Re-think: Product Planning~ Why Apple can create blockbusters? ~

Chikafuji, Ryu

- Version 0.9c1 -

For persons who are interested in consumer products, services, and markets.

– Aug/25/2011

Temptation

Chapter 1

The most important task is to find out:

“what user-experiences the customer looks for,

values, and needs”.

Everyone knows this, but this isn’t an easy task.

Instead, many companies give an ear to the

industry’s influencers and oversee competitors,

apart from their target customers.

Influencers:- Big research firms- Oligopoly firms

CompetitorsTarget

Customers

(*)

A Company(a consumer products company)

Curiously, influencers provide the vision of the

newly defined product category for their customers

– the consumer products companies.

(*) examples of influencers

In fact, many influencers have global marketing

platforms to survey their customers’ potential market.

The problem is that the influencers’ happiness

do not correspond with the companies’ happiness.

The influencers’ happiness is to spur intense

competition in their customers’ market because

such competition brings them huge revenue.

Everybody Netbook!(with Wintel !!!)

The influencers elegantly lead their

customers into intense competition.

The competition makes the influencers’ hearts sing,

while the companies’ hearts are exhausted.

It’s time to re-think.

Re-Think

Chapter 2

Many companies start from products.

They improve existing products and

make their spec table better.

Existing market Existing market

New segment

Sometimes they create a new segment.

Fewer companies start from people.

They innovate new user experiences

and make the people’s life better.

Existing market Existing market New market

Sometimes they create a new market.

My focus here is clearly on the latter case:

“Start from people”.

*Lots of theories, practices, consulting services are available for the former case, such as theory of

competition, product management practices, social media marketing, etc.

True marketing says “These are the [user-experiences](*)

the customer looks for, values, and needs.”

– Peter. F. Drucker

(*)In the original, the term “satisfactions” is used.

To find out “the user-experiences” is the starting

line for new product planning, however,

“You can’t go out and ask people, you know,

What’s the next big thing?”

– Steve Jobs CNN Money, Aug/03/2008

“This product is ‘Innovative’” means that the

product brings far better user-experience to the

target customers.

user-experience

time

Discontinuity

Conventional Products

Innovative Product

In other words, there must be discontinuity between

the trajectory of conventional products and an

innovative product in terms of “user-experience”.

Conventional trajectory(incremental improvement)

New trajectory

What ordinary people can imagine is limited to

incremental improvement of existing products,

their imagination can’t go beyond this discontinuity.

If I had asked people what they wanted,

they would have said “faster horses”

– Henry FordFounder of the Ford Motor Company

We did market survey (around 2000) about the demand

for camera-phone; not once but four times the results

showed negative. However, nowadays, camera-phone

have become the standard.

– A comment from a marketing director (Martin Cooper’s Keynote Speech at IEEE Wescon 2005)

It’s really hard to design products by focus groups.

A lot of times, people don’t know what they want

until you show it(*) to them.

– Steve Jobs

(*) From the context, “it” doesn’t mean prototype, “it” means finished product such as shown at Apple’s conference.

It’s us who have to answer the question:

“What’s the next big thing?”

Masaru Ibuka,photo from www.sony.net

Both Honda-san(*) and I had never started product

development from a technological point of view.

The first and foremost priority was our goal

what product we really wanted to make.

– Masaru Ibuka, co-founder of SonyQuoted from“The Soul of Monozukuri”

(*) Soichiro Honda, founder of HONDA

The idea for the Walkman had come from Ibuka, who was

over 70 years old, and Morita(*), himself approaching 60

enthusiastically supported it.

Not content to rest on their laurels, both kept looking for

new ideas and strove to understand what kind of

products would meet the lifestyle needs of young people.

– Quoted from “Sony History”, www.sony.net

(*) Morita: Akio Morita, co-founder of SonySony Walkman TPS-L2 (1979)

Photo by GeorgeArthur, Wikimedia

"It was very nearly fetishistic, in fact – he even had a

collection of Sony letterhead and marketing materials,"

laughs Deutschman(*). "Sony was a company that Jobs

instinctively admired and saw as model from the very

beginning.”

By Jeff Yang, "How Steve Jobs 'out-Japanned' Japan”, SF Gate

(*) Alan Deutschman, Author of "Walk the Walk", Professor at University Nevada-Reno.

Steve Jobs simply described Ibuka’s way:

We figure out what we want. And I think we're pretty

good at having the right discipline to think through

whether a lot of other people are going to want it, too.

That's what we get paid to do.

– Steve JobsCNN Money, Aug/03/2008

Once we are confident that “a lot of other people

are going to want it, too”, then most barriers which prevent us from innovation are removed.

You may have heard the following sentences.

“I requested an engineering team to implement that feature, but they said it was too difficult and too risky to do it. So, we had to abandon it. However, our competitor could do it and we are in for it now. Stupid engineering team!”

Marketers

“I asked marketing guys how critical to implement that feature for our business. But they didn’t show any compelling explanations. So, we had to make it a lower-priority task. Otherwise, we could do it!Our marketing team doesn’t work at all”

Engineers

Before iPhone, most manufacturers believed that it was impossible to implement a full-web browser on a mobile handset.

But just less than one year after iPhone, many manufacturers released mobile handsets with a full-web browser.

What does all this mean?

We see a lot of similar stories in our history:

Transistor Radio, Home VTR, Walkman, Personal Computer, Megapixel Digital Camera, Full-flat CRT, Large format LCD, Broadband, Tablet PC, …etc.

What does all this mean?

Barriers against an innovation are not so high if we share strong confidence that“a lot of other people are going to want it, too”.

This confidence fires up us to realize far better user-experience, innovative products, no matter how high the barrier may be.

You know, potential ability of engineering is much higher than we expect and engineers can be more flexible if they share the confidence.

Marketing, sales, logistics, legal, production, PR, IP, HR, or top managements, in whatever sections, persons in charge can be more passionate and creative if they share the confidence.

The missing piece for innovation is the strong confidence that “a lot of other people are going

to want it, too”.

The key to get strong confidence is the ability to understand and share the feelings of target customers, that is, “Empathy”.

empathy:the ability to understand and share the feelings of another.(Concise Oxford English Dictionary)

Think about

Chapter 3

It's in Apple's DNA. The technology alone is not enough.

That is technology married with the liberal arts, married

with the humanities, that yields us the result that makes

our hearts sing.

– Steve Jobs

Keynote speech, Mar/2011, from Apple.com

This sentence explains about the advantage of Apple’s products, but it doesn’t explain why they can create such attractive products.

The question I’d like to ask here is:

“How to create such attractive products?”

The answer must be very basic and obvious.

Apple has strong confidence that gets what

the customers want to buy.

Apple is always striving to find out:

“what user-experiences the

customer

looks for, values, and needs”.

Apple spends enough time for this task.

Category Inception Apple Product Released

MP3 Player 1997 iPod 2001

MP3 Download(*) 1999 iTune Store 2003

Smart Phone 2001 iPhone 2007

Mobile App(**) 1999 App Store 2008

Netbook 2007 iPad 2010

Apple’s blockbusters

So, Apple often enters the market very late, and attractively re-defines the product which makes customers’ hearts sing as well as itself.

(*) Napster, etc.(**) NTT docomo, etc

The greatest praise an innovation can receive is

for people to say,

"This is obvious. Why didn't I think of it?"

– Peter. F. Drucker

Looking back from today:

The demands for iPod & iTune Store was

obvious around 1999.

The demands for “Breakthrough internet

communicator”(*) was obvious around 2005.

The demands for “big iPhone” was obvious

around 2008.

(*) Steve Jobs’s introductory words about iPhone

It may sound paradoxical, but Steve Jobs says:

We do no market research. We don’t hire consultants.

In the meantime, Apple has been building

a huge platform.

Apple Store was launched in May 2001, five months

before the first iPod was to be released and two years

before the iTune Store was to be launched.

Apple StorePhoto by Camillo Miller, Flickr

(*)At that time, Apple's annual revenue was only $5.4 billion and loss was $25 million. There were only Notebook and Desktop computers in the Apple Stores.

In 2011, Apple has 336 stores in 11 nations:

Japan: 7US: 240

Canada: 20

Australia: 12

France: 7

Spain: 2

UK: 30Germany: 5

Italy: 6

Switzerland: 3

China: 4

5.8 millions people come to Apple Stores each week

and 610,000 members in “one-to-one” service.(data from ifoAppleStore.com)

One-to-one service at Apple StorePhoto by Phil Photostream, Flickr

Apple has about 50,000 employees and about 30,000

of them are working at Apple Stores as full-time

employees. 60% of employees are there sharing their

vision "Enrich Lives".

(*) Gateway, now a subsidiary of Acer, had similar retailing strategy, but they didn't hire their own people, didn't own real estate. On the other hand, Apple does.

Apple StorePhoto by Camillo Miller, Flickr

The only way to enrich their life is to be part of

their life.

– Ron JohnsonSenior Vice President of Retail, Apple

Apple Store has become the most powerful “empathy” platform on the planet.

Empathy

Chapter 4

The business enterprise has two – and only these two –

basic functions: marketing and innovation. Marketing

and innovation produce results; all the rest are “costs”

– Peter F. Drucker

Marketing

Empathy: [em-puh-thee] - the ability to understand and share the feelings of the

target customers; “the CORE” ability of Marketing

Empathy

Imagination (feel)

Creativity (think)

Innovation (produce)

Passion (triumph)

Motivation (act)

encourage

inspire

[ref] ”Towards a Definition of Creativity”, Wisconsin Task Force on Arts and Creativity in Education

Empathy: [em-puh-thee] - the ability to understand and share the feelings of the

target customers; “the Source” of Innovation

“Empathy” is the very core ability for both marketing and innovation, the two basic functions of business enterprise.

Some companies have already executed drastic investment for Empathy as a system.

Apple has been building a huge and stunning Empathy platform: the Apple Store.

Samsung has a “Regional Specialist Program”, a very aggressive Empathy cultivation program.

(*) see http://is.gd/Eu0Gfy

This is very old program, since 1990.

Dyson’s vacuum cleaner DC12,a strategic product for Japan market

Dyson’s engineers home-stayed in Japan several months to understand and share the people’s lifestyle before designing DC12.

However, to build the Empathy as an effective system is not easy, especially, in this profound changing age.

Life Style

Declining Birth Rate and Aging Population

Diversity & Inclusion

Sustainable Society

Later Marriage

…

Connected Society

Share of Global GDP USA: 31%(2000) 18%(2015)(*1)

BRICS: 8%(2000) 23%(2015) 31%(2020)(*2)

Share of Global Cell-Phone Market(*3)

USA market: 50% (1998) 12% (2015) Asia market: 19% (1998) 50% (2015)

E7 will go beyond G7 in 2020 in terms of GDP(*4)

(*1) IMF(*2) BRICS Summit(*3) Softbank(*4) PWC

Global Economy

Lifestyle changes day-to-day, market changes globally.

Once again, “Empathy” is the very core ability for business.

Are you being inspired through target customers?

Are you cultivating your passion through target customers?

Are you and your company ready for the next decade?

… to be posted.

An answer will be shared here in version 1.0