Why Apple's Business Model is Successful

In a recent TIME magazine cover article, they interview Steve Jobs of Apple computer. In the article Jobs lets us in on his thinking about product innovation. To sum it up, here is a revealing quote:

... this is the company that gave us three of the signature technological innovations of the past 30 years: the Apple II, the Macintosh and the iPod. In the past six weeks alone,Apple has shipped three impressive new products: an ultra-tiny iPod called the nano, the video iPod and a nifty feature called Front Row that lets you run your computer from across the room, lying on a sofa, clicker in hand, without crouching over a keyboard. That is cool stuff. So, where does it all come from?

Ask Apple CEO Steve Jobs about it, and he'll tell you an instructive little story. Call it the Parable of the Concept Car. "Here's what you find at a lot of companies," he says, kicking back in a conference room at Apple's gleaming white Silicon Valley headquarters, which looks something like a cross between an Ivy League university and an iPod. "You know how you see a show car, and it's really cool, and then four years later you see the production car, and it sucks? And you go, What happened? They had it! They had it in the palm of their hands! They grabbed defeat from the jaws of victory!

"What happened was, the designers came up with this really great idea. Then they take it to the engineers, and the engineers go, 'Nah, we can't do that. That's impossible.' And so it gets a lot worse. Then they take it to the manufacturing people, and they go, 'We can't build that!' And it gets a lot worse."

Well, there you have it. Steve Jobs nailed the problem. Innovation is in trouble in our current U.S. business model because design is judged by those who build or produce the final product. This is a bad model if you want to have a thriving, innovative, business. But let's take that same thinking out of the realm of product design, and look at what happens when marketing solutions are presented.

A marketing plan is produced and a graphic designer is asked to interpret it into innovative marketing design and branding solutions. But the person who makes the financial decisions says it costs too much or isn't cost effective. Then you have the voices of those who fear anything they can't understand, and they weigh in with reasons why the ideas will never work. The final result is a muted design concept that has no emotional connection with the target market. It is flattened by committees of people who have been given power to exercise their myopic thinking.

To avoid this mess, the best plan is let the innovators innovate. Let the engineers do engineering. Let the financial guys figure out a way to pay for what is needed. Let the fearful share their fears, but do not give them veto power. And above all do not fear failure when you cast a vision. Go for it, and you might win big. For not doing so may win survival for a time, but end in adding to the cacophony of unmotivated solutions.