A lot has been said about the challenges Apple (AAPL) is facing in the post-Jobs era. Naysayers point to its stock performance, a spate of incremental product launches, and the passing of several years since a monumental product launch.
This may be a natural progression from the Apple that Steve Jobs began to nurture back to health in 1998 to a more mature and disciplined company. For Chief Executive Officer Tim Cook and his management team, this transition is a critical period that will set the tone for future success.
This success will be dependent upon three key factors:
Managing External Forces
As Amazon.com (AMZN), Samsung Electronics (005930), and Google (GOOG) continue to pressure Apple, its management must be sure to place smart bets on feature improvements while managing to keep profit margins at historic levels. It must avoid reactionary products that only deliver marginally incremental features—a danger with the reported bundling of Apple TV with an actual television.
Cook and the board must communicate to the doubters on Wall Street that innovation creates winning and losing products, all with the associated development time and costs, as well as capital investment. Apple should take this message of its commitment to build a culture of innovation directly to shareholders and institutional investors.
Cook has to continue placing risky bets on developing or acquiring new technologies. While Siri provided an important entrée into the future of search, Apple seems to be sitting on the sideline for several key technology trends. Pebble and Google Glass beat Apple to the punch in wearable computing, and the company still doesn’t have anything to say about 3D printing.
A Maturing Culture of Innovation
Apple depended heavily on Jobs and a few other inspirational leaders for the role of creative genius and problem solver. Cook and his team must nurture the development of more creative leaders throughout the organization. That will help a mature Apple organization become a more effective innovator.
While Jobs famously squeezed great innovation out of harried and pressured employees, he also burned many of them out. Encouraging top performance cannot be so draconian in a productive culture. Management must pay specific attention to the incentives that drive teams to deliver new ideas.
As innovation moves away from a benevolent dictatorship to an organization-led model, the managing of a new product pipeline will need to become more rigorous. The goal must be to allow risk-taking and the development of new, disruptive product lines. Management should direct Apple’s considerable cash reserves to disruptive product research based on consumer insights.
Leaving Apple’s DNA Intact
While consumers may thrill to such devices as the Samsung Galaxy, such products are still far from Apple’s more seamless user experience thanks to the ecosystem that has developed around Apple devices. My 7-year-old can pick up any iDevice and use it immediately. His computer geek dad can go under the OS X hood to automate common tasks and create keyboard shortcuts to work at blazing speed. This interface elegance makes us both happy. Apple must not stray from this important design principle.
Great design is as much about what you leave out as what you put in. Apple’s critics often single out components or features that are “missing” from Apple products. But just because a feature can be implemented doesn’t mean it should. Mac OS 10.8 was initially accused of the bloat and speed problems that plague Wintel machines. Apple management must carefully curate new features to ensure they are fast, solid, and relevant to a wide user base.
As it has with floppies, optical discs, Flash, and FireWire, Apple needs to jettison tech elements that no longer make sense. Other companies hold on to the past to the eventual detriment of progress, like Windows 8’s incomprehensible combination of Metro with the original Windows desktop.
Apple and its high-tech competitors are learning about innovating in a more mature industry. As Procter & Gamble (PG) and Ford Motor (F) have shown, mature companies can continue to innovate in a rapidly changing environment.