptive innovation.

10. Organize Something

What happens when we think of using new approaches to reorganize structurally inefficient
industries? You get the iPod, the iPhone, the iTablet(?). One of the deepest secrets hidden at the
heart of 21st century economics: markets, networks, and communities can organize economic
activities and drive disruptive innovations. As an extension of the principle "Innovation is not
Invention", using markets, networks and communities to re-organize inefficient industry models
while empowering end users has resulted in a number of Apple innovative business models and
designs.

11. MRD + ERD + URD

At Apple there are three evaluations required at the inception of a product idea: a marketing
requirement document, an engineering requirement document, and a user-experience
requirements document.
Marketing is what people want; Engineering is what we can do; User Experience is how people
like to do things.
These three documents are reviewed by a committee of executives, and if approved, the design
group would get a budget, and a team leader would be assigned. At that point, the team works
on expanding the three requirement documents, inserting plans on how they hope to meet the
marketing, engineering, and user-experience needs--figures for the release date, ad cycle, pricing
details, and the like.

Sony: The Leader in Product Innovation

The new millennium is here and Sony has plenty to celebrate. The company’s approach – doing what others don’t – has paid off, in the form
of great products that people covet.

Throughout its history, Sony has demonstrated an ability to capture the imagination and enhance people’s lives. The company has been at
the cutting edge of technology for more than 50 years, positively impacting the way we live. Further, few companies are as well positioned to
drive the digital age into homes and businesses around the world for the next 50 years and beyond.

Sony innovations have become part of mainstream culture, including: the first magnetic tape and tape recorder in 1950; the transistor radio in
1955; the world’s first all-transistor TV set in 1960; the world’s first color video cassette recorder in 1971; the Walkman personal stereo in
1979; the Compact Disc (CD) in 1982; the first 8mm camcorder in 1985; the MiniDisc (MD) player in 1992; the PlayStation game system in
1995; Digital Mavica camera in 1997; Digital Versatile Disc (DVD) player in 1998; and the Network Walkman digital music player in 1999.

Today, Sony continues to fuel industry growth with the sales of innovative Sony products, as well as with the company’s convergence
strategy. Examples include: VAIO notebooks that raise the bar in both form and function; digital cameras that capture pictures on a floppy
disk, CD-R or Memory Stick; a handheld device that lets you store and view photos as well as moving photo; MiniDisc recorders with a digital
PC Link to marry high quality digital audio with downloadable music; DVD/CD multi-disc changers that playback both audio and video; digital
network recorders that pause, rewind and fast-forward "live" television using a hard-disc drive; and Hi-Scan flat screen TVs that deliver near
HDTV picture quality through Digital Reality Creation (DRC) circuitry.

But Sony is not just the market leader in consumer electronics.

Through research and development, the company has made considerable inroads in the areas of professional broadcasting (with the
creation of the Betacam, DVCAM, HDCAM and 24P formats); mobile communications (with digital phones and the CLIE handheld); PCs
(with VAIO notebook and desktop computers); storage and media (with the invention of the floppy disk, AIT and DTF drives, and the Memory
Stick) and, now, the Internet.

Sony’s future brand success will be determined by how the company meets the challenges of change. Sony has always led the market in
terms of innovation. But in a digital networked world, products will no longer be developed with just hardware in mind. The convergence of
technologies – consumer electronics, computing and telecommunications – is a reality, with new competitors forming and consumer
mindshare up for grabs.

We Help Dreamers Dream

Sony is a company devoted to the CELEBRATION of life. We create things for every kind of IMAGINATION. Products that stimulate the
SENSES and refresh the spirit. Ideas that always surprise and never disappoint. INNOVATIONS that are easy to love, and EFFORTLESS to
use, things that are not essential, yet hard to live without.

We are not here to be logical. Or predictable. We’re here to pursue INFINITE possibilities. We allow the BRIGHTEST minds to interact freely,
so the UNEXPECTED can emerge. We invite new THINKING so even more fantastic ideas can evolve. CREATIVITY is our essence. We
take chances. We EXCEED expectations. We help dreamers DREAM.

Things You Didn’t Know About Sony

• Sony’s first product was a rice cooker

• Sony establishes its first major overseas operation in New York City (514 Broadway) in 1960 with a capital investment of
$500,000
• Sony becomes the first Japanese company in the United States to make a public offering of 2 million shares of common stock in
the form of American Depository Receipts (ADRs) in 1961.
• In 1986, Walkman was included in the Oxford English Dictionary
• Before the Walkman personal stereo became a worldwide brand name, it was introduced under a variety of names, including the
Soundabout in the U.S., the Stowaway in the UK and the Freestyle in Australia.

• Take flexible approach to innovation

and succeed the Sony way
• A giant’s emergence from postwar Japan provides an example to new
business and is a worldwide leader in innovation
• Shekhar Chaudhuri
• According to the Concise Oxford English Dictionary, the word “innovate” means to
change something established by introducing new methods, ideas or products. I shall mainly
focus on technological innovation at the firm level. I would like to go into the details of one of
the most innovative companies in the world today: Sony.

• Sony Corporation began in the chaos of Japan at the end of World War II. Its first
quarters were a small corner room of a burnt-out department in Tokyo’s Ginza district. Masaru
Ibuka, the founder of this company, brought along a few young engineers to start some sort of
electronics enterprise. His earlier company had supplied vacuum tube mould meters and other
instruments to the war effort and Ibuka felt an obligation to provide continued work for his
people.

• In his own words: “We started with a basic concept that we had to do something that
no other company had done before”. From these inauspicious beginnings sprang one of the
world’s most innovative companies, with worldwide sales in fiscal 2006 of $63.9 billion (£32.2
billion).

• Let us try to understand what factors contributed to Sony’s huge success as an

innovative company. First of all, “close to the need”. In the early postwar period, Ibuka
produced products with a very distinct, obvious need. These products did not need a complex
marketing or distribution system.

• “An inventor’s outlook.” This is explained by a quotation from Ibuka. “To do the job
better than anybody else. To do something unique.” This attitude helped the company to avoid
existing competition from established companies.

• In 1952 Ibuka went to the United States to explore a possible market for his tape
recorder — the first major product of the company. While he was there, a US friend told him
that Western Electric was ready to license its transistor patent. Ibuka investigated but when he
heard the price was $25,000, he left the US knowing the price was too much.

• He was convinced the transistor would revolutionise electronics, though no one was
able to say when and how. With his young engineers in mind, he revived their euphoria with a
new project: the transistor radio. The next point was the clarity of its founding concept —
combining mechanical and electrical skills to produce unique products for new applications.
This clear and broad concept attracted people and provided cohesion to their activities.

• In the beginning Ibuka and Akio Morita provided balanced leadership. Ibuka was a
technical genius. Morita had exper-tise in the area of marketing and administration. Flexibility:
Sony had a “trial and error” approach. In spite of the fact that the experience base of the young
team was small, we must keep in mind that Ibuka had already enough experience. He was 37
years old when he started this company.

• Let us now look at Sony’s innovation system when it had grown into a larger
organisation. The first factor that seems to be important is that Sony kept its innovative teams
small. This helped in achieving better and faster communication within the teams, several of
which were initially led by Ibuka himself. The next factor was its long time horizon. Sony was
established to be an ideal factory: free, dynamic and pleasant, where technical personnel of
sincere motivation can exercise their technological skills to the highest levels. Another point
which was emphasised in its purposes of incorporation was the reconstruction of Japan. The
Japanese are very proud of their nation and, after the devastation in the war, a very important
goal was to see how the country could get back its past glory.

• The next point is the application of the advanced technology developed during the war.
The broad vision of Sony helped attract talented people and keep them motivated. The practice
of undertaking several parallel projects towards a new innovation helped in creating
alternatives from which managers could choose. It increased the probability that one of the
approaches would work.

• Most research-based industrial organisations face the problem of technology transfer

from R&D to engineering and manufacturing, and finally to sales. In the development of new
products, Sony ensured that people from manufacturing participated on the development team.
They rotated engineers into the marketplace, into production and other aspects of operations.
This helped in technology transfer, which was facilitated because of the broad perspective of
the engineers.

• The next points I would like to emphasise are persistence and the practice of hands-on
management. Both Ibuka and Morita, the two founding leaders, visited the R&D labs and dealt
with technologies and were supportive of the activities undertaken by the R&D engineers. This
helped them to understand the technologies which were basically the core of their company.

• A few other factors which are important in explaining Sony’s success: Sony’s top
management sets key targets. Ibuka is able to set a few key and stimulating targets for
development and gives others the freedom to work out more specific goals and solutions. This
helps to keep the motivation level of the engineers very high.

• An important factor in Sony’s culture is the acceptance of failure. However, they would
not allow people to make the same mistake again and again. Recruitment and placement of
engineers and executives in Sony is given considerable importance. Ibuka and Morita looked
for talent and not someone to fill a job.

• We have seen that innovation is a key determinant of economic development. Sony

brought out the differences between the success factors in the early and later phases of its
evolution. The success of Sony may be very well explained by mapping the various factors in
terms of the McKinsey’s 7-S framework that brings out the coherence between the seven Ss.
That is: shared values, strategy, structure, systems, staff, style and skills, at different periods of
time.