The CEO as the Chief Innovator

CEO as the Chief Innovator

Roopen Roy

Innovation is not incubated by committees. Break-through ideas usually do not germinate by following standard operating procedure manuals. By definition, it entails breaking the mould. Innovation and invention are often born out of irreverence for conventional beliefs. Conviction and missionary zeal of an individual or a small group ignites boundless creativity.

The CEO of a Japanese multinational corporation did not engage an expensive market survey firm to ascertain the future needs of his customers. He watched people listening to music. He also had a deep insight into the art of the possible in the manufacturing technology of consumer electronics. He allowed disruptive innovators to develop a novel product that imagined (and not predicted) the fantasies of his future customers. He created a product that would change the world of music.

This CEO was Akio Morita of Sony. I had the honour and privilege of meeting him at a conference in Tokyo in October 1987. I still remember what he said, “IBM says think, we say imagine!”

Overruling the arguments of many seasoned engineers and marketing executives in Sony, he and his lieutenant Ibuka (who later succeeded him as the CEO of Sony) stuck to their convictions and launched Walkman. It not only introduced a new word in the English lexicon, it sold over 200 million units and transformed forever the way people listened to music. His own vision about Walkman: "This is the product that will satisfy those young people who want to listen to music all day. They’ll take it everywhere with them, and they won’t care about record functions. If we put a playback-only headphone stereo like this on the market, it’ll be a hit."

Akio Morita said this in February 1979 at Sony’s headquarters. The moral of the story: to lead the pack and create a “blue ocean” stop competing with your rivals in their own game. Change the game. You cannot be a pioneer by following the best practices of your competitors. You will need to create the next practices of a trail blazer.

I do not know whether it was the Isaac Newton story or the Adam and Eve narrative that led Steve Jobs to choose the “Apple” name for his maverick company. Apple Computers produced the niche Macintosh brand of personal computers that had a cult following. In January 2007, it made a strange move. The company dropped the second word from its name to tell the whole world that Apple “also makes computers”. It launch ed iPod media players, promoted the iTunes online content store and launched the iPhone mobile handset, whi ch combined hi-tech with hi-touch in more than one sense. Revenues from other businesses outstripped the sales of its computers. Apple re-invented itself.

Critics claim that Apple gadgets are expensive and most users never really use more than 10% of their functionalities. They question: why on earth would one design a car, which can also fly – an aircraft is better designed for flying. An iPhone can help you to find your way in a city if you are lost. You can read the barcode of a product using iPhone and it can scan the worldwide web and tell you where the product can be bought at the cheapest price. If you are sitting in a bar and listening to some jazz music you have never heard before, you can use your iPhone to find the number and even download it from iTunes. Critics say: why would you want a phone to do all that? Well, why do you buy and carry a Swiss knife? Do you use it very often to uncork a bottle of wine or clip your moustache? The fact remains that customers have voted with their wallets for Apple products and many a Cassandra has eaten a humble pie.

Not surprisingly, the new iPad has raving fans and disparaging critics. Interestingly, most of them have actually not used the product. Critics have already started bashing the iPad. Dan Frommer called it a “big yawn” in The Silicon Alley Insider. Scott Anthony of Innosight Ventures has po sted a more sensible and balanced view in the Harvard Business Review blog, “ The two things I admire most ab out the company are its ability to think holistically about business models (iPod + iTunes, iPhone + the App store, iPad + iBookstore) and its willingness to keep innovating. Imagine how different it would have been if Apple stopped at the first generation iPod, or just rode the iPod for as long as it could. Its willingness to step out and enter into new categories is an important lesson for all companies.”

Mystery and obsession with secrecy bring thrill to any Apple launch. In the words of CEO Steve Jobs, Apple’s mission is to create “insanely great products”. There are at least four ingredients to his secret sauce: 1) Imagining what a future customer will fan cy and die to pay for. 2) Think, design and manufacture a flawless intuitive gadget. 3) CEO as the chief innovator who is audacious in business experimentation. 4) CEO as the chief cheerleader who can single-handedly create enormous hype.

Imagination, great engineering, innovation, superb execution, judicious selection of price point and orchestrated marketing — all combine to make it a risky gamble to bet against Apple.

With iPad, Steve Jobs may have yet again created Apple’s own roads.

The writer is managing director, Deloitte Consulting, India. These are his personal views