The Limits of Innovation

There's an interesting article in Fast Company about Apple, Steve Jobs, and innovation. The gist of it is that "if Apple is so innovative, then why are they so damned small."

The author, Carleen Hawn, makes some interesting points, but seems to have missed a particularly large one in my mind. Apple is one of a rare breed of companies that is actually able to innovate without running out of cash or being gobbled up by their competition. I know that in the dollars and cents world that the author inhabits this isn't enough, and that she'd rather see the "business process innovation" of either a Dell (as cited) or a Walmart (as implied), but I would offer that in the end of the day, these companies offer only the innovation of price. They provide a nice return for their investors, and provide inexpensive products for their customers (with increasingly poor service).

Apple, and companies like it, provide the backbone of what moves technology, products, and the user experience forward.

There are certainly larger and more commercially sucessful companies that innovate as well. I'm not going to count out IBM as an innovator, despite their size. However, the history of companies such as Microsoft show that their innovation also comes from being small-- in their case, it comes from other small companies that they adroitly swallow because it is more cost effective to them to use small company innovation to drive their profits through acquisition.

It's a fine method, and very effecctive (you can't knock success), but I would daresay that Fast Company has their priorities screwed up if they can't see the benefits of a medium size innovative company that is profitable.

However, it will be important that when Apple shows its numbers in January, that the desktop business takes a rebound, because the article's analysis that most of Apple's profit comes from the iPod line is definitely a threat to the company (if it is true). Of course, it may also be the reason why there are rumors floating around about a $100 baby iPod in the mill for January MacWorld.