No One's Perfect Dept: How Steve Jobs Missed the Music Revolution

Last Updated Jun 12, 2008 1:08 PM EDT

No One's Perfect Dept: How Steve Jobs Missed the Music RevolutionOn the heels of Apple's announcement of a $199 iPhone and the company's continuing surge, it's instructive to recall that CEO Steve Jobs isn't always right.

Enter the year 2001 into your Apple Time Machine to a period when the company was recording a $195 million loss -- the only loss suffered since Jobs' return to One Infinity Loop. The problem: iMac sales were dropping, partly because they lacked CD burners.

Jobs had forseen the computer transforming into a control center for the entertainment digital hub, but his bet was that digital video -- not music -- was going to be a key to the iMac's future success. He missed even what his own customers were showing him.

"The rush to digital was especially marked in dorm rooms and, though college kids were a big source of iMac sales, Apple had no jukebox software for managing collections of digital music," writes Wired editor Leander Kahney in his new book, Inside Steve's Brain.

Jobs later recalled he "felt like a dope" for banning recordable CD drives from the iMac line, but of course made up for it by championing iTunes, which begat the iPod, which begat the iPhone.

I thought of this story while reading Scott Anthony's Harvard Business blog post Four Ways Traditional Market Research Can Kill Innovation. He outlines several mistakes with basic market research methods:

  • Talking to the wrong customers.
  • Asking the wrong questions.
  • Having the wrong people interpret the data.
  • Making the wrong decisions based on market research data.
In Apple's case, none of these were to blame.

The Man With The Golden Gut
As Kahney's book maintains, Jobs wants little to do with traditional market research in developing new products. As Jobs once told BusinessWeek, "A lot of times, people don't know what they want until you show it to them."

Most of the time, Jobs' gut instinct is golden. In this case, if Apple had been a little more attuned to what its customers were doing rather than what Jobs thought they wanted to do, Apple wouldn't have missed a beat. The other lesson here, of course, is to be able to admit when you are wrong and get the ship headed in the right direction again.

What is your approach to creating innovative products or services that break new ground with customers? When does traditional market research work, and when is it not enough?

(iPod image by Mai Le, CC 2.0)

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.