How Apple Taught Us to Disrupt Mature Markets

Let’s analyze one of the world’s most recent and amazing global disruptions; Apple and the cell phone industry. Simply put, Apple replaced the cell phone with a handheld computer, revolutionary touchscreen interface, a way cool new look and feel, and made voice an “app” through a great new business model. For those who might have been living under a rock for the past 10 years, this disruptive new product is simply known as the iphone.

All based on the notion of the “whole product.” And oh-by-the-way, it didn’t just disrupt the market. It completely blew it up in an amazingly short period of time. The impact was so eventful that it took years for anyone to even begin to catch up.

So how did the 5 perceived attributes of innovation and their impact on rate of adoption work out?

1. Relative Advantage: the degree to which an innovation is perceived as being better than the idea it supersedes.

The introduction of an over the top innovation launched and managed by a world-class marketing team made us go WOW even before we touched it. Remember the Steve Jobs product introduction? Do you remember this photograph? The iPhone with a first of its kind touch screen, the look and feel of the device, the buzz, the camera quality, the introduction of the app store and apps like music coupled with voice as opposed to “but I can make phone calls and I’m cheaper.” As a rule of thumb, our experience shows that, to be considered disruptive you have to be a minimum of 10X better than the innovation you are looking to replace. Apple √

2. Compatibility: Consistent with existing values, past experiences, and needs of potential adopters.

At its most basic level, the iPhone is a one-for-one replacement – I already carry a “cell phone.” It fulfills the current, established voice function requirements, completely compatible with my lifestyle, and with the addition of their app store, it offers a lot more than a phone. It expands on my freedom and ability to fulfill one of the most common human needs – to communicate. I also enjoy the early adopter/cool image it gives me. Apple √

3. Complexity: The degree to which the innovation is perceived as relatively difficult to understand and use.

The touch screen, icons and graphical user interface made it easy and fun to use. The product upheld the Apple promise of no user manual required. Everything was very intuitive. Apple √

4. Trialability: The degree to which the innovation may be experimented with on a limited basis.

Stop by your local Apple store for an excellent experience. It’s fun to spend time there. Think of the iPhone as a brand extension of Apple and Steve Jobs. The Apple store design and the visual experience you have even before you enter. I can remember every Apple store I have ever been to and it all starts in the street looking at the front of the building and the entrance. I can’t say that for any other place that I frequent. Then once inside the place literally jumps with energy, the people are helpful, knowledgeable and even the fellow shoppers are interesting. Overall, it provides a one of a kind, positive experience. Apple √

5. Observability: How easy it is to observe and communicate the results to others.

Simple – one look and I get it. With the touch screen and graphical user interface, the case color options, the look and the feel this phone has over the top competitors, I am showing it to everyone I know. Apple √

Apple not only understood the five perceived attributes of innovation and their impact on adoption, but it hit everything out of the park. The iPhone wasn’t just a great device, it was also a brilliantly conceived “whole product.” The whole product that extended and greatly supported the Apple brand promise. When you bought your first iPhone, were you surprised at how elegantly it was packaged? I certainly was.

But if we stopped here we would be greatly under-valuing the contribution of the iPhone and the eventual evolution of the smartphone. As you consider what the smartphone represents, as a platform coupled with the inevitable extensions – smartwatch, EarPods, body fitness sensors, Google Glass and the applications available as well as those as yet unknowns, you begin to realize that through the introduction of the iPhone brand and business model, Apple has presented a means to create and disrupt countless industries.

In the classical example, disruption doesn’t come from within it comes from outside. Why? First, the people on the inside are happy with the way things are and they really don’t want to disrupt things. Disruption means change and change brings risk. No, thank you.

Secondly, people inside become myopic trying to improve the product. If you would have walked up to anyone in the cell phone business prior to the iPhone introduction and held out a cell phone and asked what it was and what it was good for, chances are you would have been told it’s a phone and it is used to make phone calls. And where do I buy it? The phone store of course. People inside always try to improve things through continuous improvement methods right up to the point where someone from the outside has a bigger brighter vision.

I have no way of knowing for sure, but my guess is that when Steve Jobs looked at the cell phone he saw the opportunity for a computing platform coupled with all the great new technologies he was being exposed to and already applying within Apple. Looking through his eyes, think about all those new technologies coming together in a package already in everyone’s pocket or purse as opposed to people trying to make a better phone. Talk about a difference in perspective.

Here the fast path to disrupting a mature market was not to improve the product but to greatly expand the utility of the product. To take the base function and make it one of many versus improving on just the one.

For a bit more on the subject, check out Why the Best Products Fail Click HERE