Apple had a blowout first quarter in the face of a declining economy, proving, once again, that innovation drives revenue and profit growth. But what exactly does that mean in the case of Apple? A.G. Lafley, P&G’s CEO, told me over lunch recently that “innovation is a social system—it involves culture, organization and leadership.”
Apple has that now. In its early years, Apple succeeded because of
brilliant user-centric design and user-friendly technology. Xerox Parc was the origin of practically all of Apple's early high-tech innovations, and Apple applied these advances in ways that connected with consumers.
Apple is innovating on a wider and deeper scale these days. It is using sociology rather than technology to propel its sales. By that I mean the iPhone, iPod, Macs and stores are all at the heart of a consumer culture that defines itself in terms of connection and sharing. Apple is providing the tools, the methods and even the cool spaces (stores of all things!) to enable and empower this sharing culture. It is identifying with its customers who identify with it. Both Apple and its customers are creating a singular, distinctive identity together.
Apple is still learning this. The successful US model for the iPhone isn't working in Europe, where people want cheaper phones and carriers want to keep more of their revenues and not share as much with Apple. In India and elsewhere, people group text and the iPhone initially couldn't do that. In a global marketplace, being in customer cultures means being in many cultures. That's very hard, especially for such an "American" company as Apple.
Nike's slogan "Running Together" captures the new phenomenon of co-creating identity together. Every company now needs a "Together" concept and culture that unites it with its consumer base.
Companies that still rely on technology and not sociology to define their businesses and their identities will fail going forward. Does Google get that?