Apple's iDilemma: Can Apple Escape the Whirlwind of Disruption?

    By Dan Lyons | Small Business

    In 1997, Harvard Business School professor Clayton Christensen coined the term “Innovator’s Dilemma” to describe the situation in which a company becomes the victim of its own success and gets toppled by new technologies.

    The term gets bandied about quite a bit, but lately it has been applied to an unlikely target, a corporation that until recently has been seen as invincible, superhuman, and immune to the forces that disrupt ordinary organizations: Apple.

    Roger McNamee, co-founder of private equity firm Elevation Partners, tells Bloomberg TV: “Apple is caught in a classic innovator’s dilemma. They’re doing the same things that they were doing five years ago. The difference is that five years ago they were creating the smartphone market.”

    And there’s Olof Schybergson, CEO of a consultancy called Fjord, writing on GigaOm that, “As things unfold over the next few years, Apple will probably become a new textbook example of the Innovator’s Dilemma.”

    These comments are coming out in the wake of Apple’s World Wide Developer Conference (WWDC), where Apple showed off updates to two computers (MacBook Air and Mac Pro) and two operating systems (OS X and iOS). These products are cool but not earth-shattering or revolutionary. The most important one, iOS 7, has been received with disappointment. And two big potential game-changer products that Apple has been rumored to be working on -- a TV and a smart wristwatch -- have yet to appear.

    But Apple seems to be feeling a bit defensive about this, as evidenced by the fact that its marketing chief, Phil Schiller, made a point of saying at WWDC, "Can't innovate anymore, my ass." The crack backfired in some quarters, including The Verge, where Nilay Patel wrote that Schiller's "bravado clouds the company's real challenges."

    The Dreaded D Word

    Two questions arise. First, are observers correct in asserting that Apple is caught in the classic Innovator’s Dilemma? Second, if they are correct, how can Apple wriggle out of the trap?

    Christensen's theory is that companies that create hugely successful products become obsessed with protecting those products and serving their customers, but because of that they miss out on the next big thing. So market leaders end up getting disrupted, often by rivals who start out by making cheap knockoffs that at first aren't nearly as good as products made by the market leader.

    If you've been following the smartphone market, that sounds not entirely unfamiliar.

    The problem is, it’s not like there’s a Dilemma Police who can declare that yes, this company is caught in Christensen’s whirlwind of disruption. There’s no clear line that you can draw and say that, once it’s been crossed, a company is in trouble.

    On the other hand, when you find the dreaded “D Word” showing up next to your company’s name, you can at least say that you are in a place where you’d rather not be.

    For a powerhouse like Apple, the fact that people are even talking about this is kind of hard to believe. 

    Nevertheless, it’s worth noting that just a few months ago, Christensen himself said at a conference that Apple could become victim of the Innovator’s Dilemma, because smartphones are becoming increasingly commoditized, making it more difficult for Apple to charge premium prices. (Note that Christensen said this could happen, not that it had happened.)

    The Way Out?

    What should Apple do? McNamee says Apple should focus on making iOS more useful and connecting it with iCloud to make an overall ecosystem that’s more intelligent and helpful -- one that can anticipate your needs.

    “It’s about putting context into everything you do,” McNamee says. “What Apple should be doing is taking my calendar each night, populating it with all the information I need for the next day, and updating it in real-time as I get to each new thing.”

    McNamee is correct that Apple needs to get its act together in cloud services, where right now it lags badly. And the kind of intelligent ecosystem that McNamee is imagining would be amazing, if Apple (or anyone else) could actually create it.

    But that in itself may not be enough. The reality is, Apple needs something big. This is a company that will do $170 billion in revenues this year. The only thing that’s going to move the needle for Apple is a product that’s as big as the iPhone -- one that transforms an entire market. As far as I can see, the incredibly messed-up and inefficient TV industry remains Apple's best opportunity.

    Some analysts believe Apple could introduce a TV before the end of this year. I for one am hoping they’re right.

    This post by Dan Lyons originally appeared on Hubspot. HubSpot all-in-one marketing software helps more than 8,000 companies in 56 countries attract leads and convert them into customers. A pioneer in inbound marketing, HubSpot aims to help its customers make marketing that people actually love.

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