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How design enabled Apple’s turnaround story in 1997

Share price jumped 600+% in ~3 years

Industrial design was instrumental in reviving Apple’s fortune.  In 1996, Apple was in trouble.  Its market share was falling, and its share price was at below $5, 12 year low.  Second quarter results in 1996 reported Apple losing $700+ million. 

In December 1996, Apple bought NeXT Computer.  The deal closed at $427 million.  Apple got two things with this deal – foundation for the next generation operating system and Steve Jobs.  Steve Jobs was back at Apple.

On his second day of the job, Steve met with top analysts and journalists to explain his plan to turn Apple around.  Steve believed Apple lost ground in the market because it tried to be everything to everybody.  Steve emphasized getting back to meeting the needs of Apple’s core customers.  Industrial design was at the core of this strategy to turn around the company.

In 1998, Apple began shipping iMac.  iMac was an immediate success in the market and enabled Apple’s turnaround story.  From design and business perspective, iMac was the first of many products that turned industrial design into reality and made almost the same impact as the original Macintosh did in 1984.  Share price rose from below $5 in 1997 to $12+ in 1998 to $35+ in 2000, a 600+% jump in ~3 years. 

Key Learnings

  • Industrial design saved Apple. The share price of Apple started to climb after the launch of initial iMac.
    • Designing iMac and successive products was done with existing team. The company was largely saved by existing team.
    • Good design is a language, not a style – Massimo Vignelli.  Apple put industrial design at its forefront by applying its principles repeatedly and iteratively to successive versions of iMac and other products. Read more about what do you stand to lose in the absence of good design?
    • Aesthetics is leverage.  The aesthetic-usability effect refers to users’ tendency to perceive attractive products as more usable. People tend to believe that things that look better will work better. Apple’s success is an excellent example of the competitive advantage of paying attention to aesthetics.
  • Innovation was constant, rapid and iterative.  The iteration of design was done from concept to manufacturing to launch.
    • The design language of the product kept evolving.  The product is built, tested and reviewed, then the design team improves on it and it’s built all over again. This cycle takes at least 4-6 weeks at a time and may be run many times over a product’s development lifecycle.
    • This is a very costly approach, but it is one reason that Apple has a reputation for quality. The more you invest in design including user research and rapid prototyping with the goal of improving usability and user experience, the more likely you are to build incredible market transforming products.
    • The design that led to success was in styling and bordering the iMac
      • All changes were to the external appearance on the front side of the glass than internal look, feel or behavior
      • Apple did not redefine computing, it simply redefined how the computer looked like
  • Executive vision was key to the success of this strategy.  If you do not have the vision, will and power at the highest level, the talent is almost certain to remain wasted and frustrated.
    • Giving designers the liberty to design, innovate and make sure that the product they turn out fulfill their customer’s visions
    • Giving design team an independent reporting structure rolling upto Apple executive team
    • There were failures along the way, but applying the learnings from failures was key to the success
      • If Steve Jobs had played it safe and not risked failure, he would have never succeeded the way he did
      • Risk can be mitigated by having the right tools, right training, right technique, right partners, so on and so forth, but risk can never be eliminated

Industry adopts design at its core

Many other companies have included design at the core of their organizational strategy.  This includes Google, Facebook, Microsoft, Spotify, Medium, IKEA, Lego and others. 

Google adopts Material Design, a visual language that synthesizes the classic principles of good design with the innovation of technology and science.   

Facebook supports a design process that is super free, intense and fast paced. 

Read more about how do you design something really well.

What has most value

For me it is:

  • Executive vision that focuses on core customers
  • Culture that supports fail fast, fail often through rapid experimentation
  • Iterative learning to design solutions – better, cheaper, faster

What is at the heart of your organization ?

How does your organization drive innovation ?

Do share in the comments!

Like this article ? How about giving it a like and share ? Thank you!

By Ramesh Chandak

Principal Content Developer & Technical Program Manager

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