The Single Greatest Source of Innovation According to Apple

by Tom Koulopoulos

As Apple embarks on one of the most aggressive retail makeovers they are signaling a fundamental shift in how companies innovate.

The Single Greatest Source of Innovation According to Apple

What is the single greatest source of innovation? I’ll give you a hint, it’s not a product. You can innovate it faster than any product, it creates the most enduring value for your company, and it’s what your customers will remember most. Read on and I’ll give you the answer from a company that has become the poster child for innovation.

A few days ago I wrote about Angela Ahrendts’ announcement of a makeover for Apple’s retail stores, including a new series of educational offerings called Today at Apple, a redesigned layout that replaces the Genius bar with a Genius Grove, and live music. As a cornerstone of the rollout Apple unveiled one of its first new stores, Apple Dubai Mall yesterday. Note that it’s no longer called the Apple Store, it’s now Apple followed by the location.

So, what’s the big deal? After all, retail stores undergo makeovers regularly, it’s how they keep attracting customers to buy the same old same old by creating the illusion that something has really changed. Without actually walking into a new Apple retail store it’s hard to appreciate the magnitude of the change. But this is about much more than just a fresh coat of paint and new floor layout.

The Real Innovation

While we most often talk about Apple products as the innovation, the real innovation in this case is the one to which most retailers and consumer facing companies pay little attention, the experience. And it’s where Apple has always played to its strengths by creating an experience of community, relationships, human-centered design, and the projection of a higher purpose that includes much more than just technology.

The fact is that experience is always the greatest and easiest source of potential innovation–it’s the one place where you can deliver near infinite variety; and it’s also where you have the opportunity to build the strongest bonds with your customers.

To quote the Late Maya Angelou, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Think about that quote as it applies to your retail experiences. If you’re like me I’ll bet that what comes to mind most often is how you felt after sub-par experiences. The frustration of not being able to find an associate in store to help you, or, when you do, having them tell you they have no idea how to answer your question. Or perhaps waiting in a long checkout line when half a dozen registers are standing idle and unmanned. We all have vivid memories of our most horrible customer experiences. It’s much harder to recall the wonderful, even delightful, experiences you’ve had, because there are typically so few of them.

What Apple is doing is nothing less than revolutionizing the retail experience and the way you feel about shopping, not by adding products, but instead, by creating a place that immerses you in Apple’s mission to build its products around its customers’ experiences. With outdoor gardens, fountains, panoramic views, a 6K monitor so large that it could double as the screen for an old time Drive-In theater, no barriers to stand between Apple employees and customers, and live entertainment, you are part of something that is part theater, part showcase, part community, and all Apple.

I have no doubt that many companies will look at this and say, “What a waste!”

Yes, that’s exactly what people said when Howard Schultz founded Il Giornale in 1985, which then acquired and was renamed Starbucks. Starbucks certainly had some innovative products, but let’s face it, it’s coffee! What Schultz really innovated was the coffee drinking experience, creating a brand that you could personalize to your hearts content–Grande, half almond, half soy, triple shot, latte, no whipped cream, a shot of caramel and sprinkle of cinnamon. And all this in a welcoming environment that for many of us became our second home or office! JetBlue and Virgin did it with air travel. Uber has done it with transportation. Amazon has done it with books and online shopping. Experience is the king of innovation because it puts the customer at the center of the relationship.

That’s Apple’s mission with its retail makeover and why Ahrendts was brought over from Burberry, where she was a transformational CEO, for a compensation package that ranges between $50M and $100M a year. Her objective is to alter not just retail but the fundamental relationship with each customer.

It’s also worth noting that Apple most needs to up its game when it comes to customer relationship. In no small part because product innovation is getting so much harder. Scaling a behemoth like Apple at it’s current size is going to be Apple’s greatest challenge so far. Doing that in the absence of a blockbuster innovation or a multi-billion dollar acquisition, means doubling down on the customer relationship. Not coincidentally Apple’s services business including Apple Music and Apple Care are among the fastest growing parts of Apple’s business.

At the same time retail is changing dramatically. What’s clear is that the old model of retail where a store was the fastest and most convenient way to buy isn’t going to hold up against online. There has to be much more value for the customer as part of the in-store experience.

So, if you’ve ever wondered why Apple puts so much emphasis on in store technical support when they could probably do most support over the phone or online, consider the impact and value of an in-person experience. If you meet with a Genius you will leave suitably impressed with his or her interest in your problem while sharing a mutual love of Apple. You’re more likely to want to add on an extended service contract with your next purchase, and your loyalty is rewarded. What began a problem ends as a fond memory.

I for one, look forward to my Apple encounters in the same way some people look forward to going to the spa or a spiritual retreat. I’m not shopping, I’m communing with my inner geek. For those few moments I’m cool, young, and so totally with it. (Okay, maybe that says more about me than Apple, but I doubt I’m alone on this.)
Investing In Experience

It’s no surprise then that Apple picked Dubai to showcase its new Apple experience. Dubai itself is an experience. If you haven’t been the best way I can describe it is to imagine Disney World on the scale of NYC.

It’s a city that is less than 40 year’s old. Everything is brand new and glistening, every plant and shrub is perfectly trimmed, roadways and infrastructure are state of the art. Technology is at the center of everything here, from the the Burj Khalifi, the worlds tallest and smartest building, to the NORAD like command and control rooms used to manage the city, to the touch panels that run your hotel room.

Why invest so much money in experience? Because experience is what we most remember. Nobel laureate Daniel Kahnema founder of behavioral economics, talks extensively about how our experiences are shaped by our memories. In his widely viewed TED talk he describes how it’s possible to have a lousy experience but remember it as much better than it was if the last memory of the experience is a good one.

So, why invest in a real store when you could do everything on line? Because that gives Apple the chance to make sure that whatever your experience with the product, over which they have less than total control, you will still be left with a memory of a great experience in the store with a living, caring Apple employee.

It’s also critical to note that Apple is doing its best to make sure that its retail experience reflects the core values of the company. This is a showcase not just for products but for a culture. One of the most inspiring proofs of that is their recently revised store Credo.

Enriching lives

We are here to enrich lives. To help dreamers become doers, to help passion expand human potential, to do the best work of our lives.

At our best

We give more than we take. From the planet, to the person beside us. We become a place to belong where everyone is welcome.

Everyone. We draw strength from our differences. From background and perspective to collaboration and debate. We are open.

We redefine expectations. First for ourselves, then for the world. Because we’re a little crazy.Because “good enough” isn’t. Because what we do says who we are.

We find courage. To try and to fail, to learn and to grow, to figure out what’s next, to imagine the unimaginable, to do it all over again tomorrow.

At our core

We believe our soul is our people. People who recognize themselves in each other. People who shine a spotlight only to stand outside it. People who work to leave this world better than they found it. People who live to enrich lives.

The bottom line is that experience is often the most overlooked yet most impactful area of innovation. It sounds pretty simple, right? It is. So what are you doing about it? You may not have the resources to even build a storefront, but every single customer touchpoint you have should be looked at as an opportunity to create an experience that delights your customers and brings them back for more.

Whether it’s face to face or not, all communications, whatever the medium, are chances to create an experience, to reinforce who you are as an organization, to illustrate how much you value your customers, and to tap into the single greatest source of innovation.

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This article was originally published on Inc.

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Thomas KoulopoulosTom Koulopoulos is the author of 10 books and founder of the Delphi Group, a 25-year-old Boston-based think tank and a past Inc. 500 company that focuses on innovation and the future of business. He tweets from @tkspeaks.tomtom

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