Apple and Business Process Management
- January 20, 2009
- 9 Comments
Method Behind the Madness
In the BPM world, not much is said about Apple, and people in our business don’t associate Apple with BPM. I’d say the association is more like Apple to Innovation. Yes, there are people who are rabid fans (or equally enthusiastic detractors), but BPM doesn’t come to mind when one thinks about Apple at any rate.
However, as I was reading a blog entry titled “How Apple could sell 77 million iPhones in 2013” by Philip Elmer-DeWitt on his “Apple 2.0” blog, I think there is a bit of method to Apple’s innovation madness. One might even call it process. At least, when I look at the iPod and iPhone entries into the respective MP3 player and Mobile Phone / Smart Phone markets, it appears to the outsider that there is a process being implemented.
- Step 1: Identify adjacent market where “more features” on the device will not necessarily yield more sales. Early entrants in the space have innovated on features, but are approaching the point where the complications of the features are making the device less palatable to mass consumption. In early phases, an extra few features would yield more sales, but like Microsoft Word in software, the device has reached the point where it cannot create more demand by adding another feature to the hardware. Ideally, general consumer satisfaction with these devices should be middling to poor. Ironically, its actually okay if the market is saturated with the “crappy” devices identified in this market.
- Step 2: Conceptually, determine whether a new device could be designed that is dramatically simpler and captures the most important features discovered and pioneered by the vendors in this space.
- Step 3: Identify whether a vertical platform (for purposes of our discussion, think web application or cloud application platform for either buying, storing, trading, etc.) can provide a compelling, competitive advantage. Do any of the existing vendors offer a decent platform? Is the integrated experience a good one? Does it create long-term lock-in? Does it allow for easily migrating hardware devices while retaining your relationship to the vertical platform?
- Step 4: In the labs, design prototype devices that emphasize simplicity and elegance (as currently defined), and evoke the Apple brand. In all but the most basic functions, trade-off simplicity of look and use over additional functionality. Make this an IT lust item, a fashion accessory, such that the exact number of MB and knobs and twiddles are less important than how it feels in your hand or looks while you use it in public. Do not recreate the original brick cell phone!
- Step 5: Release product and platform at the same time.
- Step 6: Revise product, release again, every 6-18 months depending on the product cycle, cost, etc. New releases generally should encompass a bit more technical horsepower, but additional benefit of each release is an improved fit-and-finish, look, fashion, etc. This is approximately what BMW does with its cars – each version has a technologically superior engine, but the difference between new and old is still minor – but each new model year also has design cues to draw the buyer in.
So, why doesn’t it matter if the market is currently saturated? Because if the current products aren’t that good, then Apple’s “good” products will displace their demand. Also, Apple can start with a premium price point for a few reasons: First, a high initial price protects them against ramping production too quickly and overshooting demand (which is then followed by discounting, etc). At the very least, it reduces this risk.
Second, Apple displaces low-profit sales of the competition with high-profit sales for itself. Third, as demand curves become more predictable, Apple ramps production, and can afford to lower prices with volume discounting on parts, pre-pays, etc.
The existing vendors can produce a new device, a better mousetrap. They can even release devices with more RAM, CPU speed, technical specs of all kinds. They could at some point release a device that *looks better* than Apple’s devices. However, for the most part the competition does not have a vertical platform to begin with. Their new devices end up looking like pretty baubles or paper weights because they aren’t tied in with the network effects of a platform.
Obvious improvement approaches for years to Come
When it is time for Apple to goose its revenues, it has quite a few options in front of it:
- Lower the price on the existing units
- Release a new, improved unit with the old (high) price
- Release more varied looks with approximately current technical specs (e.g. the colored iPod Nanos, for example)
- Create new pricepoints with low-cost components – e.g. RAM.
- Improve the platform by adding new services or functions
- Change the pricing of services on the platform
- Any combination of the above.
Apple’s strategy gives it a lot of leverage on the markets it enters. And it implements a version of the fast-follower that is quite compelling – the follow-better strategy rather than the follow-cheaper strategy employed by so many vendors in the software and hardware markets of IT.
There is a Science Behind the Black Box
So what’s the point? Well, for one thing, I believe Apple’s process allows it to chase goals like 70-80 Million iPhone sales in a year, though Apple likely doesn’t set its goals quite that way. But, more importantly, there is a science behind the art of building great products, and that “science” is a process that allows for capturing important inputs and putting together a winning model.
At a minimum, Apple is likely using some components of DFSS (could be DMADV or could be DCCI or DMEDI, or some other variant). QFD, and VOC (Voice Of Customer) seem like candidates to be part of the product design lifecyle. While I don’t have direct evidence of that, there is some indirect evidence (e.g. the client list here).
Because Apple keeps such a good lid on how they go about their business, the product design process is considered a bit of a black box. But the outward, measurable view of Apple indicates, to me, that they are implementing a repeatable process. So why assume that what happens inside the box isn’t a repeatable process as well? That’s not to say that there isn’t some art involved.
Pixar As Example
Look at Pixar. They run a very repeatable blockbuster-movie-making machine. However, failures can happen – judgments about character and art have to be made and if they’re too far off instead of a blockbuster you get a dud. But the track record of Pixar is too consistent to be random chance. And the movies weren’t all inspired/written/executed by the same creative mind. Again, my external view tells me this must be a well-formulated process – one that is less likely to fail than the traditional “make a movie on gut alone” approach…
There are a few key design tools used for products and processes. Tools such as Quality Function Deployment, Transfer Functions for tracing requirements, TRIZ for problem solving, Kano Analysis for Voice of Customer, etc. Many of these are coupled together and employed based on the breadth of the design consideration as well as the need for a certain confidence level before base-lining and taking a design to production/implementation/fabrication.
These are all aspects of a solid BPM program which has a portion of its focus on innovation versus basic remediation of problem areas. We can’t say for sure what Apple may be applying to their design process and product strategy. And although we can help you apply these techniques to your business, we unfortunately can’t promise to turn you into the next Apple! But we can help you begin the journey by improving on what you do now, and by turning improvement and management of processes into a core part of your team’s character.