Innovation is great. For everybody. Consumers love buying it, investors love buying into it, and companies scramble for it, spending billions of dollars annually on research and development. In fact, one of the most treasured edges in the corporate world, the first-mover advantage, is something companies frequently secure through technological innovation.
But what if the sole hallmark of your company is innovation and novelty? What if everything about it, from profit margins to marketing to stock price, is predicated on a reputation for innovation? Then, of course, you get caught in a trap, where your company has to produce innovation after innovation in an endless cycle or else the whole machinery grinds to a halt. This is the fix Apple is currently in. In the years since its inception, Apple brought forth innovation after groundbreaking innovation, from GUIs to the iMac to the iPod to the Macbook Air and the iPhone. In the process, it managed to differentiate its brand in terms of innovation and perceived quality, to the point where it’s able to justify prices far above those of its competitors, even as it maintains a loyal fan base willing to line up at iStores well before each and every new product release.
Yet Apple’s reign, it appears, is ending. Its stock price has been going down, recently hitting a one-year low that brought its market capitalization below $400 billion; its Maps app was universally acknowledged as terrible and to date no update has been released; and its latest device releases have been criticized as nothing more than a series of minor improvements rather than groundbreaking technology. More importantly, its competitor, Samsung, has gained such market dominance that Apple’s copyright infringement lawsuit comes off as a desperate measure to head off the competition, and tantamount to an admission that Samsung’s product is functionally identical with a lower price point. In short, Apple is apparently unable to innovate itself ahead of the rest of the pack.
People blame the passing of Steve Jobs for the corporate juggernaut’s faltering, but the truth is, not even Jobs had a perfect track record of successful products. Although the Maps app fiasco might never have happened under Jobs’s watch, there’s ample past evidence that even Steve Jobs’s legendary taste was fallible: there’s the clunky Apple Lisa, the iMac USB mouse, the Apple Pippin, the Newton, the original Apple TV, and the G4 cube, to name just some of the more noteworthy flops.
It’s also the nature of creativity that it can’t be programmed, and it’s inevitable that some rival will eventually out-innovate even the firm with the best RnD. When this happens, and when pre-empting the market is the only option, the wise fallback position is to listen to the market in the product development process. Despite the Steve Jobs quote that runs “A lot of times, people don’t know what they want until you show it to them,” Samsung’s approach of tying their product development closely to a feedback and customer survey process has catapulted it into the lead in the smartphone market. As we mentioned earlier though, this is a difficult tack for Apple since its reputation rests mostly on its role as trend-setter, and consumer and investor expectations are based on this. In the absence of any bleeding-edge tech developments to showcase, the superiority, and higher pricing, of Apple products becomes hard to establish. Durability is a possible differentiator in terms of quality, but closely spaced product refresh cycles make this a bit of a moot point, and build issues in the iPhone 5 make this a questionable claim.
Does this mean that Apple will fail as a company? Probably not, since it’s sitting on a huge pile of cash and has ample amounts of both RnD infrastructure and marketing clout, but Apple will have to swallow its pride and borrow a page from its competitors’ play books, look at what the market wants, and give it to them. Meanwhile, profits, profit margins, and stock prices will probably continue to take a beating as Apple realigns both its internal processes and its consumer and investor expectations for a future where Apple is running with the pack instead of breaking new ground.
Brandon Peters is an entrepreneur, techie, and writer. He enjoys following cutting-edge technology.