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Apple's strategy for adding value through open innovation and acquisitions is documented.

Historical review.

Use of open innovation to add value. A three part strategy for acquisitions.

Focus on Apple.

Strategies for open innovation.

First review of Apple acquisition strategy.

Interview with Scott Kupor, a managing partner at Andreessen Horowitz (AH Capital Management LLC), a private American venture capital firm founded in 2009. Its investments span the mobile, gaming, social, e-commerce, education and enterprise IT – including cloud computing, security, and software-as-a-service industries.

Kupor’s book, Secrets of Sand Hill Road: Venture Capital and How to Get It (Portfolio, 2019) can be used as a handbook for strategizing about venture capital deals, how to partner with multiple venture capitalists and how to assess new business ideas and market opportunities.

Kupor was interviewed to obtain a venture capitalist’s perspective on the strategic guidelines for starting up an innovative business.

One of the key issues that VC investors seek to understand is, Why is this particular team best positioned to win the market versus any of the others that might approach the same opportunity? The team in many ways can become more important than the original business idea, particularly since we know the market and product will evolve over time.

Kupor warns that competition is growing more intense. The cost of starting a business is much lower than in the past. However, given the widespread availability of talent, it is unlikely that most startups will have the field to themselves.

In the highly competitive cellular phone market, Sprint has pioneered some marketing and sales practices that, in effect, allow the co‐creation of value in cooperation with the customer. When it works, co‐creating value with customers leads to highly desirable customization, a potent way of developing loyal customers and building profitability. But in this case, when the customer/company relationship hits a snag, the resulting dissatisfaction needs special handling. At crucial points of interaction between the consumer and the company – where the co‐creation experience occurs, where individuals exercise choice, and where value is co‐created – misunderstandings and service breakdowns can destroy the relationship. Insightful lessons for companies seeking to adopt this strategy are summarized, with the essential point being that companies need to learn to focus on customer experiences, and on learning to make accommodations when problems arise.

Interviews the founder and executive director of the International Business Incubator (IBI) of Silicon Valley, which stimulates regional growth and acts as an economic development agency. States that despite the collapse of the ‘dot‐com’ bubble, IBI has continued to nurture businesses that choose the sales growth route to expansion. Explains that the company, a traditional not‐for‐profit incubator largely funded by the City of San Jose Redevelopment Agency, helps organizations to deal with the special problems experienced by foreign companies entering the USA. Points out that they only accept firms with sales experience in their own country, which helps their success rate, but warns of a number of common misconceptions. Describes the successful incubator model, stressing the importance of working to reduce risk for the startup or new company, the entrepreneur, the investors and for the region. Regards the incubator’s most important contribution as the quality and scope of relationships with professionals and consultants available to its clients.

Sun Microsystems is a high technology firm that depends upon innovation for survival. This interview of Sun’s Chief Information Officer, Bill Howard, gives insight into how this fast moving company balances the need for new development of innovations against limited resources. His goal: do more with less, but always try to produce the right quality and with good usability. With an extended enterprise that can go anywhere in the world in a virtualized connected supply chain, the demands on IT are three times greater than the resources available to do them. The solution for making the hard choices: a multidimensional matrix and governance process to evaluate the projects.

One approach for CEOs seeking to improve the effectiveness of their company’s innovation initiatives is to imitate the role that a “Scrum Master” has in high speed software development projects. Fundamentally, a Scrum Master is in the business of speeding up the rate of innovation in a software project.

By championing Agile methodology, CEOs can focus innovation initiatives upon developing what customers prioritize and value. Pushing the organization to involve customers, and in some cases suppliers, increases the value added and value creation of the project.

When a CEO practices acting like a Scrum Master, he or she does so by pursuing four goals: Keeping innovation work cycles or “Sprints” short. Focusing upon value creation and customer involvement throughout the development process. Removing barriers to development that prevent the software programmers from doing their job. Attempting to shelter developers from counterproductive interventions by external managers.

By championing Agile teams, the CEO can communicate his or her expectation that innovations will be tested on clients and be available as a “court of last resort” to cut through the barriers and delays that prevent a development team from moving forward.”

This article is unconventional in that it suggests that CEOs need to be particularly aware of how their actions in support of Agile teams can build medium and long term organizational capabilities. Top management oversight of Agile teams can strengthen strategic relationships with internal stakeholders, customers and suppliers.