Executive Development Programme: Aligning with Corporate Ethos, Vision and Mission: November 13, 2019

Real Life Application: The Development of innovative product: the iPod

Apple’s portable music player, the iPod, changed the way that music (and other digital content) was
acquired, stored and played. It was a step up from both tape and CD-based players and earlier
MP3(digital music) players, which were bulky and had less storage size or downloading functionality. It
was instrumental in changing the rules of the portable music player industry, as well as supplier
industries such as music distribution.

Apple was able to do this through combining knowledge from several different sources and exploiting
innovations that had already changed competition in other industries. These included:

a) Digital technologies such as MP3 or WMA, which are the encoding algorithms that convert
music into data files and which allowed it to be transferred between machine through, for
example, Apple’s ‘firewire’ protocol-an innovation in its own right:
b) Hard drive and battery miniaturization technologies, which respectively allowed large media
files to be stored in physical small spaces and meant that the iPod could play for reasonable
length of time without being charged.
c) Power consumption technologies, which reduced the amount of power the device used and
thereby increased the play life of the now smaller batteries. The iPod stores the music in its
memory chips, allowing the hard drive to shut down during playback;
d) DRM (digital rights management) technologies that allowed the iPod to have a scroll-wheel
controller which facilitated sophisticated searches and management of content.

Jon Rubinstein, Sr. VP for hardware development was asked by Steve Jobs to put together a product-
development team that could produce the device in a very short time -less than a year. Rubinstein
recruited a group of about fifty hardware and software engineers, including some from outside the
company, without any of them knowing exactly what they were working on. But eventually they knew
‘they were designing what was in effect a computer platform that could be improved with software
upgrade and adapted to other uses’. The iPod was part of Apple’s ‘digital hub’ strategy for Macintosh,
which brought together several different applications that could link together, for example video and
music editing, digital photo management, as well as downloading and transferring of content. To this
end a development division was set up which focused on such cross-functional applications.

But an important innovative element was the holistic design of iPod itself which was the outcome of the
bringing together of the capabilities of Apple’s chief designer, Jonathan Ive and the perfectionism of
Steve Jobs. This resulted in the combination of must-have looks and functionality that Apple, almost
uniquely, appears able to achieve.

Since the iPod was first launched it has gone through several incremental improvements (since Real-life
application 4.5) resulting in models of smaller size of greater capacity. It has also clearly influenced a
more recent Apple product, the iPhone. In 2005, Apple announced that it was setting up a separate
division centered on the iPod which was intended to create a developer community around the product.

There are question marks over the cost of development of two of Sony’s newest products, the Blu-ray
disc and the PS3. These are arguably examples of products that are ripe for being brought down by
competitor’s technologies and products, such as Nintendo’s Wii.

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Executive Development Programme: Aligning with Corporate Ethos, Vision and Mission: November 13, 2019

Sony’s CEO, Sir Howard Stringer, has gone on record as saying that Sony had become so decentralized
-so not interconnected that its knowledge was in silos that needed to be broken down if it was to
continue to develop world-beating new products. Sony has developed the ‘Network Walkman’, a digital
music player two years before iPod was launched. In theory it should have the same functionality as the
iPod, but the engineers and the software developers apparently never introduced, getting the music into
the players was laughably cumbersome and it was withdrawn. And Sir Howard has also made a
concerted effort to cut back the number of products and technologies that the company has ‘you have a
hundred and sixty thousand employees and a thousand products, and you are pulled every which way’.
He is said to look enviously at Apple with its lone ‘six products’. So, Sony recently cut back on the
number of areas in which it undertakes R&D.

However, Sony’s annual reports consistently report on firm’s desire to create novel and unique products
and innovation still appears to be the core element its corporate DNA. Sony mixes regular reinvention of
their main businesses (recent developments are based around Cell processor, digital camera sensors,
and digitization and network technologies), incremental improvements to existing products within the
local divisions and radical new product development. Business units focus on a small number of core
technologies, which fuel product development in each of these areas. However radically new
technological and knowledge development-‘blue sky’ projects- are carried out in units that report
directly to the CEO.

Sony also appears to become less insular. Like Apple, it is embracing a model of innovation development
that is becoming increasingly prevalent: collaborative partnerships with other specialists-innovation
networks. These bring together expertise from many different organizations, sometime across
international boundaries, although they are often located within a narrow geographical area. In Sony’s
case the Blue-ray DVD format and the Cell processor which is a key component of the PS3, were
developed with partners that included IBM and Toshiba.