Monday, April 30, 2012

It Takes Competition PLUS Innovation

David Brooks of The New York Times recently wrote a fascinating op-ed, “The Creative Monopoly,” in which he contends that U.S. companies are more invested in competition than innovation…to their strategic disadvantage 

“Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it,” he writes. “The profit margins are much bigger, and the value to society is often bigger, too.”

It’s true:  a competitive mindset can sometimes mean missed opportunities.  There are lots of examples of big, successful companies walking away from a breakthrough new idea.  Think of the telephone.  When William Orton, president of Western Union, the world’s first communications empire, was offered the rights to the telephone in 1877, he declined, describing Alexander Graham Bell’s invention as an “interesting novelty [with] no commercial possibilities.” 

If Orton had been a little more far-sighted, we might now be signing up for cell-phone service with Western Union Telephone & Telegraph (WUT&T), instead of American Telephone & Telegraph (AT&T)!

In the best of all possible worlds, companies should be combining competition with innovation.  One company does it well:  Apple.

Have you ever heard of Audio Highway?  That’s the company that, in 1996, created the first portable MP3 player (called Listen Up) and the system for uploading content to a PC and downloading it into the player.  But in 2001, Apple differentiated what could have been a “me too” product by redefining the consumer’s experience of using a portable audio device, when it launched the iPod.

Today, Apple is coming out with new products and innovations just about every 15 minutes.  Through its brilliant design, branding and marketing initiatives, Apple has created a whole family of products that now includes five or six different varieties of iPods — plus iPhone, iTouch and iPad.  

It’s the prime example of a company that manages to be both competitive and innovative…and, as a result, outperforms itself in almost every measure. 

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