Walter Isaacson begins chapter 30 of the biography Steve
Jobs titled “The Digital Hub” with a “What next?” workshop Jobs facilitated
in 2001 where iPod idea got a push. However, as we read further into the
chapter, we come across various events that influenced the decision making, shaped
the idea and took it forward. Here are 3 lessons I feel innovation leaders (CXO,
product managers, Biz heads, VCs) can learn from iPod story:
1. Strategic
theme (“Digital Hub”): Apple introduced FireWire technology in
1999 that would help transfer video from cameras into iMac fast. The video could
then be edited, mixed with music and distributed further. Seeing this Steve
Jobs realized, “Using iMovie makes your camcorder ten times more valuable.
That’s when it hit me that the personal computer was going to morph into
something else.” Jobs would call that “something else” – “Digital Hub”. A side
effect of PC becoming a hub was that it would create opportunity for personal
devices to become simpler. Note that the source of the insight was an internal "bright spot" (i.e. iMovie-camcorder joint value creation) not a trend discussed externally. Digital hub would soon become the dominant theme
during the brainstorms like the one mentioned above. I have facilitated “What
next?” workshops for the past several years. Rarely do I come across a team or
its leadership with clarity on strategic theme such as “Digital Hub”.
2. Investment
confidence ($10 million check): iTunes software was
launched in January 2001. However, Jobs had started pushing for the portal
music player idea a few months earlier – in the fall of 2000. At that time,
Rubinstein responsible for hardware engineering, told Jobs that the right
components were not available yet. During one of his regular supplier visits to
Japan in February 2001, Rubinstein came across a tiny 1.8-inch Toshiba
hard-drive with 5GB space. Toshiba engineers were not sure what it could be
used for. Rubinstein realized its potential use in the portal music player.
Fortunately, Jobs was also in Japan giving a keynote at the Tokyo MacWorld
conference. That night he met Jobs at the Hotel Okura where Jobs was staying
and said, “I know how to do it. All I need is $10 million check.” Jobs
immediately authorized it. That was roughly 2.5% of the R&D spend at that
time and R&D budget was around 5% of revenue. This demonstrates Steve’s
investment confidence – not that easy to find at least in India.
3. Business
plan review (Experimentation focus): “There are certain
meetings that are memorable both because they make a historic moment and
because they illuminate the way a leader operates.” This is how Isaacson
describes the iPod’s proposal review meeting in April 2001. Tony Fadell, a new
joinee and a key brain behind iPod was the presenter and in the audience were
Jobs, Rubinstein, Schiller (designer), Jonathan Ive (Head of design), Jeff
Robbin and marketing director Stan Ng. It was Fadell’s first presentation to
Jobs.
Fadell began his
presentation with a slide deck on the potential market and existing players and
soon realized Steve doesn’t like slides. Steve later told Isaacson, “If you
need slides, it shows you don’t know what you’re talking about.” Fadell quit
showing the slides and showed the three different models he had brought in to
the conference room. Rubinstein had coached him on what order to reveal them so
that his preferred choice is shown last and with a bit of suspense. The last
mockup option was hidden under a wooden bowl at the center of the table.
Fadell took various parts
out of a box and spread them on the table. These includes 1.8-inch drive, LCD
screen, boards and batteries all labelled with their cost and weight. This was
followed by a discussion around how the prices might come down in the coming
year. Some pieces could be put together, like Lego blocks, to show options.
The models were made up of
Styrofoam. The first one had a slot for removable memory card, the second one
had DRAM memory which was cheap but user could potential lose all songs if
battery ran out. Jobs didn’t like both of these models. The final model was
shown by lifting the bowl and revealing the fully assembled model of 1.8-inch
drive. Next Schiller demonstrated the trackwheel through a few models. Jobs
shouted, “That’s it!” The decision was made and Fadell & co got working on
the project immediately.
Fadell recalls, “I was used
to being at Philips, where decision like this would take meeting after meeting
with a lot of PowerPoint presentations and going back for more study.”
As an innovation leader ask yourself: (1) Do I have any
strategic insight like the “PC as a Digital Hub”? (2) Am I willing to write a
“$10 million check” for the strategic initiative when a “Rubinstein” shows up?
(3) Can we emphasize experimentation (prototyping) in the business plan review over
PowerPoint projections?
“Apple’s R&D spending hits bottom as percentage of revenue” by Larry Dignan, ZDNet.com, October 17, 2011. (has a table that gives Apple’s R&D as a percentage of revenue since 2000).
Greatly insightful. Beautifully talks about the trait of the leader, Jobs is.
ReplyDelete