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Sony vs. Apple - iPod Launching, a Case Study of Leadership and Innovation

Academic journal article Manager

Sony vs. Apple - iPod Launching, a Case Study of Leadership and Innovation

Article excerpt

1.Introduction

Innovation can be defined as all the scientific, technological, organizational, financial, and commercial activities necessary to create, implement, and market new or improved products or processes (OECD, 1997).

This paper underline that innovation could appear in any company, not necessary the one that has all the prerequisites to provide a new innovation. Two very different firms, Sony and Apple Computer, are used as case study illustrations. In 1979, Sony launched a portable Walkman range. For nearly a quarter of century, the Sony Walkman was the undisputed market leader and Sony was considered a top innovative company. Then, in 2001, Apple decided to launch the iPod, a new portable player. About 80% of the iPod technical components (e.g. memory, storage media) were produced by various companies within the Sony group. In 2004, iPod sales overtake Sony Walkman globally and become the new market leader in portable players. How was this possible? Theoretically, Sony held all conditions for launching the new generation of portable players, but instead, a new company - Apple - completely changed the market. Innovation does not proceed through logical deduction, but rather is the result of an excellent organizational cooperation.

The companies' competitive success is relying upon the effective management of innovation. This is the reason that innovation has been the object of considerable academic study from a variety of perspectives.

2.Approaches to innovation

Maybe the most well-known concept of an innovator belongs to Schumpeter (1911; 1939). Schumpeter's entrepreneur introduces "new combinations" - new products, production methods, markets, sources of supply, or industrial combinations - shaking the economy out of its previous equilibrium through a process Schumpeter termed "creative destruction". Perhaps Kirzner best described the market impact of Schumpeter's entrepreneur when he wrote: "...for Schumpeter the essence of entrepreneurship is the ability to break away from routine, to destroy existing structures, to move the system away from the even, circular flow of equilibrium" (1973).

Schumpeter also distinguished between five different types of innovation: new products, new methods of production, new sources of supply, the exploitation of new markets and new ways to organize business. The focus of our paper is the first type: product innovation. The term 'product innovation' has been used to characterize the occurrence of new or improved goods and services.

As Nonaka and Kenney (Nonaka, Kenney, 1991) noticed, to remain competitive, "any firm must constantly be creating new strategies, new products, and new ways of manufacturing, distributing and selling. The constant reexamination, reconceptualization and reorganization are necessary-and this requires the constant discussion within the companies. The newly created information in this discussions must then be diffused throughout the firm, setting off further innovations. This diffusion within the firm is important because it allows the firm to reap more of the benefits of its newly created information."

From this point, there is only a short distance till what we call "collaborative innovation".

The collaborative innovation is seen as a social construct used to describe the teams of self-motivated people with a collective vision, willing to collaborate in achieving a common goal by sharing ideas, information, and work.

According to Adner (2012) "the need for collaborative innovation has defined progress since the Industrial Revolution - the light bulb on its own was a miraculous invention but needed the development of the electric power network to turn it into a profitable innovation. What has changed is the way the collaboration is organized. The shift toward innovation ecosystems follows a historical trend toward greater complexity and interaction that has characterized the rise of the modem economy. …

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