Same Exterior, Different Innovation Engines
by Nicolas Bry
As I was completing my thesis on “rapid innovation“, one of the frequent comment was: “and you’re lucky to work in the digital industry because you can include in your case studies Google and Apple”. As if they were two innovation champions of the same kind…
Google and Apple may seem to share similar innovation patterns from afar, but under the hood, they play totally different ball games. This way, they demonstrate their ability to build their own identity based on a genuinely personal innovation model. Let’s get more in-depth into the comparative analysis.
Leadership and Culture
Google was founded in 1998 by two brilliant engineers and strong leaders, Larry Page and Sergey Brin. To take their growth to the next stage, and in response to the well-meaning but strong pressure exerted by their shareholders, they strengthened the team in 2001 by recruiting Eric Schmidt, a manager with an international reputation, as Executive Chairman. On joining the business, Eric Schmidt discovered that 60% of searches were run from areas outside of the USA and set up sales teams to develop operations in Europe. The management style is characterized by the care dedicated to recruitment: Larry Page has always carefully considered each and every application from potential candidates and it is not uncommon for up to 10 recruitment interviews to be held. However, this does not mean that there is no scope for thoughtful open-mindedness: to boost the performance of its network of servers, Google’s 18th employee was a neurosurgeon who had qualified at Harvard and the Yale School of Medicine. Finally, one should note the sense of fun “which is taken very seriously” at Google; the Googleplex site is playfully decorated, with toys, benefits and services available on the premises, while the delicious, cosmopolitan and healthy cuisine symbolizes the sense of enjoyment that presides at Google.
Even though Apple was co-founded by Steve Jobs and Steve Wozniak, it is really the “baby” of one leader, Steve Jobs, who has not ceased to act as its visionary, charismatic and authoritative head except for during the period when he left the company between 1985 and 2000. It would be possible to say that Steve Jobs has invented himself a super hero outfit in order to be better identified: he is invariably dressed in a black, high-collared T-shirt, jeans and white New Balance tennis shoes; the round spectacles and carefully neglected beard complete his American student look which creates the illusion of eternal youth reminiscent of our childhood heroes. Steve Jobs does not hesitate to get involved: on welcoming Didier Lombard, former Orange France Telecom CEO, and presenting the first iPhone release, he got up, walked around the table and got down on his knees next to the President of France Télécom to show him he could zoom in on pictures using two fingers and how to access his address book. This contagious enthusiasm is one of Apple’s strengths. What is more: Steve Jobs has not become obsessed by power and, according to his colleagues, continues to be a man who is open to criticism provided that it is backed up arguments.
Portfolio of Innovations
Google initially developed on the basis of a simple, fast search engine which provides high-quality responses. The portfolio has become considerably more diverse with the Gmail mail service, the Google Images and Google News search services, the Froogle price comparison service, the Google Maps and Google Earth map tools, the Google Chrome Internet browser, the Android operating system, and the Google TV middleware, namely a range of innovative and powerful tools for using the Internet. Google also conducted an intense strategy to acquire emerging technologies and know-how: Double Click ($ 3,2bn), AdMob ($ 681m), Keyhole (future Googleearth), Grand Central (future Google Voice). Rooted more or less directly in Google’s search expertise, these tools do not always seem to be interlinked in any obvious way or to contribute directly to the revenue streams of the sponsored links. Instead, this service portfolio seems to be motivated by the technological challenge, the possibility of taking innovation further, of providing a new useful and effective service on the Internet.
Apple has built its success on its legendary Macintosh whose user interface offered a revolutionary new way of using a computer. This product is backed up by a strategic innovation: Apple changed the business model initiated by IBM, by targeting the public at large and professional users, purchasing its microprocessors from external suppliers and using a network of stores as outlets for its computers. Since the return of Steve Jobs, Apple has managed a paradox: it has widen its portfolio from PC to entertainment devices , and it has kept at the same time a strong innovation focus, concentrating on a small number of products: iMac, iPod, iPhone, and now iPad. Together, these products form a family and have been designed within a very strong ecosystem: the range of accessories continues to grow and is now being promoted in the Apple Stores. The most extensive ecosystem is in the sofware: it is the one that embraces the iPod personal music player, the iPhone & the iPad, and goes right through to the iTunes music and video download service, and has helped Apple develop into a content provider. It has been extended with the App store, a store of thousands of applications which run on iPhone and iPad.
The Innovation Process
Google’s need to innovate is huge since it does not possess a captive user group, with everyone being free to change search engine whenever they want. Google closely integrates users in the design of its products and practices a type of collaborative product creation: after seeing how strongly Internet users reacted to the first changes to the search engine’s home page, Google was quick to understand the value of including these users at an early stage in its design considerations. This gave rise to the logic of developing beta versions which are available online at GoogleLabs.com. These are unfinished versions which are intended to be improved thanks to the tests performed by users. Finally, Android, without truly being totally open in the same way as an open source system, is a no-cost operating system which other players in the industry are free to implement in mobile terminals and TV decoders and which is used in third-party mass-market applications (Android Market is Google’s answer to the App Store). At Google, all IT developers can spend 20% of their time, or one day a week, working on the project of their choice. This 20% rule is a way of encouraging innovation: enjoy yourself, don’t worry about whether your idea is going to make money. It takes its inspiration from 3M and the working rhythm that Larry and Sergey experienced at Stanford: the American teachers who spend 4 days in the office and the fifth immersing themselves in research. Google believes that people are more productive when they are working on things that they consider important or that they have invented. It is also a way of promoting bottom-up innovation: there are limits to what a management team can specify or command. Thus people talk about what they are working on over lunch, the Google intranet allows everyone to tell the others about the object of their work (Google tools enable to stay connected everyday including the week end), and the company also sets aside time for meetings at which the engineers can listen to the comments their colleagues have to make about their budding ideas: a positive comment means that other people are prepared to work with you and is the first step in constituting a project. Then some of these ideas receive finance and the management team assures the follow-up necessary to ensure that the project becomes a reality. Google offers both freedom and resources.
Apple constructs complete, self-contained ecosystems around its products. The software is an integral part of the hardware and any divorce between the software and the appearance of the terminal could harm the brand. Apple retains control of the system and the customer is simply a user of the product: consequently, a Windows PC is more open than a Macintosh; a fact which has caused some users to unlock, or “jailbreak”, their iPhones in order to install applications outside of the Apple system. However, with the iPhone, Apple is nevertheless opening up to developers for the first time by allowing them to create mass-market applications which Apple then validates and publishes in the App Store where users can download them to their iPhones at their own expense. Another characteristic of the Apple innovation process lies in the secrecy which surrounds the design of new products. The company’s executives are extremely disciplined concerning its strategy of silence, certain rooms are protected from the eyes of inquisitive employees by secure access mechanisms and projects are designated by code names. One and the same project has different internal and external name and these codes change half-way through the development phase: Didier Lombard recalls that it was forbidden to mention the iPhone other than by the term Acmé. Apple does not hesitate to perform take-overs in order to save time, acquire expertise or complete the ecosystem surrounding their innovations: with the purchase of PA Semi, a chip designer, and the grey matter of its teams, Apple has secured a competitive advantage for its tablet and iPhone 4 in terms of performance, energy efficiency and production costs.
In terms of design, the Google search engine is characterized by an extremely simple home page. This page was designed by Sergey Brin in the absence of the money needed to pay a graphic artist and with no great artistic talent himself! It has become a distinctive Google trait. Google’s initial approach to design was somewhat random in which pleasing results arrive by chance (“serendipity”). The same sense is found in the products that followed: Gmail, Google Earth, Chrome etc. in which the main aim of the graphical user interface ergonomics and functions is to meet a need efficiently and the design is not particularly remarkable.
Apple’s hallmark is its design. Its products have always been carefully designed and easy to use. Very early on, Steve Jobs said that computers were only slowly finding a place in the home because they were horrible grey machines designed by engineers with no taste. With him, the concepts of beauty and ease of us penetrated the IT world: “What Apple is great at is figuring out how to invent cool technology and making it wonderfully easy to use”. Nothing is left to chance, from the shape of the products through to the cable that powers them. The designer Jonathan Ive, who once designed bathrooms, imposes his ideas on the engineers and through him, the iPod and iMac products were to mark a turning point; they were no longer merely “user friendly“, they were “friendly” pure and simple: beyond their functionality, they reflected a prestigious status which gave pleasure to the user, they created an emotional relationship. In other words: Apple has the desire to achieve totemic minimalist and playful devices through design & engineering excellence, integrating simple to use and theatrical interfaces and a closed eco-system“, the whole creating an unforgettable emotional experience that is bigger than the sum of the parts.
Rather than spending the money they had raised on advertising, Google’s founding duo were intent on creating a quality product and providing a service that was sufficiently attractive for people to want to use it. Good products backed up by word-of-mouth recommendation, so to speak. Under these circumstances, the recognition achieved by this brand which has become a part of everyday speech represents an outstanding success. This marketing approach, unsystematic to say the least, is seen again in the creation of the Google brand name which was brought into existence by the founders during an evening’s brainstorming when they mistook it for Gogol! Gogol (10100) had sparked the founders’ imagination and “Google chose this term to symbolize its mission: to organize the immense volume of information available on the Web.” This lucky spelling mistake was then to give rise to the name Google. This initial conviction has recently been enriched by the desire to develop the Google brand through the founding of the Google Creative Lab. Its mission is to remind people why they like Google; it works in association with the product managers. The Creative Lab is a proactive force that develops concepts (e.g. YouTube Symphonic orchestra, a composition by Tan Dung with a competition for musicians); it operates as a studio, as a creative PR agency and manages relations with the other agencies.
The Apple brand is at the very top of Maslow’s pyramid! Apple products draw their customers into the Apple world, they ensure acknowledgement, they leverage accomplishment and give their users a feeling of freedom. People speak of the brand’s iconic status, of religion and a faith in Apple! Apple is an expert in marketing strategies. Before a product launch, the information surrounding it is released drip-by-drip and Apple makes sure that rumors keep circulating outside of the company. There is nothing like keeping the buzz going to make sure that you are talked about while saving costs: David Yoffie, a professor at Harvard Business School, has calculated that before its launch, the iPhone had benefited from free media coverage worth an estimated 400 million dollars. The products are then presented at a finely choreographed public event, the famous semi-annual Keynote, which is synchronized with intensive advertising campaigns. Jobs’ public appearances are models of successful communication. If the Apple boss always gives the impression of speaking informally then this is a mere illusion. Every word is painstakingly rehearsed with his team of PR consultants: for example, the “Today, Apple will reinvent the telephone” at the launch of the iPhone, the careful staging of his praise for the lightness of the MacBook Air which he removed from a padded envelope which he opened in front of the cameras. The clarity of his presentations which never contain more than one sentence, one photo or one visual is as remarkable as his way of making numbers concrete: “the iPad battery lasts 10 hours? That’s enough to watch movies non-stop on a flight from New York to Tokyo.” In 2011 Apple’s brand just overtook Google to become the world’s most valuable brand at $ 153 billion.
After initially adopting the conventional approach of selling licenses for the use of its search technology, Google has been distinguished by the innovative nature of its business model: drawing on the experience of the yellow pages in which advertisements appear on the same page as the consulted numbers, Google developed sponsored links (inspired by Overture) associated with an auction system for key search terms which places Internet users at the center of the value chain.
The Apple business model is the classic model of a manufacturer marketing its own terminals and accessories. This has recently been enriched by the online iTunes service (music sales and video rental), the applications available in the App Store (revenue shared with the application developers) and the Apple Store distribution network (reintegration of distributor margins), with Apple extending its control over the industry network.
“Don’t do evil” is written on Google’s walls. This illustrates the original angelic desire of its engineer founders who were also able to put on the mantle of battle-hardened businessmen. When Google was first listed on the stock exchange, they said: “Our search results are the best that we can produce; we do not take money to change these results. We therefore display advertisements that we can clearly identify and which we do our very best to make relevant”. The text “Help make a better world” also appeared in the initial launch document.
Steve Jobs is the incarnation of the Apple philosophy. Beyond his design and brand philosophy, Steve Jobs, who is nicknamed the “Apple guru”, gives the impression of someone with a mission to accomplish, teaching to lavish. As he said in 2005 at America’s Stanford University when describing the lessons he had learned from his life “connecting the dots looking backwards; find what you love to do & follow your heart; stay hungry, stay foolish, live every day like the last day and some day it will be true!”, a lesson that continues to be gospel truth for millions of Apple fans today.
Would you like to know more about innovation champions, and see how they distribute from thriving innovation organization to innovation dedicated unit? Have a look at:”become the innovator you are”.
Image credit: missha
Nicolas Bry is a Senior VP at Orange. He developed a strong experience in innovation management, creating digital business units with international challenge, and completed a professional thesis on rapid innovation at HEC Business School.