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The Need for Smart Innovation
In early 2007, Microsoft CEO Steve Ballmer laughed off the iPhone, conceding Apple’s latest device “no chance” of gaining market share. He’s not laughing anymore. Several years later, Microsoft is chasing the iPhone and the booming smartphone market it ignited with its too little/too late Windows Phone 7.
The iPhone wasn’t the first time Microsoft has been smoked by Apple, nor was it the last. Microsoft’s Zune media players entered the arena five years after the iPod exploded the market and Microsoft is again chasing Apple into the tablet space. This is the critical difference between the two giants is simple: Microsoft is following trends while Apple is starting them.
It’s easy to ridicule Ballmer but hindsight is, of course, 20/20. Still, to innovate intelligently and nurture long-term success, foresight is vital. It’s this sort of smart innovation –an understanding of your strengths coupled with the vision to apply them to create new opportunities—that has rewarded Apple with massive hits like the iPod, iPhone, and iPad. Microsoft’s aggressive (but late) entries into spaces pioneered by other companies reflect short-term bottom line thinking, not the long-term smart innovation the tech giant needs.
Consider Microsoft’s recent strategy in the young eReader market. The company announced two weeks ago that it is buying into the Nook eReader and tablet brand owned by popular US bookseller Barnes & Noble, to the tune of $300 million. It’s not hard to understand why; the Nook is popular, owning a solid third of the US eReader market and holding its own against Amazon’s Kindle and Apple’s iBook platform. This way Microsoft didn’t need to win market share on its own, it simply bought it. The move will be profitable in the short term, but unless the spirit of enterprise that created the brand is maintained, will it continue to grow? Buying the innovation of others is not always the way forward, even for Microsoft: remember Razorfish?
Apple wasn’t in a great place when it first announced the iPod. Apple’s share of the computer market was miniscule, it didn’t have any other real pillars to rest itself, and it had recently stayed afloat only on a major investment from Microsoft. But it didn’t have nothing. Apple had a brand, loved and admired by the few, it had design chops in both hardware and software, an innovative spirit, and, thanks to Steve Jobs, a vision. Beginning with the iPod, then the iPhone, and now the iPad, Apple applied its assets and core competencies to create entirely new experiences and ignited whole new categories. Smart innovation at its finest. On the way, Apple have been showing up other former stars like Sony, who have been busy with cost-cutting, rationalizing and now engaged in a massive ‘downsizing’ in the hope of returning to profit.
Most companies aren’t as large as Apple, Microsoft or Sony, but all can learn from both and decided which to emulate. In this global recession especially, it can be tempting to take every opportunity to cut costs, downsize to protect the bottom line – or hedge your bets and buy ready-made innovation. But this will lead only to a downward spiral or, at best, short term ‘acquired’ growth. Smart innovation, the Apple way, is the better route. It may take guts; it sure needs vision, but the payoff can be real and the future bright. Invest in the future, not in cost-cutting (itself a costly exercise) – or buying others’ opportunities. Leverage your strengths to create the new. Be the pioneer, not the chaser.
Co-Written by Stuart Mackay & Stephen McVerry