Alain Breillatt: You Can't Innovate Like Apple. (But You Can Learn a LOT)

Scott Francis
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Alain Breillatt argues that you can’t innovate like Apple for many reasons.  His article is really a fascinating read for what it reveals about Apple’s design and product development process, regardless of what you think of his conclusion. But as with any piece that makes a bold statement, there are bound to be pieces where the author misses an underlying truth in pursuit of making the point that is the thesis of the article. The part of the article that caught my attention:
10 to 3 to 1. Take the pixel-perfect approach and pile on top of it the requirement that Apple designers expect to design 10 different mockups of any new feature under consideration. And these are not just crappy mockups; they all represent different, but really good, implementations that are faithful to the product specifications. Then, by using specified criteria, they narrow these 10 ideas down to three options, which the team spends months further developing…until they finally narrow down to the one final concept that truly represents their best work for production. This approach is intended to offer enormous latitude for creativity that breaks past restrictions. But it also means they inherently plan to throw away 90% of the work they do. I don’t know many organizations for which this would be an acceptable ratio. Your CFO would probably declare, “All I see is money going down the drain.” This is a major reason why I say you can’t innovate like Apple.
Well, first of all, the math is wrong.  If they brought 10 concepts all the way to final production-ready version, and threw away 9, that would be 90% “thrown away”.  But actually they’re abandoning 7 ideas at an earlier stage, and 2 more at a late stage for production.  So the percentage thrown away is something less than 90%. Second, what struck me most is that Apple’s design process doesn’t consider these throw-away prototypes as waste – it considers these prototypes as a valuable part of the creative process – and that the TRUE waste is producing less than the best product design.  Or worse, producing multiple products that are inadequate.  Imagine if Apple had released 4 iPhones instead of 1 in the first run.  That would have been the real waste – because each of those products would require significant production costs, engineering costs, support costs, and marketing costs on into the future. So Apple is making a trade-off of design-cost against production-waste, from this point of view… Next, Alain describes Apple’s strategy as high-risk:
4. Apple focuses on a select group of products. Apple acts like a small boutique and develops beautiful, artistic products in a manner that makes it very difficult to scale up to broad and extensive product lines. Part of this is due to the level of attention to detail provided by their small teams of designers and engineers. To think that a multi-billion dollar company only has 30 major products is astounding, because their neighbors at that level of revenues have thousands of products in hundreds of different SKUs. As Jobs explains, this is the focus that enables them to bring such an extensive level of attention to excellence. But it is also an inherently risky enterprise, because they are limited in what new product areas they can invest in if one fails.
Again, I see how having a “narrow” product line can look like it increases risk.  But the advantage that Apple gets (and which I’ve pointed out previously), is that Apple can put all of their R&D effort behind a smaller number of products at volume, rather than splintering the focus with a great number of different products.  The greater risk to Apple’s business would be producing a broad array of inferior products.  The risk that Alain is focused on is the risk that Apple produces, for example, only one phone, and if the next version is a “dud” then the risk comes home to roost.  But this risk is over-stated:
  1. Apple’s product update lifecycle is typically about 1 year. So if a design is a dud, it usually won’t hurt them in that product category for more than 1 year, and they can learn from that failure for the next version.
  2. Apple provides a lot of product updates that aren’t risky – color options, storage/memory upgrades, speed improvements, software updates.
  3. Apple only provides “choice” when there is demand volume to justify the extra cost.
Moreover, one could argue that for a given market-share, Apple can benefit from efficient R&D expense (yielding higher margins).  And if Apple is successful in delivering a premium design, then they benefit a second time from premium pricing. Of course, Alain makes many points in his article that were new insights to me, and more that I completely agree with, so it is a little unfair to just pick on a couple of things that I think his post missed.  It’s a great read and highly recommended.  But, my cautionary note: when thinking about cost, think about the cost of the Apple path, sure. But then, think about the real costs of the other path as well.  Which one is really more expensive?  Riskier?  And what is the expected return for each path (Risk*Reward – Cost)? Update 5/24/2010: Clearly, Apple’s own R&D and growth trajectory show that its approach is actually more efficient, less expensive.  Alain argues that it is more expensive, but the data shows otherwise.  Take this article from Silicon Alley Insider as an example:
Turns out, Apple’s run of incredible products (and growth) has been achieved with a staggeringly low R&D spend. How low? Apple only spent $4.6 billion on R&D over the past four years, while revenues soared from $25 billion to $43 billion.
Meanwhile, Microsoft spent 700% more, and acquired 45 companies.  And achieved much more modest growth.  It is pretty compelling data.
  • Scott, interesting analysis, and I appreciate the added nuance for how the staged effort in prototyping means Apple is draining concepts for all their value as they move toward the final solution that will be released to the market. Yes, it's not 90% thrown away as waste to be swept off the cutting floor, but instead, ~85% left floating in the creative space that incorporates Apple's innovation conversation.

    I'm not an advocate for failing fast since that tends to lead to reckless development rather than carefully constructed, intelligent design that evolves by taking risky bets. So you're right in saying it's better to leverage well established design / development / market filters to winnow out poor concepts well before you get to the market testing phase and that in doing so you avoid even greater waste.

    Your point on high risk however is only valid if we're discussing product improvements rather than truly new to the world products or products that represent a significant leap forward. And my reasoning, while perhaps not as deliberately defined in the article, was focused on the latter – specifically on new category entrance. In this case, when Apple narrows its focus there is a higher risk that a failed bet means significantly diminished return on investment for the R&D dollars. Apple only sells into 5 major categories: personal computing, digital audio players, mobile phones, multi-media creative software, and digital content (mostly music). Their narrow focus does allow them to deliver significantly better solutions when they do get it right. But if they fail? Well you've already answered that question. And if you're not Apple, you're probably vastly less likely to survive such a bet if you get it wrong for many of the reasons I outline. And that in the end is why I started off by saying, “You can't innovate like Apple.” The congruence between their strategic product direction, R&D budgeting, design priorities, pricing methodologies, and brand essence make it possible for them to do what most companies cannot.

  • Great response, Alain, and as I mentioned in the post, really unfair of me to nitpick two very minor points.

    I think the “throw away” percentage is less than 85% as well, but the point is, they “throw away” a lot of design work.

    Your point about risk in a new product category vs. an existing one are very well taken. I wonder if Apple (internally) views these as new product categories though, or just smart iterations on the product market that already exists (smart phones existed before the iPhone, but certainly nothing as interesting as the iPhone, or as capable), upending existing players.

    Also, regarding the congruence of these factors: while I agree that they have these advantages, which most other firms do not… which came first? the congruence or the design methodology? I think the design discipline and methodology preceded the other factors, may have even created the conditions to allow those other factors to come to be. After all, when the iMac came out, the brand essence was a mere fraction of what it is now.

  • The Sony example is equally thought-provoking:http://bit.ly/9bdZmq (@cdixon )

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  • Interesting to take a look back at this post in light of the article in the Silicon Alley Insider : http://www.businessinsider.com/apple-and-effici

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