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Apple's History of Innovation

In this annual speech in Paris in 2003, Steven Jobs, the lionized CEO of Apple Computer, Inc., proudly described Apple in these terms: “Innovate.  That’s what we do.”  And innovate they have.  Jobs and his colleagues, Steve Wozniak and Mike Markkula, invented the personal computer market in 1977 with the introduction of the Apple II.  In 1980, Apple was the number one vendor knows as Silicon Valley in California, the mother lode of high technology invention and production for the next three decades.

Apple has always been a trailblazing company whose innovative products are almost universally acknowledged as easier to use, more powerful, and more elegant than those of its rivals. In the last ten years, Apple has been granted 1,300 patents, half as many as Microsoft, a company 145 times the size of Apple. Dell Computer, by contrast, has been granted half as many patents as Apple. Apple has invented, moreover, more businesses than just the personal computer. In 1984, Apple created the first computer network with its Macintosh machines, whereas Windows-based PC’s didn’t network until the mid-1990s. A decade ago, Apple introduced the first handheld, pen-based computing device known as the Newton and followed that up with a wireless mouse, ambient-lit keyboards for working in the dark, and the fastest computer on the market in 2003. In 2003, Apple also introduced the first legal, digital music store for downloading songs—iTunes—along with its compatible technology, iPods. In other words, Apple has been at the forefront of product and technological innovation for almost 30 years. Apple has been, hands down, the most innovative company in its industry and one of the most innovative companies on the planet. Here’s the problem. Today, Apple commands just two percent of the $180 billion worldwide market for PCs. Apple’s rivals have followed its creative leads and snatched profits and market share from Apple with astonishing effectiveness. From its number one position two decades ago, Apple currently ranks as the ninth largest PC firm—behind name-brand firms such as Dell, Hewlett-Packard, and IBM, but embarrassingly, also behind no-name firms such as Acer and Legend. These clonemakers, from Taiwan and China respectively, have invented no new products. Moreover, whereas Apple was once among the most profitable companies in the PC industry, its operating profits have shrunk from 20 percent in 1981 to 0.4 percent in 2004, one-tenth the industry average. Its chief competitor in software—Microsoft—sold $2.6 billion in software in the most recent quarter compared to $177 million for Apple.

What could possibly be wrong? If one takes seriously the messages being declared loudly and prominently in the business press and in the broader global society today, innovation and creativity are the keys to success. “Change or die.” “Innovate or get passed over.” “Be creative to be successful.” A key tenet upon which progressive, market-based, capitalistic societies are based is the idea of creative destruction. That is, without creativity and innovation, individuals and organizations become casualties of the second law of thermodynamics—they disintegrate, wither, disorganize, and die. New products are needed to keep consumers happy. Obsolescence is ubiquitous. Innovation and creativity, consequently, are touted as being at the very heart of success. For more evidence, just skim over the more than 49,000 book titles when you log onto Amazon and search using the key word “innovation.” On the other hand, consider some of the most innovative companies in recent American history. Xerox Corporation’s famed Palo Alto Research Center gave the world laser printing, the Ethernet, Windows-type software, graphical user interfacing, and the mouse, yet it is notorious for not having made any money at all. Polaroid introduced the idea of instant images, yet it filed for bankruptcy in 2001. The Internet boom in the late 1990s was an explosion of what is now considered to be worthless innovation. And, Enron may have been the most innovative financial company ever. On the other hand, Amazon, Southwest Airlines, eBay, Wal-Mart, and Dell are examples of incredibly successful companies, but did not invent any new products or technologies. They are acknowledged as innovative and creative companies, but they don’t hold a candle to Apple. Instead of new products, they have invented new processes, new ways to deliver products, new distribution channels, new marketing approaches. It is well known that Henry Ford didn’t invent the automobile. He simply invented a new way to assemble a car at a cost affordable to his own workers. The guy who invented the automobile hardly made a dime. The trouble is, creativity as applied to business processes—manufacturing methods, sales and marketing, employee incentive systems, or leadership development— are usually seen as humdrum, nitty gritty, uncool, plodding, unimaginative, and boring. Creative people and creative companies that capture headlines are usually those that come up with great new product ideas or splashy features. But, look at the list of Fortune 500 companies and judge how many are product champions versus process champions. Decide for yourself which is the driver of economic growth: good innovation or good management. SOURCE: Adapted from Hawn, 2004.

Read the case study carefully and answer the following questions.

Answer all the following questions in no more than word limit specified.  Evidence of adequate research must be shown in your written work, at least 7 academic sources must be referenced.

  1. Consider the four approaches to creativity.  What approaches has Apple relied on?  What alternatives have other firms in the industry pursued?  What other alternatives could Apple implement?
  2. Assume that you are consultant to the CEO at Apple.  What advice would you give on how Apple could capitalize on its creativity?  How can Apple make money based on its own inclination to pursue creativity in certain ways?
  3. Explain in detail what tools for fostering creative problem solving are applicable to Apple, and which would not be workable? Which ones do you think are used the most at Apple?
Apple's History of Innovation

For a company to succeed, there is a need to adapt to the highly changing market environment in the world (Ginevicius and Cirba, 2009, p.191). This is because the future of the company relies on the innovations and creativity of workers through changing their knowledge into ideas (Karnitis, 2006, p.96). Ideas are developed through the availability of information and communication technology. Through creativity, companies are able to innovate by implementing new ideas (Lavickaite, 2011). The concept of creativity and innovation is important and fundamental to the success of any company in the world. Doyle and Bridgewater (1988) argue that it is not possible for a company to maintain its market unless it gets innovative. Creativity refers to a situation where something new is brought into being.

Apple is a unique company that has taken leadership in the market by developing creative and innovative products. The products made by Apple have attracted many customers through attractive designs (Elmansy, n.d). Apple has relied on two approaches to creativity, imagination, and investment. Imagination is the process of creating new ideas and new ways of solving a problem. Apple has focused on innovation by transforming imaginative ideas through experimentation. There are several innovations Apple has made including a wireless mouse, iPod music player and an online platform for downloading music, iTunes store among other main innovations such as iPhone in 2007 and iPad in 2010. Apple’s success has not been by luck but through its high focus on ensuring ideas are generated fast.

The concept of Investment has been used by Apple. The approach is based on the concept of being the first. Being the first in anything requires a company to invest in time, high commitment and dedication. Apple created the first PC, the Apple computer in 1976, a first mp3 music player, the iPod in 2007 and the first iPad in 2010. The main focus for Apple is creating the best products that satisfy customer needs (Muller, 2010). The company invests its time and resources to introduce new products. Every product introduced by Apple hits the market with high recognition and increased rates of sale. For instance, the computer network created by Apple in 1984 was highly accepted and other companies imitated the technology to introduce new forms of computer networks.

Other firms in the computer and electronics industry have used different concept for their growth. For instance, companies such as dell, Hp, Acer, Amazon, and IBM are companies that have used the concept of creativity by improvement to dominate the market and stay competitive. The concept of improvement is an approach based on being better in the market. For instance, HP which is a computer and printer giant has regularly modified its products to satisfy the consumer needs. The company has improved its computers by offering the best technology, speed to promote efficiency (Trefis, 2015). The company has also launched new varieties of its tablets and laptops in order to remain competitive in the market. Apple competitors are therefore able to improve their products to cope up with the competition.

Challenges for Apple

Apple could implement the approach of pulling and putting people together. Creating teams among workers have been seen to be more productive than having individuals work separately. When the minority views are included in a group, creativity increases. For instance, development of the Macintosh computer was done by a group of people who were pulled out of the company and given some space to work on the computer. Apple could also promote the networking approach.  Innovators use networking strategy by spending time with other innovators or groups of people with different experiences (Garry, Julia & Thompson, 2012). This helps by providing the innovators with different insights from the groups they associate with.

Apple could make money through its creativity in many ways. Apple’s main goal when it comes to creativity is to create a simple and easy to use the product or reinvent a product in a better way (Bajarin, 2012). Imagine if other smartphones from different companies could use an Apple’s operating system (iOS). Currently, there are imitations of the iOS currently running on other non-Apple devices. If consumers in the world could get such an offer, users would upgrade their operating systems with a bang. A large population of smartphone users could search for applications in the Appstore and subscribe to services which would give the company high profits. This would also increase the competition between Google (owners of Android OS) and Apple company.

Apple largest source of revenue was from the iPhone which is an Apple creativity through innovation. The second source of income at Apple came from the services sector including the iTunes, App store and music streaming which gave the company more than $6 billion dollars (Vivek, 2016). If the iOS is made available on other phones, the revenue from the service sector would double or triple for the company. Microsoft which is a top competitor for Apple lost its smartphone market because it was protective of its operating system. Apple on the other hand, still have a chance to take advantage of this creative idea since it is better in the market (Vivek, 2016).

In order to make money, you must be willing to spend. In this case, in order to make money from a creative idea, the company must be willing to invest in people with innovative ideas. Carliss Baldwin (2012) argues that searching for people who are willing to innovate in your company is like searching for a needle in a haystack. To define a challenge through crowdsourcing, the company need to offer incentives in terms of money or other benefits which helps people to select themselves amongst the workers (Garry, Julia & Thompson, 2012). By sourcing creative and innovative people, acquisition of talent becomes possible and this adds to the generation of new ideas and products could be a source of revenue for the company. As James of the Boston Consultant Group puts it, it is not just creativity that generates profits for a company. Being innovative does not mean coming up with ideas, products or services rather it is creating ideas and products that can generate enough money to pay all the costs including rewards and benefits for your stakeholders. Some companies such as Xerox Corporation which gave the world important innovations such as the laser printer, the mouse, ethernet among others had not made any money which a failed innovation is.

The Importance of Creativity and Innovation for Companies

A company like Apple can boost their success by employing the integrator model where a company takes the responsibility for the whole innovation from the design, implementation, and sale of the product. This model works best for big and already established companies like Intel. Apple could leap greatly from licensor approach which is used by a company like Microsoft.  In this case, a software company gives an operating system license is issued to different manufacturers f computers with an aim of ensuring the product is distributed to a wide market at the lowest price (Carleen, 2004). This is a creative undertaking that could make money for Apple.

innovation in order to make money from creativity, Apple need to include the element of successful, a follow through. Innovation does not lead to economic growth but management does. In this case, Apple needs to support its innovations with strategies aimed at promoting customer service. Apple is very innovative but not good at executing.

Creative problem solving refers to tackling the problem by generating new ideas by convergent and divergent thinking. The first phase in Creative problem solving is Clarify phase. At this point, the company explores the goals and vision. This is aimed at helping in the understanding of the problem in a clear manner. Divergent tools such as brainstorming tool where can be used. It involves generation and contribution of different ideas and solutions to a problem (Rouse, 2017). Each member of the group contributes creative ideas in an innovative way (Creative Education Foundation, 2015). During brainstorming, people’s ideas should not be praised or criticized but they should be analyzed so that the right ideas are noted. To converge, the challenge statement should be defined and tools such as dot voting are used. In dot voting, the participants are given a set of cards with dots and the card is placed on the option presented. The option with the highest dot count is taken. At this point, the challenge or the problem has been established and questions that could solve the problem are aired.

The next phase in creative problem solving is the Ideate phase. At this point, ideas that answer to the challenge questions are generated. Alternative means of solving the challenge is sort from the different ideas raised. After this, the next phase is the development stage where solutions are formulated. At this stage, all possible options are analyzed and solutions are derived. This is a critical stage as the members need to ensure that the solution they give meet the need and ensure it will be successful once implemented.

The last process in creative problem solving is the implementation. Sources that support the implementation are sourced and an action plan is developed. This includes all the activities to be undertaken from the moment. In formulating a plan, it is important to create a short-term and a long-term plan for solving the problem.

The best tool for Apple to use in Creative problem solving is individual brainstorming. This is because group brainstorming makes individuals unable to come up with new ideas and they end up sticking to the already proposed idea. Individual brainstorming would work since every person comes up with a different idea of which different ideas are generated giving the members a wide range of ideas to choose from.

On the other hand, brainwriting is not a good tool for Apple to use as a divergent thinking tool. This is because it involves thinking in the same line of thought as the first person who generated the idea. Brainwriting does not give the problem solvers a range of choices to choose from which makes it inapplicable for Apple company.

References

Bajarin, T. (2012)6 Reasons Apple Is So Successful. [online] Available at:  https://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/ [accessed on 29th September 2018].

Carleen, H. (2004) If He’s So Smart…Steve Jobs, Apple, and the Limits of Innovation. [online] Available at: https://www.fastcompany.com/48286/if-hes-so-smartsteve-jobs-apple-and-limits-innovation [accessed on 29th September 2018].

Creative Education Foundation (2015) Creative Problem-Solving Tools & Techniques. Resource Guide. [online] Available at:  https://www.creativeeducationfoundation.org/wp-content/uploads/2015/06/ToolsTechniques-Guide-FINAL-web-watermark.pdf

Elmansy, R. (n.d) How Does Apple’s Design Process Work? [online] Available at:  https://www.designorate.com/how-does-apples-design-process-work/ [accessed on 29th September 2018].

Garry, E., Julia, H & Thompson, R. (2012) Five Ways to Make Your Company More Innovative. [online] Available at:  https://hbswk.hbs.edu/item/five-ways-to-make-your-company-more-innovative [accessed on 29th September 2018].

Ginevicius, R.; Cirba, S. 2009. Additive Measurement of Market Concentration, Journal of Business Economics and Management 10(3) pp.191–198. [online] Available at: doi:10.3846/1611-1699.2009.10.191-198 [accessed on 29th September 2018].

Karnitis, E. 2006. A Knowledge-Based Human-Centered Growth Model for Latvia, Journal of Business Economics and Management 7(3) pp.95–101.

Levickaite, R. (2011) Four Approaches to The Creative Economy: General Overview. Journal of Business Management and education. Vilnius Gediminas Technical University, 9(1) pp.81–92.

Muller, C. (2010) Apple's approach towards innovation and creativity, Munich, GRIN Verlag. [online] Available at: https://www.grin.com/document/167838 [accessed on 29th September 2018].

Rouse, M. (2017) Brainstorming. https://whatis.techtarget.com/definition/brainstorming

Trefis, T. (2015) Reviewing HP's Performance in 2014. [online] Available at: https://www.forbes.com/sites/greatspeculations/2015/01/02/reviewing-hps-performance-in-2014/#708bb69a6cc3 [accessed on 29th September 2018].

Vivek, W (2016) How Apple can make money after the iPhone. [online] Available at: https://www.washingtonpost.com/news/innovations/wp/2016/07/27/how-apple-can-make-money-after-the-iphone/?noredirect=on&utm_term=.93f73ee1242a [accessed on 29th September 2018].

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