Setting Expectations for White Space - Apple iPad

by Adam Hartung

It's easy to misunderstand White Space. About twenty years ago Apple launched the Newton. The company sold about 375,000 of the first commercial PDAs, but Apple's leadership thought the market wasn't really there - and decided instead to focus on growing Mac sales. Obviously, as Palm and other PDA makers demonstrated, there was a tremendous market for PDAs. Apple misread the feedback from White Space.

Look now at the recent iPad launch. Silicon Alley Insider headlined "Now That They've Seen Apple's iPad, Most People Don't Want One." The headline keys on the fact that after the launch the number of people who said they were not interested to buy doubled (26% to 52%). Wrong fact to grab onto.


Instead, look at the fact that the number who said they would buy one tripled, from 3% to 9%. This is incredible, and should excite Apple's management as well as employees, suppliers and shareholders.

Most people will see a new, innovative product and say "why would I want that? I already have this other thing and it works great." And that is what marketers should expect. Most people are just trying to 'Defend & Extend' what they regularly do, and thus all the want is a product that helps them do their thing a little easier, faster, better and cheaper. They want minor improvements - variations and derivatives of what they already have. Improvements that are immediate, without them doing anything new or different.

All new deeply innovative products start with customers who are under-served or unserved. And this is why it is so important they be launched in White Space. White Space teams aren't intended to develop the big, mass market of known customers looking for something new. White Space is about doing new things that bring in new customers, give new solutions that attract real growth. And White Space teams have to learn how the market is evolving, how they fit into the market shift and how their solution will advance the market in order to sell more.

For the iPad, the 3% to 9% shift in likely buyers is huge because it shows that the iPad is an offering that appeals to people who are not today well served by their existing PC, laptop, netbook, mobile phone, kindle or mix of these solutions. 9% of respondents are saying that they see the iPad and they see a solution for what they want to get done. And if 9% of potential buyers see this option, that is HUGE. By White Space standards, often there are only .5% or 1% or 2% of people who initially see how the new product fulfills their under-served needs.

Set expectations right for White Space. White Space is not for launching variation 4 of an existing product - targeted at existing customers. That's what the marketing and sales department can do fine, thank you very much. White Space is the team that finds the 3% (or in Apple's case 9%) of users that see value in this solution, then works with them to implement the product/solution in order to make sure it fulfills the market need and is priced to sell effectively while providing a profit to the company.

Apple understands this, you can be assured. Look at how successfully the Apple White Space teams found the underserved users that jumped all over the iPod and iTunes, the iTouch and then the iPhone. They got the product positioned and selling in a hurry. And now that Apple has that skill, the company is going to apply it to the iPad. If you understand this chart correctly, you understand that it bodes very, very good things for Apple.

And it tells you the importance of having White Space teams, setting their expectations correctly, and managing them for the kind of results that can turn your organization into the next Apple. It took Apple 10 years to reach this skill level. It did not happen overnight. Or with one product introduction. And it will take your organization a few years to build this skill. So, what are you waiting on?


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Adam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

What does Apple do when it all goes pear-shaped?

by Yann Cramer

Most CEOs would say that innovation is critical to their companies' success. Loads of people would like to exercise their creativity and innovate, but whether at the corporate or at the individual level, something holds everyone back: risk. "What if it all goes wrong?" This can be more or less marked depending on the degree of acceptance of trial-and-error as a learning process, but to some extent it exists in all cultures, countries and companies.

What can we do about it? There are process answers around framing the project and keeping it focused, rapid prototyping different versions of the product or piloting in the market. But most importantly there is a mindset answer which is both accept it and don't accept it.


Accept It

Forbes provides an interesting list of Apple failures: a few forgotten computers such as the Lisa, the Mac portable, the Taligent, the power mac G4 cube, and a raft of other products that most people may be surprised to hear about: the Newton PDA, the Quicktake digital camera, the Macintosh TV, the Pippin video-game console, the Motorola Rokr mobile phone/mp3 (Apple developed with Motorola).

For all its resounding successes from the Apple II to the iPhone, Apple has not been immune to failure. The difference that makes the difference is that they accept that there will be some failures along the way. They have a portfolio mindset: they continuously scan the environment, they identify potential opportunities, they try, they go for it. When it does not work they pull the plug decisively, but when it works: bingo!


Don't Accept It

Apple may have failed with the Newton, the Quicktake and the Rockr but they have remained true to their multi-media vision, they sticked to the strategic challenge they had set for themselves to get into the handheld market, and ultimately they found "the magic number" to succeed with the iPod and the iPhone.

Accepting failures does not mean accepting that these mark the end of the road. Too often, a company's response to a few innovation failures is to abandon the field and shift strategic priorities in another direction. As they do so, they actually reduce the relevance of what they have learned (or should have learned) from their failures, they land themselves in a new field where they need to learn everything, and their chances of success are actually lower than if they had sticked to their initial strategic priority.


So, accept that you will be thrown off-balance along the way, but don't accept being blown off-course.


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Yann Cramer is an innovation learner, practitioner, sharer, teacher. He's lived in France, Belgium and the UK, he's travelled six continents to create development opportunities with customers or suppliers, and run workshops on R&D and Marketing. He writes on www.innovToday.com and on twitter @innovToday.