Innovation
If a company stands still then it is really going backwards. If you don’t innovate and improve your customer’s experience of using your product, then someone else will. Other firms are perfectly able to take your smart idea, and look at ways in which it can be improved, then produce this better version, and suddenly you have no customers, and no business.
It is important to note that innovation does not just mean new, better products although that is certainly a part of it. There are lots of other ways a firm can be innovative. I will use the I-pod as my example. Mp3 players were certainly around before ipods, and there are other, cheaper generic (Non branded) versions available. So, what is so compelling about the ipod? Why is it so good for Apple?
· The business model: How a firm gets it’s customers to pay for the service(s) they offer. They changed this. Before, Mp3’s were seen by the music industry as the enemy. You all just downloaded your music for free from the peer-to-peer file share web sites. Now, however, they can make money from them. Apple negotiated through I-tunes a chance for the music industry to profit from downloads, and in addition made the “free” file share provider’s position even more untenable.
· Networking: Teaming up with other companies to enhance the consumers’ experience, so both companies do better. Partnered music publishers (see above) to sell music online legally, and worked with accessory producers to extend ipod’s market and brand.
· Enabling process: How easy is it for people to get the product. They were less successful here. Any company could copy the ideas, the software etc, and adapt it for themselves. A better example is low cost airlines. Rather than
· Performance: Obviously, how well the product works. Apple managed to create a line of hardware that is easy to use, cool looking, and clearly differentiated from other products around it.