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

Chikafuji,  Ryu

- Version 1.0 -

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

–  Aug/25/2011(last  revised  on  Dec/18/2013)

tempta5onchapter  1

There  is  nothing  more  important  task  than  to  find  out:

“what user-experiences the customer looks for, values, and needs”.

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

Instead,  many  companies  give  an  ear  to  the  industry’s  influencers,  and  oversee  compeItors,  apart  from  their  target  customers.  

Influencers(big  research  firms,  oligopoly  firms)

Target  Customers

A  Company(a  consumer  products  company)

Instead,  many  companies  give  an  ear  to  the  industry’s  influencers,  and  oversee  compeItors,  apart  from  their  target  customers.  

CompeItors Target  Customers

A  Company(a  consumer  products  company)

Curious  to  say,  influencers  provide  the  vision  of  the  newly  defined  product  category  for  their  customers,  the  consumer  products  companies.  

(*) examples of influencers

Actually,  many  influencers  have  global  markeIng  plaLorms  to  survey  their  customers’  potenIal  market.  

Problem  is  that  the  influencers’  happiness  doesn’t  correspond  the  companies’  happiness.  

The  influencers’  happiness  is  to  spur  an  intense  compeIIon  in  their  customers’  market  because  such  compeIIon  brings  them  huge  revenue.  

Everybody Netbook!(with Wintel !!!)

The  influencers  elegantly  lead  their  customers  into  a  intense  compeIIon.  

The  compeIIon  makes  the  influencers’  hearts  sing,  while  the  companies’  hearts  be  exhausted.

It’s  Ime  to  re-­‐think.

re-­‐thinkchapter  2

Many  companies  start  from  products.  They  improve  exisIng  products  and  make  the  spec  table  beRer  one.  

Sometimes they create a new segment.

Existing market Existing market

New segment

Sometimes they create a new market.

Fewer  companies  start  from  people.  They  innovate  new  user  experiences  and  make  the  people’s  life  beRer  one.

New marketExisting market Existing market

My  focus  here  is  clearly  on  the  laRer  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  markeIng  says,  “These are the user-experiences the customer looks for, values, and needs.”

True marketing says, “These are satisfactions the customer looks for, values, and needs.”

– Peter. F. Drucker

To  find  out  ”the user-experiences” is  the  starIng  line  for  new  product  planning,  however,  

You can’t go out and ask people, you know, what the next big thing.

– Steve Jobs “Steve Jobs speaks out”, CNN Money, Aug/03/2008

[This  product  is  “Innova5ve”]  means  that  the  product  brings  far  be;er  user-­‐experience  to  the  target  customers.

user-experience

time

Discontinuity

Conventional Products

Innovative Product

In  other  words,  there  must  be  discon5nuity  between  the  trajectory  of  convenIonal  products  and  an  innovaIve  product  in  terms  of  “user-­‐experience”.

Conventional trajectory(incremental improvement)

New trajectory

What  ordinary  people  can  imagine  is  limited  to  incremental  improvement  of  exisIng  products,  their  imaginaIon  can’t  beyond  this  disconInuity.

If I had asked people what they wanted, they would have said “faster horses”

– Henry FordFounder of the Ford Motor Company

(Around 2000,) We did market survey about the demand for camera-phone, not once, four times. Every time the results showed negative. However, nowadays, camera-phone became 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  quesIon:   “what the next big thing”

Masaru Ibuka,photo from www.sony.net

Both Honda-san(*) and I had never started productdevelopment from 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 Sony

"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  reach  a  strong  confidence  that  “a lot of other people are going to want it, too”, then  most  barriers  which  prevent  us  from  innovaIon  are  removed.

You  may  have  heard  the  following  sentences.

“I  requested  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  compeMtor  could  do  it  and  we  are  in  for  it  now.  Stupid  engineering  team!”

Marketers

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

Engineers

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

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

What  does  all  this  mean?  

We  see  a  lot  of  similar  stories  in  our  history:

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

What  does  all  this  mean?  

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

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

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

MarkeIng,  sales,  logisIcs,  legal,  producIon,  PR,  IP,  HR,  or  top  managements,  in  whatever  secIons,  persons  in  charge  can  be  more  passionate  and  creaIve  if  they  share  the  confidence.

The  missing  piece  for  innovaIon  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.(by Concise Oxford English Dictionary)

chapter  3

think  about

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  aRracIve  products.  

The  quesIon  I’d  like  to  ask  here  is:  

           “How  to  create  such  a`racMve  products?”

The  answer  must  be  very  basic  and  obvious.

Apple  has  strong  confidence  that  she  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  Ime  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  o^en  enters  the  market  very  late,  and  she  gorgeously  re-­‐defines  the  product  which  makes  customers’  hearts  sing  as  well  as  herself.

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

The greatest praise an innovation can receive is for people 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  introducMon  words  about  iPhone

It  may  sound  paradoxical,  but  Steve  Jobs  says:

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

MeanIme,  Apple  has  been  building  a  huge  plaLorm.

Apple  Store  was  launched  on  May/2001,  5  months  before  the  first  iPod  would  be  released,  two  years  before  the  iTune  Store  would  be  launched.  

Apple Store, Photo by Camillo Miller, Flickr

(*)At  that  Ime,  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  naIons:

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 Store Photo by Phil Photostream, Flickr

Apple  has  about  50,000  employees  and  about  30,000  of  them  are  working  at  Apple  Stores  as  full-­‐Ime  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 Store Photo 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  became  the  most  powerful  “empathy”  plaLorm  on  the  planet.

Empathychapter  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

Empathy: [em-puh-thee] - the ability to understand and share the feelings of the target customers; “the CORE” ability of Marketing

MarkeIng

Empathy

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  markeIng  and  innovaIon,  the  two  basic  funcIons  of  business  enterprise.

Some  companies  already  executed  drasIc  investment  for  the  Empathy  as  an  system.

Apple  has  been  building  huge  and  gorgeous  Empathy  plaLorm,  Apple  Store.

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

(*) see http://is.gd/Eu0Gfy This is very old program, since 1990.

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

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

However,  to  build  the  Empathy  as  an  effecIve  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  GDPØ USA:        31%(2000)  -­‐-­‐-­‐>  18%(2015)(*1)

Ø BRICS:    8%(2000)      -­‐-­‐-­‐>  23%(2015)  -­‐-­‐-­‐>  31%(2020)(*2)

Share  of  Global  Cell-­‐Phone  Market(*3)Ø USA  market:  50%  (1998)  -­‐-­‐-­‐>  12%  (2015)Ø Asia  market:  19%  (1998)  -­‐-­‐-­‐>  50%  (2015)

E7  will  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  culIvaIng  your  passion  through  target  customers?

Are  you  and  your  company  ready  for  the  next  decade?

…  to  be  posted.

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