Strategic Innovation Management in Apple Inc

This report highlights the significance of strategic innovation management in Apple Inc. It discusses the innovation analysis of Apple iPod, business model innovation of Apple iPod, and critical success factors that have lead to market success of Apple iPod.

Running head: STRATEGIC INNOVATION MANAGEMENT
STRATEGIC INNOVATION MANAGEMENT
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................3
Strategic innovation management in Apple Inc...............................................................................4
Innovation analysis of Apple ipod...................................................................................................7
Business model innovation of Apple ipod.....................................................................................10
Critical success factors that have lead to market success of Apple iPod.......................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

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Introduction
The report highlights on the significance of strategic innovation management within the
business. The enterprise that is chosen for this report is Apple Inc. Apple Inc is one of the biggest
multinational corporation headquartered in California. It designs, produces and sells computer
software, consumer electronics and other online services. The hardware products that they sells
includes- iphone, ipad, ipod, smartwatch, TV etc. The software products includes- iOS, macOS,
iTunes, etc. This enterprise has been considered as the world’s biggest information technology in
terms of revenue and second biggest phone producer in the year 2015. It has attained huge
reputation in market due to its innovative products.
Innovation is vital for the survival of the business in highly competitive business
environment where it is difficult for differentiating products as well as services. Innovation is
usually applied to the enterprise in various ways that involves- Product or service innovation,
process innovation, business model innovation, marketing innovation, financial innovation,
supply chain innovation and enterprise innovation (Davila, Epstein and Shelton 2012).
Innovation management signifies the procedure of managing innovation procedure of the
enterprise that begins at initial phase of ideation to the final phase of effective adoption. It
mainly encompasses strategic decisions, activities and various practices of planning as well as
adopting the innovation strategy (Goffin and Mitchell 2016).. Moreover, the managers of the
organizations administer innovation through different stages of innovation cycle. The innovation
cycle indicates the activities that are involved in moving innovative service or product to the
market (Dodgson, Gann and Phillips 2013). There are two basic activities of this innovation
cycle that includes- development of innovative goods or service and expanding business for

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marketing commodity or service. Innovation enterprises typically work on new innovations in
order to eventually replace the older products. The report also highlights on the significance of
the innovation management in this firm. The study reflects on the innovation analysis of one
product of Apple i-pod. Furthermore, the business model innovation of this Apple i-pod is also
discussed in this report. In the last section, the critical success factors that have lead to the
market success of this product is also explained in this report.
Strategic innovation management in Apple Inc
Strategic innovation management refers to innovative practices including competition
mechanisms analysis such as creation of innovative vision, harmonizing strategy in business,
expansion of strategy to the levels of organization, market tendencies and acts of competitors. It
has been opined by Hitt, Ireland and Hoskisson (2012) that, success of innovation mainly
depends on the owned resources and the firm’s ability to manage the resources. Some of the vital
determinants of the strategic innovation practices involves- organizational structure,
technological capability, innovation strategy, innovation culture and relationship between the
customers and suppliers. It has been found out by some researchers that effective strategic
innovation management practices influences the innovation performance of the organization.
Strategic innovation management plays a vital role in the performance of the
organization. This is because it facilitates in –
 Stimulating innovation- It motivates the workers to innovate products and services by
allocating rewarding effort as well as time. However, the managers of the enterprise plays
dual role in supporting as well as stimulating innovation.

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 Realigning the enterprise- Innovative idea for producing new product might require
important change in enterprise for bringing it in the competitive market. However, the
enterprise might need new suppliers for providing vital components for new products.
This in turn might lead to opening of new channels to the market for reaching target
customers.
 Providing resources-Managers supports innovation as well as maintain momentum by
giving resources in form of money, people and time. According to (), the leaders of the
company supports their innovators by recognizing the individuals who can bing balanced
perspective to project.
 Commercializing the commodity-An innovative commodity might not attain success
without proper management. The enterprise should commit their marketing resources to
commercialize innovative product. Moreover new goods and services requires marketing
for building relationships with different kinds of customers.
Apple Inc is one of the valuable organizations around the globe and has maintained huge
dominance for reputation as innovative enterprise. Owing to their innovative products as well as
brand reputation, this company has attained huge success in the competitive business
environment (Aaker 2012). In addition to this, its innovative design is also considered as one of
the factors that lead to its huge success in business. In fact, Apple’s innovation management
facilitates this enterprise to gain competitive advantage over its competitors.
The leaders of this company helps to generate innovative ideas, manage innovation and
effectively integrate this innovation for manufacturing products. Moreover, the leaders of this
organization generate innovative idea by carrying out research and development. In fact, this
enterprise has an innovative factory where the leaders carry out different kinds of experiments by

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using talented and skilled individuals. It has been opined by Vermesan and Friess (2014) that,
innovation in this company is mainly driven by competition and external uncertainty. The
innovation leaders of this company find new opportunities in the market and also reorganize
those areas that is inefficient. This in turn helps to fill these gaps that exist in the market. It has
been evident from the fact that the innovative leaders of this company came up with the product
i-pod in order to fill the gap between computer and mobile phone. The strategic enablers of the
innovation capability in this enterprise are – people’s management, organizational culture,
innovation competencies and innovation strategy. Furthermore, the leaders of this organization
help to build innovative culture within the workplace. The innovative thinking culture thereby
helps to foster the process of innovation (Keskin, Diehl and Molenaar 2013). It has been
reflected from recent study that this firm has been able to develop different framework of
innovation and change through their systems theory and experimentation. However, this
enterprise indentifies, protects and motivates all their innovation leaders in order to retain them
in business. Not only this, the innovators of Apple are also given reward either in terms of
money or recognition based. It has been stated by Tidd and Bessant (2014) that, innovation is
generally internalized in the working of individuals. However, the innovation leaders of Apple
regularly monitors the ongoing projects and also analyzes present activities for ensuring that
effective innovation take place.
Apple ipod is in reward position as it attained larger market share and its growth rate is
higher than other competitor’s product. Apple adopted “Blue ocean strategy” for innovating iPod
and bringing it to market. Blue ocean strategy includes- insights about new ventures innovative
positioning and tools for making it possible (Kim and Mauborgne 2014).. This strategy makes
utilization of procedure termed as “ value innovation”. However, implementation of this strategy

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benefitted Apple Inc by reducing cost and increasing buyers value. Apple targeted customers of
age more than 34 years to sell this product and thus it continues to lead a shrinking media players
market. There has been no issues in this product at present and hence it business has been
feasible over the last few years.
Innovation analysis of Apple ipod
Apple’s iPod has been considered as one of its best innovation till today. This company
has attained first position among innovative companies owing to exponential growth rate of iPod.
This product has been the best example of increasing brand innovation strategy attained through
effective as well as pragmatic innovation (Kapferer 2012). This product has attained huge
success in the market owing to the creation of software that permits the users to directly
download music from internet to device first at the launch time. At present times, near about
40% of the total profits that Apple gains mainly comes from the sale of iPod. It has been found
out by some researcher that iTune is one of the vital reasons behind the success of iPod. The
innovative analysis of Apple iPod has been explained with the help of SWOT. This analysis
helps to provide an overview about the strength, weaknesses, opportunities and threats. There
are several weaknesses as well as strength from inside the company that can determine the result
of whether the product might be successful or not. These are explained below:
Strength- Apple has extremely strong brand image in the marketplace. The sales of its iPod are
increasing around the world owing to it innovative features. (Bhasin 2018). It has been seen from
the recent study that this product has given this enterprise access to bigger sectors that are
purchasing into other areas of this brand. The strength of Apple’s ipod are-

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1) Portable – iPod is portable as well as lightweight device that provides their customers
convenience of music on the move.
2) Space for additional apps- This device holds space for additional application for primary
use and thus functionally making it highly innovative.
3) Variety in its storage-Several variants of 8 to 64 GB makes it highly accessible to wider
population.
4) Other innovative features-This product provides accessibility to emails, which in turn
adds value to its features. In addition to this, its music speed makes its most attractive to
the music players in this industry.
5) Status symbol- This product has been treated as the status symbol and hence makes it
aspiring to every individual.
Weaknesses-Although Apple iPod has several innovative features, it has several weaknesses that
includes-
1) Very fragile-The glass of this product is easily breakable and thus increases risk in
handling the product.
2) Applications and videos are memory consuming- The installed application, videos and
photos consumes huge space, which in turn creates difficulty for the buyer (Bhasin 2018).
3) Battery is not long lasting-The ipod’s battery is not long lasting and thus gets easily
discharged in few hours of use. Some recent facts highlights that this company has
presented their customers with complimentary battery.
Opportunities-It also provides huge opportunities to this product over the last few years-

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1) People becoming brand conscious as well as individualistic-As the present as well as next
generation people becomes brand conscious, this opens great avenues for this product.
2) Changing requirement of customers- Since this enterprise tries to understand emerging
requirements of their customers before developing this product, it helps Apple to retain
loyal customers and attract new ones.
3) Increasing level of income-The customers increasing level of income provides huge
opportunity to this product for launching new as well as aspiring products.
Threats- One of the major threats to this enterprise is the increasing level of competitors within
their industry. But in case of ipod , the threat occurs in the following way-
1) Smartphones-The smartphones are considered as one of the major threats to this product
owing to increase in demand for smartphones.
2) Huge competition- It has been seen from the recent study that the music players market is
getting intensified over the last few years (Bhasin 2018). In addition to this, almost all
technological media enterprise has been entering with larger giants. As a result, this
creates threats to Apple’s iPod.
3) Continuous advancement in technology-As there has been continuous innovation in
technology industry over the last few years, it creates threats mainly for the technology
oriented commodity such as iPod (Edquist 2013)..
4) Substitute products- As several kinds of substitute products have entered the market such
as iPhone etc, it has created huge difficulty for the products such as iPod. However, this
enterprise have been working firmly on the research and development and advertising
campaigns in order to sustain in the competitive business environment.

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Business model innovation of Apple ipod
Business model innovation refers to the development of unique and new concepts
supporting the enterprise financial viability involving its mission as well as processes in order to
bring about these theories to fruition. The main aim of this business model innovation is to
understand new sources of revenue by enhancing value of product and the method of delivery to
their customers (Massa and Tucci 2013). This model helps in describing how the enterprise takes
resources mainly in technology form as inputs and then convert it through markets and
consumers into outputs. This in turn facilitates in connecting resource with realization of its
economic value. in addition to this, this basically refers to the segments of customers being
served, offering to customers, configuration of resources, creating customer value and attaining
profit from all these activities with the help of value capturing mechanism. Business model
innovation has become extremely vital for the enterprise since it has strong effect on its profit
margins growth.
According to Planing (2015), business model innovation also facilitates the enterprise to
stay ahead in innovation of product game. Although implementation of this model is costly,
bigger enterprise adopts this framework in order to achieve success in this market. In case of
Apple, the enterprise focuses on the manufacturing of innovative hardware. Creation of iPod and
other associated application iTunes highlighted that this company involved distribution of music
as activity. Despite expanding their business in their hardware product, Apple drastically
transformed its business innovation model to involve relationship with its customers. However,
through this method, this company expanded its innovation from product space to business
model. The figure below reflects the change in revenue as well as profit after the launch of iPod
business model.

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Figure 1: Revenues and profit after introduction of iPod/iTunes
Source: ()
The business model innovation canvas of Apple iPod is explained below;
Key partners of
Apple
Key activities Customer relationships Value proposition
Apple Inc
partners with the
Nike company in
order to target
runners as well as
iPod users.
However, this
partnerships
The distribution
channel used by Apple
for selling ipod
involves- utilization of
electronic firms, using
social media for
advertising this
product.
Apple Inc builds good
relationship with its
customers in order to
attain huge profit from
this innovative product.
This product has been
fully integrated with the
Apple Inc focuses on
satisfying its customers with
this iPod. It innovative features
creates value to its customers.
This product also helps in
solving the customer problems.
In fact, ipod features also
satisfied the requirements of

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became the
successful owing
to adoption of
effective strategy.
The resources
offered by Nike
was a sport kit.
This was the
wireless system
that allowed
footwear user
communicate
with ipod. This
partner unveiled
this product at
the event in New
York.
They have innovated
the system where the
customers brings this
product and
professionals work on
it.
business model. customers.

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Customer segments Key resources
This product creates value for the teenagers as
well as young adults. It basically targets
towards those individuals who have enthusiasm
to hobby as well as technology. This product
appeals to all ages and different personality
people.
Innovative product manufacturer and suppliers are the
main resources for the distribution channel. IN
addition to this, the suppliers tries to build up good
relationship with it customers for retaining them and
attaining their trust.
Channels Structure of cost Revenue streams
Reaching customer segments
through channel becomes
easier for the company owing
to utilization of social media.
The channels preferred by
each segment involves- retail
stores, Apple stores etc. The
method used by the innovative
leaders are mainly cost
efficient.
The total cost of producing
iPod has been inherent I the
business model. Both the
resources as well as method
adopted for manufacturing iod
was highly expensive.
The customers takes interest in paying
for this product owing to innovative
features contained in it. They would
prefer to pay through their suppliers by
checking the features of this product.

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Critical success factors that have lead to market success of Apple iPod
There are several critical success factors that have lead to huge market success of iPod , which
are explained below:
 Total integration-Apple is the first company that was successful in unleashing iPod as it
integrated players, software and computer. Some of the enterprise did not achieve success
in their product as they shipped other company’s music software in manufacturing it.
This enterprise bought this product along with the market trend. It chose to use this ipod
fire wire technology with much wider adoption (Kleinknecht 2016)..
 Design of this product- This enterprise designed this product in simpler way so that the
customers does face any difficulty while using it. The volume control option of this
device worked easily (Goldberg 2013). Moreover, it was highly durable as compared to
other competing products as this company uses better parts in it, which in turn makes it
highly reliable.
 Marketing techniques- This Company always stay ahead in the market by launching new
software, hardware and applications for ipod. However, it became the fashion accessory
for the customers especially teenagers. For achieving the status of fashion accessory,
Apple partnered with several enterprises to promote this product. These partners
involved- radio broadcasters, Facebook, mobile phone vendors, Myspace etc. Moreover,

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with the rising popularity of this Myspace, it created the profiles for iPod where
customers downloaded several apps integrating with iPod. In fact, they strategized to
keep their design same in order to make it easily recognizable (Mootee 2013). Apple also
offered discount on iPod in order to make it attractive to its customers.
 Fairplay- One of the main reason of ipod success was digital rights technology of this
comoany. Apple used Fairply for providing mechanism in order to prevent customers
from sharing purchases of music. This was fairly innocuous with its computer limit and
hence was success factor for iPod.
Conclusion
From the above study, it can be concluded that Apple’s iPod has become successful in the
market as compared to other rivalries product. This enterprise has successfully attained branding
of iPod as it was the first company to offer innovative features with inclusive solution between
hardware and its content. In addition, effective strategic innovation management of this company
facilitated them to attain success from this innovation. In fact, adoption of Blue Ocean strategy
also helped to create value to their customers with the launch of this product. besides this,
business model innovation of iPod also led to increase in both stock prices and market share
growth rate.
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