The departure of Steve Jobs from day-to-day control at Apple has prompted a debate about whether the company can continue to create such beautiful, innovative products that reshape how we spend our lives. There are two possible answers to this question, pretty equally reflected in the debate. While I hope the answer is ‘yes’, I fear it is ‘no’.
The reason is to be found in a wonderful book by William Baumol, published in 2002. In [amazon_link id=”069111630X” target=”_blank” ]The Free Market Innovation Machine[/amazon_link], he documents the existence of two types of innovation, the incremental and the dramatic. Most innovation is the former type. It is carried out mainly by big corporations, which make successive improvements to their products. Radical innovation is rarer – it changes the world and is usually carried out by entrepreneurial, smaller firms.
The book describes the market dynamic this pattern sets in play – and it applies especially to high-tech firms, Baumol says. “For oligopoly firms in the high-tech sectors of the economy, it [innovation] is in fact a matter of survival. The firm that lets its rivals outperform it substantially in innovative products and processes is faced with the prospect of imminent demise. The firm must innovate or die.” But because it is hard for a big company to think in radically innovative ways – large corporations don’t employ or listen to mavericks very often – many instead turn to trying to protect their market position by creating barriers to entry, to try to prevent the arrival of a new upstart whose radical innovation could topple them from their dominant position.
Apple was actually lucky in losing Steve Jobs for a while. His return gave it another turn at being the radical incomer. However, it is now the high-tech titan. Baumol’s account makes me think the industry dynamic he describes so convincingly will come into play here. Timothy Wu’s terrific book [amazon_link id=”B004DUMW4A” target=”_blank” ]The Master Switch[/amazon_link], which is about the ebb and flow of market power in communications industries, might point to the same conclusion.
[amazon_image id=”069111630X” link=”true” target=”_blank” size=”medium” ]The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism[/amazon_image]
Surely, by your own argument, SJ leaving should ensure Apple gets another turn at innovation. I doubt if all if Apples recent innovations have been the brainchild of one man alone, so there must be the possibility that his sad departure will actually allow even more innovative design, whilst still maintaining the ‘Jobsian’ ethos and approach.
It depends whether Mr Cook turns out to be such a creative thinker, doesn’t it? Besides, at its current size, Apple has a lot more to lose from doing something different – and it maybe going wrong – than it did when Mr Jobs returned.