So here is Apple again, breaking one of Job's rules. And this after launching two larger and very popular iPhones, the iPhone 6 and 6 plus over. What is the world coming to?
Yet the history of the stylus at Apple, and its comeback (remember the Newton?) shows just what an incredible strategic innovator Apple is. This is so much more than whether or not to follow Steve's wishes how how good the Pencil actually is. At Apple, rules and convention don't apply. Features that we may take for granted become strategic assets to Apple, reinforcing each other to create a significant competitive advantage. It also highlights an important strategic formula that Apple and many other companies have used, whether they realize it or not, to create new market rules by breaking the old ones. That simple formula is:
- Assess the strategic context of the market
- Identify and define the rules of the market
- Start a new game with rules so you can win
- Create layers of advantage
That was the micro strategic context for mobile devices at the time: competitive products settle for crude resistive screens because there is no advantage there. That is step one: know the context of the market in which you compete.
Step two, defining the rules, is simple once you know the context of the market. In the smart phone market the rules where: go with convention of a resistive screen, use color if you can maintain lower power draw because it's an advantage, use a stylus to overcome issues like fat fingering, allow single touch only, accept that the stylus will eventually ruin the screen, and don't forget battery life because a phone should last several days (or weeks if it's a Blackberry). My favorite phone at the time, a Treo in the mid-2000's conformed to all of those rules, and if you lost your stylus, good luck clicking on those apps. You lose the stylus you lose functionality. Another prevalent rule at the time was to outsource the OS because there was no advantage in it; following the PC model (Hello, Symbian?).
The point is, there are a set of rules, whether defined or undefined, that every competitor follows without even thinking about it. You see it all around you: it should be on premises, have this type of user interface, fit this performance specification, or have a touch screen. How do you define the rules? You look for areas that competitors find commonality in, that they don't discuss, that they take for granted, and, by doing that, you have found the rules of the game. It's critical to understand the rules you are playing by if you ever want to change them.
Once you understand the rules, it's time for step three: start a new game with rules you can win. Apple did this by creating its own rules about the screen. In Apple's game, they could throw out the stylus and let people use their fingers. According to Walter Isaacson, Jobs once said, "God gave us 10 styluses. Let's not invent another." Apple set the rules: Phones with better, brighter, higher resolution screens so people won't want or need a stylus and still good enough battery life (just get me through the day).
However, defining a new set of rules is not enough. You also have to be able to back that up with layers of competitive advantage. In Apple's case it was truly multi-layered: develop new, higher resolution, capacitive resistance screens, take advantage of the screen to use multi-touch instead of single touch, create a new set of motions (pinching, swiping, etc.) to expand interaction and control, build features to prevent inadvertent touches, focus on screen durability, keep battery life adequate to get through the day. Probably most important: was to take on the challenge of driving costs down for a traditionally expensive capacitive resistance technology. By focusing on multiple advantages, each served to reinforce each other and build a layered strategic advantage.
These are not all of Apple's early advantages with the iPhone, but the point is clear: by understanding and then changing the rules of the game, Apple created a new game and all incumbents were forced to play catch up to compete. Then, by combining multiple advantages, they made it hard to play by the new rules. They have shown that breaking the rules of the industry can be a competitive advantage. Finding advantage comes from understanding how the current game is played, and changing the rules to your advantage.
Many have speculated why Apple has now decided to introduce a stylus; perhaps in response to Samsung's success in recent years. It wouldn't be the first time that Apple adopted an existing technology when they thought they could finally get it right when it has seen large adoption in the market. However, I think we will see history playing out again and find that Apple is using the stylus to create layers of advantage in a new game they created by once again changing the rules.