VMA The Apple Phenomenon. Andy Wilkins. What is the secret to Apple s success and what can we learn from it?

Transcription

1 VMA 2010 The Apple Phenomenon What is the secret to Apple s success and what can we learn from it? Andy Wilkins

2 Agenda Introduction to Strategyn Apple s Phenomenal Success Story Lessons from the ipod The iphone cometh The iphone value chain & service platform Building the ecosystem Lessons from Apple How Strategyn can help

3 The first real scientific method for determining customer & market needs.. that feeds all downstream innovation activities.. Growth Strategy Opportunity Discovery Idea / Concept Generation Concept Development Launch Strategyn Outcome Driven Innovation Process Selection Concept test Develop Launch What do Customers & Markets really want? Turns customer needs evaluation into a science not an art! In a recent study Strategyn s innovation process generated new product/service success rates of 86% vs an average success rated of 17%!

4 Some of the world s most innovative companies are using Strategyn innovation concepts and process

5 Outcome-Driven Innovation is a Harvard-Business Review best practice Best Business Idea Winner "Strategyn's outcome-driven concepts and method bring discipline and predictability to the often random process of innovation." Clayton Christensen, Harvard Business School Professor and innovation guru

6 The Apple Phenomenon

7 Apple s phenomenal success story Devices 275m ipods 70m iphones 5m ipads Services itunes 12bn songs 450m TV episodes 100m movies ibook Store 40m books App Store 250k apps 6.5bn downloads

8 Apple s phenomenal success story Apple s forecast 4 th Quarter numbers: Revenue - $19bn Revenue growth - 50%+ pa Earnings $4/share Gross margin 35+% Cash reserves $50bn! Not bad for a recession.!

9 Apple s phenomenal success story How do they manage this?

10 Lessons from the ipod The challenge: Sony dominated the category for portable music devices How to enter a market this market with something new and differentiated? The answer? To create something so radically better that it would disrupt and redefine the category!! How? Gain deep understanding of what customers are trying to do with music Dare to dream beyond the current definitions of a music player. Create a solution that delivers what customers want. In a radically better and the most intuitive way Help customers to discover, purchase, share and organise their music Use great design to create a beautiful product The ipod itunes

11 Lessons from the ipod What exactly did they do?? 1. First of all they made sure they understood the customers full needs in great detail. Spent time with customers Determined what music jobs were important to them Mapped out each job & determined the detailed needs for each job Determined the relevant Contexts & Attitudes Listen to music Find music Share music Organise music Create Playlists etc

12 Lessons from the ipod What exactly did they do?? 2. Apple designed a radically new proposition that redefined the portable music category The new ipod/itunes platform Customers Customer needs An intuitive, seamless & beautiful experience Listen to music Find music Share music Organise music Create Playlists etc The ipod the scroll wheel itunes A combined hardware and software service platform Delivered an integrated solution for multiple music jobs Beautiful design created an iconic must have device A radical new concept in user interface & design based on scroll wheel

13 The iphone

14 The iphone cometh.. The iphone has been Apple s master stroke Apple used innovation to challenge almost every aspect of traditional mobile thinking Lessons from the ipod experience have been re-used with spectacular results Lets look at some of the results of Apple s iphone strategy so far: 70m iphones have been sold since 2007! 6.5bn downloads from Apple App Store 250k Apps

15 The iphone cometh.. The competitive position of the iphone is even more impressive: The number of mobile visitors by device type over the last 12 months In first half of 2010 Apple sold 17m iphones vs 600m for the whole industry Yet Apple generate 39% of industry profits! Gross margin is around 50% In first half of 2010 the iphone use for web access was 7x higher than any other device Apple make approx 30% revenue Currently estimated to be $1.35bn

16 The iphone cometh.. So. how have Apple been so successful? Answer: Create something so radically better that it would disrupt and redefine the mobile phone category!! How? Gain deep understanding of what customers are trying to do when on the move Dare to dream beyond the current definitions of a phone. Create a solution that delivers what customers want. In a radically better and the most intuitive way Use great design to create a beautiful product "our job is to create beautiful product experiences Steve Jobs

17 The iphone development strategy What exactly did they do?? 1. First of all they made sure they understood the customers full needs in great detail. Spent time with customers Determined the relevant Contexts & Attitudes Determined what jobs were important to them Music jobs Calling jobs Messaging jobs Photo jobs Internet Access Gaming jobs etc Mapped out each job & determined the detailed needs for each job

18 The iphone development strategy What exactly did they do?? 2. Apple designed a radically new proposition that redefined the mobile phone category Customers & contexts Customer needs Music jobs The new iphone/app Store platform An intuitive, seamless & beautiful experience Mapped out each job & determined the detailed needs for each job Calling jobs Messaging jobs Photo jobs Internet Access The iphone With multi touch App Store Gaming jobs etc A combined hardware and software service platform Delivered an integrated solution for multiple jobs Beautiful design created an iconic must have device A radical new concept in user interface & design based on multi touch & gesture

19 Innovation iphone Service Platform The iphone is not just a phone. It s a value chain and service platform! User contexts, jobs & needs Customer jobs Deep Dive Deep insight into customer s needs & contexts Most compelling proposition & beautiful user experiences Customer Needs iphone Proposition User interface + ios Device Capabilities Rich user centric app design using human factors based UI dev Full computing platform with best aesthetic Design Most elegant and intuitive multi touch based experience Beautiful iconic device with stunning display & performance Intuitive multi touch interface Great usability & rich native apps Best browsing experience Beautiful aesthetic design Great performance & quality Mobile Networks Integrated Voice mail & connection manager + network deals Best voice mail experience + best margins in the business Widespread availability Attractive tariffs + visual voic itunes, ibooks + Apple App Store Creation of marketplace services for media types & app developers Provide the richest suite of content & app services + new revenues Broadest range of applications Best media content Simplest & safest 1 click purchasing

20 Apple is building a formidable internal and external ecosystem where each part reinforces the value of the whole service platform User contexts, jobs & needs Customer jobs New Customer jobs Apple Value Propositions Future Propositions UI + Software Platform ios + Multi Touch (120m users and growing) New UIs + OS Device New Form Factors ipad iphone ipod Marketplaces App Store itunes Store ibook Store New Marketplaces Apple Ecosystem Gatekeepers of Value Creation Content Partners Developers Media Companies Publishers New Content Partners

21 So what can we learn from Apple?

22 The big lessons from Apple 1. Gain a deep understanding of the customer jobs they want to get done This is what all innovation & product/service development should be aimed at! 2. Think outside the limits of existing product/service offerings to imagine solutions that are radically better Dare to dream! 3. Create the best designed solutions that are beautiful to use Experience is everything. attention to detail is key If a feature doesn t deliver the desired experience don t include it 4. Explore how your product can be developed into a service platform. Develop your product to support new jobs to increase value and revenue Develop longer term relationships with customers based on mutual value 5. Leverage the capabilities of other related players to build an ecosystem Create more value for customers & more innovation for your platform Leverage the ecosystem to drive as much value and reinforce your market offering

23 Apple provide powerful evidence that there is a better way to think about product/service development the old models are broken 1. Most product or service development starts with an idea (or the need to respond to something a competitor offers) Idea Selection Concept test Develop Launch The failure rate of this process is around 80-90%... Not based on a solid or deep understanding of the jobs customers are trying to do Not based on a deep understanding of the detailed needs for each job For most of us innovation feels like a black art rather than a predictable process!

24 Time for a change of thinking? Only 1 in 300 new products significantly impacts a company s growth. Frost & Sullivan Insanity is doing the same thing over and over again and expecting different results. Albert Einstein

25 Using Customer Jobs as a starting point brings clarity to the real purpose of innovation Innovation boils down to 2 main challenges: Improving an Existing Job Getting Important Unfulfilled Jobs Done

26 Jobs based analysis focuses innovation on solving the right problems Jobs based Analysis Ideas Selection Concept test Develop Launch Precision based inputs to focus developing the ideas that will really matter to customers

27 How can Strategyn help? 1. Jobs based study (involving Qual & Quant studies) Spend time with customers Determine what jobs are important to them Market Needs & Opportunity What jobs are important to customers How satisfied are they Scope of solution opportunity Size of market opportunity Segmentation of opportunity Prioritisation & growth plan 2. Outcomes based study (involving Qual & Quant studies) Map out each job & determine the detailed needs for each job Detailed Needs for Product Dev Detailed process mapping Customer needs per process step Ranked by importance + satisfaction Size of market opportunity Segmentation of opportunity Prioritisation & growth plan

28 Further reading The Customer-Centred Innovation Map, Harvard Business Review, May 2008 Giving Customers a Fair Hearing, MIT Sloan Management Review, Spring 2008 Best Business Idea Winner What Customers Want a bestselling book by Strategyn CEO Tony Ulwick, details the theory and practice of outcomedriven innovation The Innovator s Solution In Professor Clayton Christensen's book - The Innovator's Solution - he explains why Strategyn's thinking and segmentation methods are critical to the successful management of new market creation Turn Customer Input into Innovation, Harvard Business Review, January 2002

29 Outcome-Driven Innovation Apple have a formula for success. So can you! Thank you Andy Wilkins +44 (0) andy.wilkins@strategyn.com Strategyn UK Cranfield Innovation Centre Cranfield University Technology Park Cranfield Bedfordshire UNITED KINGDOM MK43 0AL (0)