Mention the word “innovation” to anyone and it will conjure up images of creative, distinctive and perhaps unique products like Apple iPod or iPhone or 3M Post-it pads. Most people have the idea that innovation best left to researchers and scientists working in labs to come up with revolutionary products or discoveries.

While that may be true for computer chip and pharmaceutical products, innovation today has gone beyond the confines of the laboratories to our daily work lives and businesses. In fact, “innovation” has become one of the key management mantras for the past decade and will continue to be one of the cornerstones for sustaining business competitiveness.

But it did not started out that way, in fact our understanding and interpretation of the term innovation has undoubtedly evolved over the past decades. Twenty years ago, innovation was more about core technologies and process quality control than anything else. With globalization, comes increased commoditization of the products and services that businesses sell. As a result, there has never been more need to be different and standout in the sea of products competing for the next customer. It is this competitive pressure that compels business to seek new ways to do something, do it faster, better and cheaper, hence innovation.

The Apple iPod is one fine example of innovation. Up until 2001, there has not been any significant breakthrough in the area of portable music players since the Sony Walkman hit the shelves way back in 1979. Apple introduced an ultra light weight media-less player which means that there is no need to carry CDs or cassettes with you. Songs and videos are downloaded from a computer to the iPod’s flash memory, much like our thumb drive. Its simplistic interface design is also revolutionary, the “click-wheel” is an innovation that gives an uncluttered, minimalist interface. It is this ultra cool combination of creative design, packaging, features and usability that propelled iPod sales to dizzying heights.

Today, there are more than 150 million units in use worldwide and Apple reached it highest quarterly revenue in the company’s history in Q1 2008. Apple has had the lion’s share of music player market since 2004. Many competitors like Sony and Creative tried and failed, so far, to take on this 800 pound gorilla.  Not surprisingly, Apple Computer has been voted the number 1 in Business Week’s most innovative company for past several years.

So, does have one innovative product makes a successful company? The answer is no, not necessarily. In fact, innovation can and should go beyond just the product. It should apply to companies and organizations as well. It means organizations that are not just built on efficiency but more importantly they can rewire itself for growth. In IBM’s bi-annual Global CEO Survey of more than 750 business leaders, innovation is seen as key to gaining competitive advantage and 87% of senior executives predicted they needed to enact moderate to major change in their organizations in the next two years to address the pressures and opportunities before them. Therefore, a successful company is the one that reinvents itself, innovate, continuously and holistically.

Now back to our Apple case study - Apple did not stop at just the product. It went further to create an ecosystem to support and promote the use and proliferation of its iPod.  Following the initial success of the iPod, Apple knew that a good media player without adequate content to support its use will ultimately limit its market success. Then Apple introduced iTunes store in 2003, put together by Apple with agreements with the music labels to sell their songs via an online store that consumers can buy individual songs for as low as USD0.99. Was it successful?

As of June 2008, more than 5 billion songs have been downloaded since its inception. The highest number of download per day is 20 million, there are more than two million downloads on an average day. Now iPod users can even rent movies for US$3.99. So Apple not only created an innovative product, it went on to create new business models and new revenue streams i.e. selling music and other digital content online.

Did it stop there? No.

Apple went on to tie up with other products and brands like BMW and Nike. BMW introduced the first iPod automobile interface allowing drivers of newer BMW vehicles to control an iPod using either the built-in steering wheel controls or the radio head-unit buttons.

Nike+iPod Sports Kit on the other hand, is a device which measures and records the distance and pace of a walk or run. The Nike+iPod consists of a small device embedded in a shoe, which communicates a receiver plugged into an iPod. The kit is able to store information such as the elapsed time of the jog, the distance traveled, pace, or calories burned by the individual wearing the shoes. It can even display it on the screen or broadcast it through the headphones of an iPod, keeping the runner motivated! 

The possibilities seemed endless and Apple have the numbers to show for it – its revenues and profit for 2008 : USD32.48 billion and USD 4.83 billion respectively.



Article written by: Gilbert Chang