Apple’s Consumer Insights & Product Portfolio Process
In reviewing the process of Apple’s product development, we discuss how two R&D strategies have led to its innovation success and ultimately the establishment of category leadership: its strategic project portfolio management and consumer insights research.
Looking at the consumer electronics industry, Apple is a category leader with a small product portfolio that only features the iPod, iPhone, iPad and Mac. Apple benefits from its strategy of choosing R&D projects and refining project goals. Apple has been providing consumers with different and exceptional experiences, yet they understand their audience by observation and using internal resources.
This week, we will recap several decisions in the product development process of the iPhone and iPad to explain Apple’s R&D strategies.
Strategic Project Portfolio Management
One important attribute in strategic portfolio management is to identify a project’s inventive merit and strategic importance to the business, and in the examples of the iPhone and iPad, both projects leveraged platform technology leadership, and by removing complexity in the product in order to keep the “purest possible simplicity.”
Apple has become the category leader of not only tablets but also MP3s and smartphones, and smartphones were not even initially developed by the company. One of the important innovations in technology is the multi-touch screen. Its successful leveraging on both the iPhone and iPad results from Apple’s strategic project portfolio management of the core platform technology.
Steve Jobs had the idea of developing a tablet with no stylus or keyboard in 2002. He recognized the multi-touch interface as a solution when his team had developed a multi-touch phone-size screen for the iPhone project. He decided to hold the tablet development and continue focusing on the touchscreen smartphone.
“If it worked on a phone,” Steve Jobs said, “I knew we could go back and use it on a tablet” (Isaacson, 2011, p. 468). It gives a good example of strategic portfolio management--choose the most promising project and concentrate on it.
When Apple was developing the iPhone multi-touch display, two alternatives was to use the iPod trackwheel technology or to have a physical keyboard. The discussion ended with choosing the multi-touch approach. Their next step was to boost this core value of the feature by simplifying other features. At every step of the iPhone and iPad projects, Jobs pushed to remove and simplify so that no feature or button would distract from the display, by doing this, Apple succeeded in the smartphone market and maximizing its product advantages from other phones.
Internal Consumer Insight Research
R&D leaders also need an understanding of the market and consumer needs to optimize product designs. Apple has succeeded in creating consumer needs and surprising them with unique product experiences. Steve Jobs relied on the engineering team to predict consumer reactions and revamp designs. “It’s not the consumers’ job to know what they want,” Jobs once said.
When the iPhone project first took off, as the company was new in cell phone manufacturing, Apple tried to work with Motorola. The joint project turned out to be a cobbled process, which was a compromise of both companies’ strengths. Apple’s later independent development of iPhone resulted from the whole Apple team’s continuous brainstorming and design revamps. In product innovation, R&D leaders need a team that share the same insights as well as that can compensate for any technical expertise shortage.
However, is that possible to create a product that dominates the market without collecting any consumer insight? Our conclusion is that Apple has consumer insights, but obtained through the approaches of observation and internal experiments.
In 2003, Jobs declared that they had no plan to make a tablet. “It turns out people want keyboards. Tablets appeal to rich guys with plenty of other PCs and devices already.” Apple watched the market trend and waited until consumers were ready. In developing the iPad, Jobs and his engineers played with twenty different models to find the right screen size that enabled people to easily “scoop it up and whisk it away” (Isaacson, 2011, p. 491). Consumer experiences are at the center of all the Apple products, and the company aims at building the best product they can conceive.
New Category Builder
From making smartphones to tablets, Apple has been expanding the definitions of what a cell phone and personal computer is. The iPhone project was born to create an iPod that could make calls. The iPad project got picked up again when the engineering team was brainstorming for a low-cost netbook computer.
Apple’s success comes both from technology strategy, and as a result of their category leadership with other products through leveraging the technology platform of one product to another. And that technology strategy is derived from their ability to gain actionable consumer insights.
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