Innovation, Commoditization, and Steve Jobs

Thursday's Wall Street Journal yielded an interesting piece on innovation. The second section of the newspaper has a new feature, entitled "The Informed Reader."

Under the subtitle, "Strategy," we are told that Columbia Business School's Bruce Greenwald once stated,

"In the long run, everything is a toaster."

This piece of idiocy was meant to warn that any product is ultimately and eventually reduced to a commodity.

Whoever thinks this is true must not be a marketer, or not have studied marketing.

The article goes on to cite MIT's Media Lab researcher Michael Schrage as finding that "innovation has a continued role, even in such staid objects as toasters and vacuum cleaners."

Schrage cites Hoover in vacuum cleaners, and GE in toasters, to highlight how even seemingly-mundane products can be revitalized, technologically repositioned, and become a source of significant new revenue growth.

Yes, you worry because anyone can produce what you do, but not everyone can emulate the design of what you do, when you do it.

And this puts a premium, of course, on continuous innovation. Or, as I see the output, consistently superior revenue growth. The successful future of a company lies in innovating any or all of the 'four Ps' of marketing- product, place, price and promotion- in order to better serve customer needs. Surrendering to price competition is the first step along the road to commoditization.

Which brings me to Steve Jobs. Jobs has proven to be a genius in his later career. But this was not always the case. Recall his serious stumble in, first, mismanaging the early successes of Apple Computer, and then recruiting John Sculley to succeed him.

In retrospect, I believe this simply demonstrated that Jobs is at his worst in a slugging match of equals, i.e., commodities. When he attempted to go toe to toe with the other personal computer makers, and Microsoft, he ended up frustrated, bored, and out of a job.

Recall, if you will, that he took a few trusted aids and started Next, which was ultimately bought back by Apple, for its object-oriented code assets.

Jobs' attempt at pushing forward a little on communications needs resulted in the failure Apple called "Newton."

In contrast, Jobs hit grand slams with his work at Pixar, and the iPod line. He is clearly at his best inventing the future, far out in front of current solutions.

In this respect, is he not rather like Thomas Edison? Like Edison, Jobs is often hustling and marketing just as fast as he's developing product. Like Edison, Jobs is egotistical, a reportedly demanding taskmaster, and short on giving named credit for much of what comes out of his development teams.

However, if anyone needs a clear example of how innovation can effect companies, look no further than Apple. With an impressario at the helm, someone who seems to simply love what he is doing, the firm has simply left Microsoft and Bill Gates in the dust when it comes to leading his firm into new, growth markets.

Yes, innovation is crucial for long-term growth in equities. One must not confuse the ability of virtually any product or service to be replicable, given time. The key is to realize that it does take time, and, in that time, the innovator can be, once again, steps ahead of the mere copiers.

For me, Frank Perdue's branding of chickens and chicken parts opened my eyes to this as a young marketing student in graduate school.

Looking back to the beginning of this piece, and the Greenwald quote, one wonders how a business school professor could be so short-sighted as to reduce innovation and marketing to a zero-sum game, confusing replication with innovative designs and solutions for customer needs.