Creative Creativity: Incremental and Radical Innovations in Apple Inc.

Apple is a great example of an ambidextrous company that manages incremental and radical innovations in sustaining their competitive market position. Most innovations tend to be incremental. They build on existing knowledge and provide small improvements in the current product lines (Hill and Rothaermel, 2003). The markets for incremental innovations are well defined, the product characteristics are well understood, profit margins tend to be lower and production technologies are efficient (Jansen et al., 2006). In terms of incremental innovations, Apple continually improves its iPhones and each new launch has continued to generate significant customer demand and interest. In contrast to incremental innovations, radical innovations usually provide substantial technological breakthroughs and create new knowledge (Ahuja and Lampert, 2001). Creativity in terms of discovering, combining orsynthesizing current knowledge (often from a diverse range of areas) is required to develop radical innovations (Sutton, 2002). The generated knowledge from this difficult and risky process comprises the basis for developing new products that capture new markets and gain access to new resources (Sidhu et al., 2007). For example, while Apple focused on maximizing sales from its current cutting-edge computers (for example, Mac), it also had several teams with different time horizons working on different innovations.

In 2001, Apple entered the consumer electronics market by introducing its first iPod, which became synonymous with the MP3 music player product category. Praised for its sleek design and equipped with an easy-to-use menu, the iPod could hold 1000 songs with a battery life of 10 hours. By the end of 2003, more than 1 million iPods were sold; a substantial and new stream of revenues (apart from its computers). Since then, the iPod product range has been regularly renewed and, in 2007, the company announced that it had sold its 100- millionth iPod, which made it the fastest-selling music player in history. A related revolutionary innovation that helped iPod's outstanding performance in terms ofsales wasthe launch of the iTunes music store in 2003, where consumers could buy online music for $0.99 persong or videosthat displayed in the newest versions of iPods.

In 2016, Apple remained the world's largest IT company by revenue and total assets (although disappointing earnings and a historic decline in Apple stock was discussed in May on: http://www.msn.com/en-us/money/news/apples-historic-slide/viBBsxFuS). Nevertheless, in 2016, Apple had 475 retail stores in 17 countries and, in the first quarter of 2014, earned more than Google, Facebook and Amazon combined (http://www.factslides.com/sApple).

• Questions:

1. Reflect on whether the 2016 decline in market share price is a one-off or more serious issue, and consider whether it is possible to identify any future threats or challenges that should be addressed?

2. Apple is well positioned, well-resourced and a financial giant but it also needs to build on strengths and opportunities. Which strategic direction would you recommend and why?