Delivering Breakthrough Innovation -- A Cloud Approach
| Delighting customers with something they couldn't describe before they saw it is one of the most powerful forms of innovation. Consider Apple's success with the iPod, iPhone and iPad in three different markets which were considered commoditized until Apple drove massive new demand (at premium prices) by delivering a unique user experience. Apple utilizes several "cloud" concepts in its approach to innovation: Customer Needs:By really understanding how customers interacted with their cell phones, MP3 players and tablet computers, Apple identified not only the shortcomings in existing products but customers' unstated, and unmet, needs. Understanding customer needs is something every marketing department tries to do. But Apple expanded its view of these needs beyond the functions of the products themselves to users' desires for ease of use and to be seen as "cool." Cloud innovation taps both existing customers and "uninvolved" outsiders to understand the full range of customer needs, implicit as well as explicit. Value Chain: Many computer vendors think of the value chain ending with the purchase of the product or the delivery of service and support. Apple extended the value chain to the purchase process (the Apple store) as well as its ongoing use (the elegant user interface and design) and the acquisition of content such as applications and music. It was thus able to create substantially more value for customers -- and charge substantially more for it -- than rivals, and to create an ongoing revenue stream over the product life cycle. Business Models: While other vendors sold mostly online or through multi-brand retailers, Apple launched Apple-only stores that built buzz and excitement around its products. By creating on-line stores where customers can purchase music, applications and other content, Apple created entire new businesses that other vendors had ignored. In the process, it created innovative licensing and payment models with content owners. And unlike Microsoft, Apple has stubbornly kept control of the hardware on which its software runs, sacrificing market share for a superior user experience (and higher margins.) These innovative business models are based on a holistic understanding of the market and its dynamics, the kind of insights a "cloud innovation" process can help deliver. External actors: Apple has used the "cloud" concept to control some innovation internally while encouraging others to innovate in areas that are not its core competency. For example, Apple hired an outside contractor to form and lead a team of 35 people from Apple and five other vendors to develop the iPod. Yet another outside company did the technical design, while Apple created the user interface. With the iPhone, Apple tapped the creativity and energy of an external developer community to deliver a quantum improvement in the value and usefulness of the iPhone platform. There's no guarantee that cloud innovation will make you the next Apple. But by adopting a portfolio approach using cloud it can help you deliver game-changing innovation while continuing to deliver on innovation that is "business as usual." About the Authors A. K. Parameswaran (Param) is Assistant Vice President within Cognizant's Strategic Business Consulting Practice. He has more than 20 years experience in multiple segments of the consumer goods industry, including food and personal products. Param has held leadership positions in some of the largest global CG majors, including Head of CAME (Central Asia Middle East) innovation center at Unilever. Just prior to joining Cognizant, Param was with PRTM, a leading management consulting company where he worked with many of the top 10 consumer goods and life sciences organizations. He holds a Master's degree in chemical engineering from Johns Hopkins University, as well as an MBA from the University of Iowa and a Bachelor's of technology degree from the Indian Institute of Technology. He can be reached at [email protected]. Vishal Anand is a Director within Cognizant's Consumer Goods Practice. He has 12-plus years of experience delivering IT solutions to top CG organizations across the globe. Vishal has an MBA from the Indian Institute of Management, Lucknow and a Bachelor's of Technology degree from Banaras Hindu University. He can be reached at [email protected]. |