Innovate Like Apple, With Baby Steps

When Steve Jobs introduced the iPhone 10 years ago, he talked about how fortunate he had been to introduce three revolutionary products over the course of his career: Macintosh, iPod and iPhone. For good reason, Apple is known for major leaps forward in innovation. But as we’ve watched their progress over the last two decades, we’ve recognized a pattern of smaller, more incremental changes: baby steps. These are the steps that often disappoint Apple watchers. Sometimes the steps forward appear to be giant leaps, but those are the exception to the rule. Even their most revolutionary products have been the sum of baby steps that preceded them. Nobody’s articulated this better than Kirby Furguson in Everything is a Remix.

Remember the Motorola ROKR E1? It was the phone we had all be dreaming of: a combination iPod and mobile phone that made it easy to load music from iTunes. Baby step. Or worse: stumble. We had all been sandwiching our Motorola RAZRs and our iPod nanos together, praying Apple would combine them. After the launch of the ROKR, Playlist summed it up nicely in their review of the device: “While I’m pleased that the phone finally saw the light of day, my pleasure just about ends there. As a phone, it’s hardly cutting edge. And as a music player, it’s a poor substitute for an iPod.” But the iPhone development team learned a lot from that 2005 project with Motorola as they prepared for the 2007 launch of the iPhone. And consumers learned to load music onto their devices, getting in the habit of using their phones as music players.

Remember the watch bands made for the 6th gen iPod nano (2010)? Apple created beautiful watch faces for the device and Phil Schiller even highlighted the trend during a keynote. Baby step. Five years later, Apple introduced Apple Watch. In the interim, the company had sold over 100M iPods and over half a billion iPhones. The Apple Watch was made possible by the technical and production capabilities Apple developed over the course of the iPod’s lifecycle in combination with the addressable market Apple created with the iPhone, which does much of the heavy lifting for the Apple Watch.

In hindsight it seems obvious, but these baby steps were critical. There are many benefits to recognizing and leveraging how gradual innovation truly is. We categorize them in two groups:

  1. Train your customers. As much as we think we want something totally new, we’re creatures of habit. We want new capabilities that fit into and streamline our routines. We want new tools that are immediately understandable. New skills require training, and your customers are no different. Baby steps in features, innovations and user interfaces help to train your customers. And they help you commercialize increasingly complex technology. The first Apple TV, for example, synced media via iTunes in exactly the same way we had been syncing media with iPods for years. We were well trained.
  2. Ramp your production capability. You learn a lot when you build your first product. You learn even more when you scale your first product to 10,000 units. But if each new product or feature is completely different, you can’t transfer the learnings from one to another. The iPhone would not exist if not for the iPod. Even though the iPhone today makes the iPod look irrelevant, it stands on its shoulders. Apple ramped its iPhone production capability to the incomprehensible level it’s at today because of the baby steps it took with the iPod line, ramping capability for flash storage, mobile displays, camera lenses, etc. Especially with physical products, ramping supply chain and production capability happens in baby steps.

We love to look carefully at the baby steps we see Apple taking today and predict what it means for the future. Looking at the iPhone 7 Plus’s dual cameras and software features, we see Apple building a huge competitive advantage in augmented reality. Portrait mode is training customers and helping to drive demand for the hardware; meanwhile, Apple is ramping their own technical and production capability with dual lens devices. The iPhone 7 Plus will have a huge implications for 3D mapping and real-time image processing in an AR world. Similarly, the haptic home button on the iPhone 7 and 7 Plus are training customers to respond to haptic button presses rather than mechanical button presses. We will be well trained for the eventual iPhones that have no home button, have no bezel, but use on-screen buttons with haptic feedback for home button functions.

AirPods (our new favorite toys), in combination with Apple Watch, are clear steps towards a post-mobile world. The watch takes care of notifications, nearly eliminating the need to take your phone out of your pocket for any reason other than a phone call, and AirPods eliminate the need to  take your phone out of your pocket for calls. Glance at your wrist to read a text. Double tap an AirPod to initiate a call-back, talk, and double tap an AirPod to end the call. Even though the iPhone still bears the majority of the processing and wireless burden, Apple is clearly taking steps towards post-mobile computing through the wearables it’s already shipping.

And baby steps work for startups too. Amazon started solely as a bookseller, only to evolve into the Everything Store. Facebook started as a network for college students at Harvard, then Boston and ultimately a network for the entire world. Airbnb started as a place to rent a couch, now it replaces hotel rooms for many.  Baby steps let Apple and others figure out the market and optimize for it before they changed the world. Prove the concept first, dial it in, then scale it. Revolutionary products seem to sneak up on us, but the steps to get there are usually apparent in hindsight.

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.