My jaw dropped last week when I heard of the alleged takeover of Beats Electronics for $3.2 billion by Apple. This, the largest acquisition in Apple history, signaled to me that Apple is now buying customers and focusing solely on profit rather than leading by innovation as in the Steve Jobs era. The word on the street is that Beats is high-priced yet inferior technology -- it’s all marketing.
As startup entrepreneurs, we tend to focus so much on building and deploying the best products in the world that we forget a fundamentally critical point: the most innovative products don’t always win the market share war. Ask Beats founder Dr. Dre, the self-touted ‘first billionaire of hip hop’, if he cares about having the best quality, most technologically advanced headphones for audiophiles. I’d suspect not so much.
We live in a world that idolizes innovation. Innovation is equated to disruption; it’s the entrepreneurial equivalent to sex appeal. It’s hot to be disruptive. Striving for innovation, however, requires relentless agitation. Companies who consistently innovate focus on continuous ideation, taking risks and creating incentives around invention. Unfortunately, innovation does not equate to product adoption or corporate success.
Many tech entrepreneurs are so product-focused that they tend to forget that you need transactions with actual paying customers. If you do not consider your customer needs and wants as crucial to your product development process, you will fail. Simply put, innovation with no customer-centricity should not be pursued.
So how do you innovate and win the game called marketing? Declare a future left better because of your product or service.
When innovating, stand in the future and imagine how your product or service fits into the lifestyle of the user. Think about their social networks and in which tribes they belong. How will they be telling your story for you? With whom do they connect on a daily basis? Determine how you can tell the story in a manner that is authentic, meaningful, and values-aligned to the tribe.
You need to understand to whom you are marketing. Do not confuse your users with your customers. Customers give you money in exchange for something value-added. Your users may be different. Market to your users and sell to your customers.
Remember, during the product development process, you shouldn’t expect your customers to be on the same page right away. Don’t be discouraged if you get negative feedback from your tribe initially. If you would have asked coffee drinkers in the 1980s if they would spend $5 on a cup of coffee, or yoga practitioners in the 1990s if they would have spent $100 on a pair of tights, they would have said no. Your role as innovator is to create a great product and attach it to a lifestyle – your customers may need to catch up.
Dr. Dre connected to a lifestyle with Beats. His tribe of users are music lovers who want to wear what the music makers wore when they recorded their favourite hits. Beats marketed to a tribe of end users but sold to retailers, HP computers, and car companies like Dodge, Fiat, and Chrysler. BeatsAudio is more than audio, it’s a lifestyle. And Apple is buying what they are selling.