When Minimum is Good Enough. Learning from Apple Watch

Bringing new products to market successfully is a tough task for any company. Fierce global competition, industry disruption, lower entry barriers, diminishing power of brands and shorter product lifecycles is enough to put any NPD manager on the back foot. So what is Apple, one of the leading companies in the world, doing to combat this challenge? The answer is lean innovation management.

Steve Blank is the pioneer of lean innovation management (LIM) and explains it as a way for established companies to organise and act on innovation at the speed of startups. The LIM methodology encourages new business model designs, minimum viable products, customer development and adopting pivots as part of the innovation process.

Innovation Re-Think

This is a significant shift from the traditional NPD process typically involving months, if not years, of idea generation, screening, expensive concept development and testing, creation of a marketing strategy, product development, test marketing and then – hopefully – commercialization. In today’s fast-paced consumer markets, this long-winded and expensive route to new product launch can, in the worst case, end up putting the company out of business.

The Apple Watch was one of the most anticipated new product launches this year. Initially it was only available through pre-orders and safe guarded behind plexiglass in the Apple Stores out of reach of even the most hardened Apple fans. The Watch is now available worldwide online and is Apple’s first go at the wearable tech market. The question is: has it lived up to the hype?

If we are to believe Tim Cook, Watch has had a great start despite Apple’s reluctance to release transparent sales figures. In the annual financial reports the Watch is included in the ‘Other Apple Products’ category, disguising the actual unit and revenue performance of the Watch. Looking at the evolution of this category over the last seven quarters, there is a notable spike in Q3 this year – the first financial quarter that includes the Watch revenue. Whether this is due to the Watch, or the other products in the category, is not yet clear.

Revenue of the ‘Other Apple Products’ Category

Source: Apple annual financial reports

Apple’s launch of the Watch is a master class in LIM. Compared to the iPod, iPhone and iPad that were only launched once deemed market-ready, the Watch was launched as a minimum viable product. A minimum viable product has only the most important features, which deliver customer value and offer an opportunity for the company to validate learning. As such, it’s not the expectation that the minimum viable product will gain mass adoption; instead it is targeted at a small group of consumer innovators.

These consumers are often fans of the brand and possess much knowledge and experience that the company can capture to improve the next version of the product. This is a form of co-creative or open innovation that involves consumers and other contributors in the product development process. The benefits are plentiful: customer-driven product development, early identification of barriers to adoption and pinpointing of features ‘wish-list’. The goal is to make the next iteration of the product fit for and appeal to a wider market segment.

Let’s Hear It From The First Adopters Of Watch

So who were the first adopters of the Watch? We conducted a study with 90 people from the US, UK and Europe who had bought the Watch. We asked them what they thought of it. Most people in the study had used the Watch for a few months (78%) and found it intuitive to use (68%). This is perhaps because they were already part of the Apple eco-system as most of them own other Apple devices (iPads 84%, MacBooks 78%, Apple TV 65%, iPods 45% and iMacs 40%).

Apple was successful in creating hype in the run up to the launch in April, partly by creating product scarcity – the Watch could only be bought online and from selected fashion retailers and keen consumers had to pre-order it. It seems it worked: half the people in our study pre-ordered the Watch to ensure they were amongst the first to get their hands on it. Other drives of adoption were people’s interest in new technology (33%), love of Apple products (30%) and interest in wearable technology (25%).

Although most people were happy with the Watch, 27% expressed disappointment. This was often related to poor Wi-Fi connection and battery life, no GPS, a lack of useful and relevant apps and slow app load time. A similar number of people (29%) also found that the Watch was not as useful as they thought it would be.

Should Apple be concerned about the lukewarm feedback from their hard-core fans? Not really. In fact, this is all part of the LIM approach. Get a good enough product to the market, let a small number of dedicated consumers trial and test it, gather the feedback and create an improved mass-market product. The aim is not to head straight for commercialisation, but demonstrate innovation intent.

LIM works for established companies such as Apple, because their core fans accept product imperfection. That is as long as the product is innovative, exciting and meets their minimum expectation threshold. Acting on innovation at the speed of startups is a competitive strategic approach that enables large, established companies to respond fast to change and capitalise on new technology and market-driven opportunities.

The challenge that now lies ahead for Apple is to convert the initial interest and customer feedback into a winning mass-market product. Perhaps the arrival of watchOS 2, which promises a much improved user experience, can help accelerate the Watch ahead of competition. If so, Apple owes at least some of their success to those initial consumer innovators.