Friday, March 16, 2012

Steve Jobs vs Innovator's Dilemma

Steve Jobs Solved the Innovator's Dilemma - James Allworth - Harvard Business Review

"Microsoft tries to find pockets of unrealized revenue and then figures out what to make.
Apple is just the opposite: It thinks of great products, then sells them.
Prototypes and demos always come before spreadsheets."

iPad (3rd gen) is finally released, just to confirm Steve Job / Apple
"solution" for "Innovator's Dilemma"

In short, the "dilemma" of market leaders is that since the product is "good enough" and profitable, there is no need to innovate fast. When they ask current customers, feedback is to gradually improve products. That works, until it suddenly breaks.

In the meantime, cheaper competition that is "not good enough" for "top market" but it is "good enough" for "mass-market" innovates faster, and eventually overtakes market leaders. That theory works in many cases. So it is not just a theory. Android vs. iOS?

Steve Jobs, busy as it was, "didn't get that memo". But apparently he did get the book.
And his solution is as obvious as it is simple: don't ask the customers
"People do not know what they want if you ask them.
But if they see what they like, then they want it now."

If Apple was following common logic, the price of iPad would gradually fall, since features are more than good enough. That is until there is a better product (iPad 3rd), for the same money!
The trick is: it does need to be genuinely better.

"Moore's Law" of increasing capability if computer hardware is the real enabler of this "solution". With continuously increasing capability of computer hardware (for same or similar price), there are two options:

  • common logic: reduce price of final products (and profit), or

  • alternative: create demand for increased capability and keep the price (and profit)

    The second can only be achieved by those who "think outside of the box"
    and are "passionate about products". No "micromanagement".
    Apple's solution: disrupt its own products, ignore common logic.
    As anything profound, it looks obvious when finally discovered!

    So in fact Steve Jobs solution is an ultimate proof of Innovator's dilemma theory,
    and an example how to solve it "the right (and hard) way":
    Passionate product Leaders : Professional Managers = 10 : 1

    PS: So far, Moore's Low does not appear to work with computer software.
    That is why Microsoft could not use same trick directly.