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

  • April 26, 2010
  • Scott
  • 6 Comments

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.

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