#6 - Innovation for Business Nerds

Its interesting how arguably the most innovative company in the world not only creates innovative products, but is even innovative in its business operations.  The company is Apple and this past week, Businessweek did an article on how innovative (and ruthless) Apple's supply chain management strategy is in comparison to its competitors.

I won't get into the details of the article which you can read, but I did want to discuss some high-level concepts that came to mind after reading the article.  The first is that if a company wants to create innovative products, then their business operations need to be innovative and unique as well.  It's interesting how we're taught to think within a confined framework for operating a business, but that only works if you're selling plain-vanilla market saturated commodity products like bread or soda.  In Apple's case, their market was and still is saturated with competitors. Rather than just producing an innovative product and competing with competitors with an antiquated supply chain model, Apple sought out new ways to improve product quality, delivery-to-market, and even total supply chain control. Perhaps their greatest strategic move is the cash reserve that Apple leverages to obtain exclusive and cheaper manufacturing costs. Most companies place a small reserve with a manufacturer and pay the full amount later, meaning that manufactures bear the risk of not being paid back should the product and company fold later. In Apple's case, the manufacturing cost is paid upfront before the product is even produced; who does't like getting paid first. In doing this, Apple is also able to get preference from manufacturers, who will put other competitor products on hold as going with Apple (cash now) is more secure to them. Pretty smart…..

The second concept revolves around how Apple works heavily with manufactures and material scientists to produce products and technologies as they desire (e.g., new lasers to etch invisible pinholes). Long story short, if doesn't exist today, Apple and its manufacturers will create the technology to produce it. 

The innovative products that Apple has produced over the last decade has changed the technology industry and the way we use technology in our lives. However, it was the innovative practices in regard to its business operations that enabled Apple to create these products and make them the company that they are today.  

Innovation isn't just for the technical nerds, its for the business nerds too.