innovation playground Idris Mootee

Apple: A Rare Case Of Successfully Building A Truly Sustainable Compeitive Advantage. It Is Definitely Worth The Current Valuation Premium.

Here's the cover model for the coming issue of my M/I/S/C magazine. We shot the cover in London and here is a picture of her taking a picture of me. The concept seems surrealistic. The next M/I/S/C Design Thinking and Customer Experience Issue will be in book stores Sept in the US and a bit later in Europe and Asia/Australia. Now I am working on the Dec issue which is Design Thinking and Creativity. I am thinking of who to invite to write for this issue. BTW this is a picture below of Idea Couture's latest window display. I am liking it.

If you've just upgraded your iPhone you will not be happy if Apple is bringing out a new one in a few short months. In addition to launching both iPhone 5 and iOS 5, there will be the new iTunes 11 bought to you from the Cloud.

Expect a very clean design and iCloud will be closely integrated with iTunes. iTunes Store is actually turning into a browser (funny without we seeing it that way) and it will actually be integrated into the entire app. Your music will be backed up by the Cloud and everything will be fully synced.

It is harder and harder to beat Apple with its deep integration between apps, OS and devices. It is reported that iCloud will be offered for free initially, and at some point users will be charged $25 annually for subscription of the service. That’s another way to get another recurring revenue stream just like MobileMe service.

Apple has finally locked-in deals with big record labels Warner, EMI, Sony, and Universal. With 30% of revenue from iCloud’s music offering with the major lablels, 12% with those holding the songwriting rights, and the remaining 58% for Apple to keep. That’s a good profit margin. Not only it is helping with the bottom line, it is further stenghtening the Apple fortress with all these integration.

Apple is building a fortress around its suite of product/services/experiences and it is almost impossible to break that. It is not only around music and devices. They have just filed a patent application that an iProjector that I believe is in the making. It makes perfect sense, a minisize slim projector that sells for $600 to $1,000 and most of them have problems with setting up. And you thought it should be easy. I will not think for a second of getting one if it is fully integrated with my MacBook or iPhone or iPad. With interactive presentations and sharable contents between devices.... and not to mention a really good looking Apple design.

The patent application "Projected display shared workspaces" was filed in February 2010 and it is basically a system for taking what's on screen and projecting it onto a nearby surface such as a wall etc. The true innovation is that about the system proposed in this filing is that it can combine projections from multiple devices into one screen, in what's dubbed the "shared workspace." So you can simultaneously show power point from your computer, a video from your iPhone and notes from your iPad. No switching between apps anymore. Called it a “presentation canvas”?

Apple’s horizontal integration strategy across devices and channels and vertical integration strategy from chip design to software and retail is creating a truly sustainable competitive advantage that is hard to replicate. For that reason alone, its valuation skyrocketed. This is a brilliant example of classic business strategy theory at work.

Every single Apple products complement (compete) and complete each other. Get an iPod, and you can download content via iTunes and access them trhough iCloud and use that to move content to iPad or other devices. The sort of control over the entire user experience or process, from hardware to software, strengthens customer loyalty and provide lock-in. You cannot leave Apple once you’re in. It is becoming the consumer equivalent of IBM for business.

'Purpose' Can Consciously And Authentically Infuse Workplace With Positive Emotive Energy Beyond Money Can Buy. There Is No Strategy Wihout 'Purpose'.

Teaching and practicing strategy is what I love. Strategy or strategic innovation is like a chess game except the chessboard keeps morphing into different shapes and there are always players entering and leaving the game. My experience is that it is subject that is undertaught in business schools and least understood in the business world. It seems like my students at CEDIM Master of Innovation Program are all having a good time. And I got a bottle of Tequila from Carolos and Michael. You need that to teach innovation I supposed.

First you cannot separate strategy from strategic innovation, competitive strategy can sustain you but cannot leapfrog others. Second strategy has a soft side, such as the putting ‘Purpose’ into the strategy equation. You cannot differentiate around something that you don’t have a heart for it.

Finding differentiation is hard enough, making sure it is relevant and sustainable is even more difficult. Putting ‘Purpose’ into it is the most difficult, you simply can’t fake it. When it comes to strategy implementation, purpose is even more important. Often you will have to make very difficult economic trade offs, without that, you will simply make those decisions based on short term economic benefits.

If Zappos did that, they would not have offered one year return policy or have their call center in India instead of Las Vegas. These all add up to the happiness indexes of Zappos which is the core of its strategy. Strategy implementation is also iterative, a process inducing various forms of individual and organizational learning, because both external threats and strategic responses are shaping these decisions on an everyday basis.

What every organization needs to achieve enduring success and power up true differentiation is ‘Purpose’. It is critical and can break the most robust strategy if there is a lack of one. It is not a mission statement or something that hangs on the wall. It is core reason for people to come to work and to mobilize all managers and employees to act consistently, responsibly and decisively. It triggers innovative thinking and trustful working relationships.

‘Purpose’ can consciously and authentically infuse workplace with positive emotive energy can impact every aspect of performance. It is the heart and soul of strategy.

Can We Really Quantify Future Innovation Opportunities? Or Is It Just A False Sense Of Predictability?

What a month, from Phoenix to Cincinnati, then New York City, then Monterrey (Mexico) to Moscow and now in London. Meetings after meetings and I don't know where I am. It is like that guy in the movie. I need to have a week sitting down and do some work. Perhaps next week. Saw my magazines in Selfrides and it is flying off the shelves everywhere. We still need to expand the distribution from the current 22 countries to 30. And getting the iPad version out. This has been a productive couple of days in London. I realized I haven't have the chance to work with Morgan for a long while. We just finished our deck for tomorrow's presentation. It is going to be a good one. And really looking forward to meet some of the people there again. Just adding a few more slides on intuition. I always love talking about this topic. And I like Morgan's Burberry shirt.

Henry Mintzberg once suggested some twenty years ago that managers need more than just analytical skills to do their jobs well; they also needed the intuitive (right brain thinking), he was right but he didn’t write a book about it. He should have.

Intuition is hard for many and good use of intuition often requires deep introspection. Chester Barnard in The Functions of the Executive (1968) suggested that managers use non-logical decision-making, which balances rational and intuitive.

“I have found it convenient and significant for practical purposes to consider these mental processes consist of two groups, which I shall call ‘non-logical’ and ‘logical’. These are not scientific classifications, but I shall ask you to keep them in your minds for the present, as I shall use them throughout this lecture. In ordinary experience the two classes of intellectual operations are not clearly separated but meld into each other. By ‘logical processes’ I mean conscious thinking which could be expressed in words or other symbols, that is, reasoning. By ‘non-logical processes’ I mean those not capable of being expressed in words or as reasoning, which is only known by judgment, decision or action."

Not that I suggest we need to start a MA degree in Strategic Intuition. Although it might attract a good number of students, I think it should be part of business school foundational teachings. I teach this at my Harvard Design Thinking Program and other in-company programs, people were excited as if they have just discovered this untapped potential. Intuition is something that should be reorganized and managed like any other element in the decision-making environment, particularly in a team environment.

The over reliance on quantitative analytics are common, numbers are very important, but it needs to be combined with other things. Often the most promising innovative ideas with long-term strategic upside are exactly those that are impossible to quantify. And they ended up being shelved.

Freek Vermeulen of London Business School just wrote a very good piece on how insisting on early quantitative validation is creating a problem. He said the reason why companies are still so eager to see numbers because the long-term, uncertain aspects of strategic investment decisions make us rather insecure whether we’d be doing the right thing; therefore, we really would like to see some numbers to lull ourselves into the belief that we’ve been thorough and have uncovered the facts and have a solid basis on which we’re accepting or rejecting the proposed course of action. Of course that’s just make-belief (you can make numbers say whatever you want them to say) and may make you quite myopic; missing the things that are difficult to quantify but just as important.

He is obviously not suggesting that we should get rid of numbers in strategy altogether. Heck no; forcing yourself to go through some sort of quantifying exercise can sometimes make you uncover and realize things that you hadn’t thought of before. He suggests that once we’ve carefully and painstakingly produced all the numbers then toss them aside and sort of make a decision based on our gut feel and experience. Very good advice.