Apple: Continuous Disruptive Innovation
In October of 2001, Steve Jobs & Company unveiled the iPod. At $400 and the inability to interface with Windows, the product largely appealed to a select group of “power users”, music fanatics who also happened to be Apple loyalists.
For many companies, the development of the iPod would have been the culmination of years of R&D investment and would have transitioned into some sort of an endgame. Sure, the product would likely advance through additional development and innovation, but the primary strategy would center around growing the business and defending the resulting earnings and cash flows against traditional competitors, the majority of which would be the purveyors of competing digital music devices.
This wasn’t the case with Apple. The iPod was a precursor to a digital platform. Several years after unveiling the first iPod, Apple opened the iTunes Music Store. In subsequent years, iTunes began selling video content. And Apple didn’t stop there. The iPod / iTunes platform provided a springboard from which Apple could enter the smartphone market. To that end, Apple developed the iPhone, as well as the App Store, to which an entire subset of companies owe their existence (think: Zynga, Ngmoco, etc.)
Simply put, the iPod & iTunes served as a platform upon which Apple developed a series of continuously disruptive technologies. Earlier this year, Apple launched the iPad. Apple TV is a formidable offering in an ever-evolving media marketplace. In short, Apple never quit. It started with one hugely disruptive technology, the iPod, and used that product as a platform that would ultimately drive tremendous value creation. Since the iPod was unveiled, Apple shares have risen almost 3,500%, creating big winners in the capital markets.
While Apple is clearly a standout, there are certainly other companies who have created tremendous value through the strategy of Continuous Disruptive Innovation. Just as important, however, are the lessons that can be gleaned from companies that compete against those that achieve continuous disruption – to various degrees of success.