Lessons From Apple and Nissan–Learning The Game While Playing The Game
As expected, there was a lot of fanfare around the Apple event on September 12th. Apple announced a new range of products including the iPhone X, which captured all the hype and news cycles with the $1000 price tag. In terms of innovation, the more interesting product for me was the next generation Apple Watch. The way Apple works on its product releases teaches innovators that they don’t have to get everything right the first time. Instead, we can do enough work to get into the game and then improve our product using market feedback.
Such an approach scares a lot of large companies; especially publicly listed ones. These companies want to get everything right before the launch. From the business plan, the marketing plan and the product itself, everything must be perfect. Once the product is launched the focus shifts exclusively to execution and scaling. There are no more lessons learned from customers after launch. This make every new product launch a high stakes event where the company either wins or loses. There is no option on the table to fail now and win with later versions of the product.
Start With Early Adopters
Apple’s general approach illustrates that there is no need to play this high stakes game early on. When the first iPod was launched in 2001 it was not a runaway success. Only 125,000 iPods were sold that year. The product was aimed at Apple customers with Macs and connected via FireWire. The iTunes store was also not part of the iPod ecosystem until 2003. Over time, the product evolved into various versions such as the iPod mini, eventually selling hundreds of millions of units.
In contrast, most large companies target the mass market from day one. This is a risky approach, since mass market consumers are more demanding compared to early adopters. Admittedly, starting with early adopters is easier for Apple because the company has a relatively large fanatical tribe of customers. However, this is does not mean that other companies can’t identify a group of early adopters for their new products.
According to Steve Blank, early adopters can be defined as a group of people who have the problem or need that your product solves, are aware of having that need, have been looking for a solution, have probably hacked up solutions of their own from bits and pieces, and have the budget to pay for your product. If a company can identify this group of people, they can target them with a new product launch. This might be a small group of customers compared to the mass market and the early numbers may look like the product has failed.
The Product Is Yet To Fail
This raises a key question about when a company can know that their product has failed. With transformational innovation, this is a tough call to make. It is probably premature to make that call with the first version of a new product. Instead, a new product launch has to be partly viewed as an opportunity to learn. On September 7, Nissan announced the launch of the second generation Leaf. Nissan has sold over 300,000 of the first generation Leaf. While this makes it one of the most successful electric cars in the world, it is taking longer that Nissan predicted for electric cars to get a large enough foothold on the car market.
Nissan could give up on the product and focus on their currently successful models. But they have not done that. Instead they have doubled down and returned with a new and improved Leaf. One way to make the decision of whether to double down on a new innovation, is to look at key social, technological and economic trends. With electric cars, it appears that Nissan might be making the right bet. Governments world-wide appear to be determined to stop their country’s dependence on fossil fuels. For example, Norway, France and Great Britain recently announced that they would ban the sale of all fossil fuel based cars by 2025 and 2040. China is also planning to ban the sale of fossil fuel cars.
Never Stop Learning
Understanding that your company is riding the wave of a good trend means that after launching a new product we should never stop learning. Even as we execute our plan to scale the current product, we have to be running experiments to learn what customers find valuable. These learnings will be useful in informing our next iteration of the product. This process applies to both software and hardware products. Never stop learning! Every company has to be searching while it is executing.
The inability to learn from customers is probably why most companies feel that they have to get it right the first time. Everyone in the business knows that this is the moment. After launching the product, the ship has sailed. There will be no future opportunities to make iterations. If the new product does not meet the financial projections in the business plan it will be canned. Such practices stifle innovation. Corporate leaders should not expect innovators to get everything right the first time. Instead they should encourage innovators to get in the game. The company can figure out the right solution and business model while playing the game.
Tendayi Viki is the author of The Corporate Startup, a book on how large companies can build their internal ecosystems to innovate like startups.