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Page 1
Strategic Innovation
Google vs. Apple
Apple• Launch iPhone • Improvement• Improvement
• Improvement
•Launch iPad
• Android operating system •Improvement
•Launch Nexus One
•Pull back Nexus One
Page 2
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Innovation and Organic Growth
• Emphasis on:– Top-line revenue– Customer-centric, customer value– Internal and external social interactions– Cross-functional and cross-experiential teams– Empathetic, high EI people– Experimentation, learning– Entrepreneurial culture, boldness, audacity
• Value-creating strategy vs. Value-enhancing strategy
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Product1
New ProductIntroduction
ProfitPlateau
CompetitionErodesProfits
Product2
Profit
Product3 Product4
time
Value-creating vs. Value-enhancing Strategy
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Apple iPod
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Product1
New ProductIntroduction
ProfitPlateau
CompetitionErodesProfits
Product2
Profit
Profit
IntroduceiPod
iPodMini
iPodPhoto
BMWiPod
Adaptor
iPodWirelessRemote
WiFiiPod
iPodVideo
iPod +Timex Watch
iPod +Nike Shoe
Value-enhancing Innovation
Product1 Product2
Product3 Product4
time
Windows compatible
Value-creating vs. Value-enhancing Strategy
Price Cut
Value-creating Innovation
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Apple’s iPod Innovation Network
10 parts create 85% of the iPod’s cost
GM Ford
Apple
Unknown Battery Pack
Renesas (Japan) Display Driver
Inventec (Taiwan)-Assembly, Testing
Toshiba (China) – Hard Drive
Broadcom (Singapore)-Multimedia Processor
Toshiba-Matsushita (Japan)- Display Module
iPodPortalPlayer (US) Portal Player CPU
Unknown Back Enclosure
Unknown Mainboard PCB
Disney Timex
Digital Music Group
Delta Airlines
Nike
Samsung (Korea) – Mobile SDRAM memory
400 additional inputs with values from $2 to fractions of a penny, with an average value of $.05
Source: Portelligent, Inc. and Linden, Kraemer & Dedrick, 2007.
Alliance Network and Innovation
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Apple – alliance network in 1995 Apple – alliance network from 1995-1997
Apple ComputuerHigh Level of VC + VE
Alliance Network and Innovation
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Unique Perspective
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How do you define the coffee industry?
Leisure,Enjoyment,
Social Interaction
Food &Beverage
Item
Coffee• Packaged• Convenience coffee• Café/restaurant drinking
Fashion
Caffeine Source
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How does Starbuck’s define coffee industry?
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Red vs. Blue Oceans
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space Create uncontested market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture new demand
Align organization towards strategic choice between low cost or differentiation
Align organization towards pursuit of low cost and differentiation
Coffee’s Next Blue Ocean?
Strategic Dimension 1
?S
trate
gic
Dim
en
sion 2
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Early U.S. Auto Industry
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Blue Oceans and The Auto Industry
Company / Product New/Incumbent Industry Char.
Ford Model-T New Entrant Unattractive
Toyota Corolla Incumbent Unattractive
Chrysler Minivan Incumbent Unattractive
Toyota Prius Hybrid Incumbent Unattractive
Strategic Map: PC Industry (Pre-MacIntosh)
Fast/High Capacity
Low Price High Price
Apple II
Wang
IBM
Slow/Low Capacity
Strategic Map: PC Industry (Post-McIntosh; Pre-Dell)
User Friendliness• GUI • Drop & Drag • Mouse• WYSIWYG
Low Margin High Margin
Wang IBMDOS-based Operating System >copy *.doc A:\
AppleMacIntosh
Strategic Map: PC Industry (After Dell Enters)
High Quality &Dependability
“Regular” SupplyChain Management
LenovoAdequate
Quality
Apple
“Efficient” SupplyChain Management
High Price
Dell
Low Price
H-P
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IBM Mainframe
Apple II
IBM PC Apple MacIntosh
Compaq Portable
Tablet PC
Compaq Laptop
Apple iPad
IBM Wearable PC
Personal Computers …what’s the next big thing?
Strategic Dimension 1
?Str
ate
gic
Dim
en
sion 2
What’s the next big thing?
Strategic Dimension 1
?
Str
ate
gic
Dim
ens
ion
2
Umbrellas…innovation?
Strategic Dimension 1
?Str
ate
gic
Dim
en
sion 2
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LG Internet Refrigerator
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Airbus A380
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Segway Personal Transporter
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Tooth Tunes
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Converging Industry Advantage
PalmtopComputing
EntertainmentMusic, Movies, News, Sports
WirelessTelephony
GPSBooks
