On August 20, 2012 Apple officially became the world’s most valuable company with a market capitalization of US$623.5 billion. It’s a far cry from the late 1990s when Apple suffered a near death experience. The late Steve Jobs, who returned in 1997 and took the helm as Apple’s CEO in 2000, played a significant role in Apple's revival and extraordinary financial success. Over the last year alone, Apple generated over $100 billion with sale of its string of insanely great products/services such as iMac, iTunes, iPod, iPhone, and iPad especially through the Apple Retail Store. The big question is: What is responsible for Apple’s extraordinary financial success? Also, how did Steve Job/Apple dream up and execute magical (insanely great) ideas that positively change the world?

The most frequently cited driver of Apple’s success is “Innovation.” However, innovation is a broad topic and one should dig deeper to understand how Apple ‘thinks different’ when it comes to innovation. In my study of Apple as well as other extraordinarily successful companies, I see a rising FRACTAL S-WAVE OF INNOVATION that consists of three wavelets (interlocking S-curves):

1st Wavelet: VALUE CHAIN (Product/Service/Enterprise) Innovation

2nd Wavelet: BUSINESS MODEL Innovation

3rd Wavelet: CUSTOMER ECOSYSTEM Innovation

The literature on innovation mainly focuses on product/service innovation. However, in these days of the Copycat Economy, innovative product features are quickly copied and commoditized so that first mover advantage and profitability rapidly disappear in product innovation. For instance, the functionality and design of devices such as Apple’s iPhone and iPad have been quickly copied. When commoditization of products and services occur, the 2nd Wavelet or Business Model Innovation offers opportunities for more defensible and sustainable competitive advantage: Apple launched its iPhone using an exclusive subscription payment system with AT & T.

Although a business model innovation is harder to duplicate than a product/service innovation, in time it becomes commoditized or in the parlance of W. Chan Kim and R. Mauborgne, a “Blue Ocean” business model increasingly turns Red as business models compete head-to-head. No wonder that Apple practices Customer Ecosystem Innovation and has tremendous advantage using this 3rd wavelet of innovation: Apple’s products and services form a tightly integrated network or ecosystem that gains customers from its other products. The products/services complement each other in the Apple ecosystem and offer customers consistent, seamless, and insanely great experiences.

But, how did Steve Jobs/Apple dream up and execute magical ideas that positively change our world? Steve Jobs used intuition rather than published tools for Value Chain (Product/Service) Innovation, Business Model Innovation, and Customer Ecosystem Innovation. In fact, Jobs was highly skeptical of business consultants and “gurus.” Nevertheless, Jobs left a few clues regarding his mindset and process of innovation.

Using a wide range of ideas and tools from many disciplines as well as writings about Steve Jobs and Apple, I discovered that Steve Jobs/Apple’s innovation process can largely be explained, simulated, and/or anticipated using four main tools:

#1: The 2 Customer Greatness Questions
#2: The One-Page Customer Plan
#3: Steve Jobs’ Law for Customer Ecosystem Innovation
#4: Periodic Table and Jigsaw Puzzle for an Ecosystem

For an illustration of these tools in the context of Apple, please see the following presentation:

http://www.slideshare.net/RodKing/apple-one-page-customer-plan-dr-r...

Luckily, the above tools can be applied to every organization: profit and non-profit organizations; small, medium, and large businesses. The tools are even applicable at individual and personal levels.

I hope that you find interesting the above ideas.

Best,
Rod.