Archive for October, 2011

Steve Jobs: The Innovation Paradox

Thursday, October 6th, 2011

I’m already very late in writing an homage to Steve Jobs, so let me take a different angle…

Steve Jobs may represent the most successful example of a man and his company being able to maximize the profit from innovation. He and Apple have done this by taking an approach to innovation that appears to be a paradox: Steve Jobs was extremely innovative and extremely anti-innovation.

That Jobs was innovative hardly needs to be explained. He truly invented and reinvented industries over and over again. Years

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ago, I observed that Apple was great at introducing products that had great design, were first of their kind to truly appeal to the mass market, and that broke down traditional barriers. Over the years, I think the company has proven those points time and again. However, what I missed then was the nature of the boundary breaking… Jobs created and reinvented industries by breaking down the barriers between the digital and analog worlds.

Look at the industries that have been completely redefined by Jobs and his companies: personal computers (Apple II, the first mass market personal computer and the foundation of everything that followed), publishing (the shift to desktop publishing ushered in by the Mac), music (mass market adoption of digital music thanks to iPod/iTunes), movies (broad adoption of CGI-animation, led by Pixar), photography (Apple was a bit later to the party on this one, but the iPhone helped cement the role of the cameraphone), and telephony (or whatever you want to call this industry that connects the devices that are now central to our lives).

Bottom line, Jobs was a master at leveraging incredible design instincts to turn nascent ideas into mass market hits, and in the process completely redefining industries. That’s why I believe he was extremely innovative.

However, Steve and Apple have also been extremely anti-innovation. Not long ago I observed that Apple suffers from Big Bell Dogma. I summarized it this way:

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They want to put constraints on how innovation can happen so that they dominate the ecosystem and extract the most value.”

We have seen it time and again. They limit how their innovation can be leveraged. No one but Apple can make a device running iOS. Only a select few carriers can sell it, and then under far more stringent parameters than any other phone OEM imposes. Apple regularly tweaks the rules under which developers can operate – each time shutting down one or more areas of innovation that are threatening to the company. Apple sues competitors seemingly to keep their products out of the market. All of these actions put constraints on innovation. Without these constraints, there would be much more innovation in the ecosystem, but not necessarily to Apple’s benefit.

Which brings me back to my original point. Apple, perhaps uniquely, does an excellent job of monetizing innovation precisely because of this innovation paradox. The company focuses (i.e. actually deselects distractions) on innovating to create insanely great products (usually building on the innovations of those that went before them), and then protects their financial benefit from that innovation using every possible means (great marketing, carefully constructed legal agreements with complimentary partners, full legal enforcement of intellectual property, etc.).

Who knows if Apple, the company, has so fully integrated the nuances of this model to continue to enjoy its fruits for years to come, and who knows if the strategy will actually pay off with the current spate of patent

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disputes and developer decisions, but part of Steve Job’s legacy will undoubtedly be his mastery of this innovation paradox.