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Data Science and Agile Systems Engineering
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Course / Week 2: DevOps Principles for Business Agility / 2.1 Examples of Business Agility

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2.1.1 Examples of Business Agility Summary Points
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Lesson Summary:
Many Examples of Business Agility across sectors
IBM – complex systems
Starbucks – consumables / retail
Apple – consumer electronics
Others: Hyundai – car market
Innovation can take many forms
Innovation is a constant for great companies
Stories of Business Agility
IBM
History
Long-time innovator focused on big complex systems
Was drawn into and started the personal computer market (PC)
Then out-competed and lost most of its market share by early 1990s in the consumer
market, with a hold on the mainframe business only
Businesses were leaving that market quickly for personal computing and reduced costs
Servers to Services - 1990s - this was disruptive adoption of the use of the internet for
eCommerce and business transactions
Major effort led by Gerstner
Became a service partner to start building custom software and training personnel its use
Started offering suites of internet / eCommerce enabling products
No one was fired during the transition away from PCs and to internet services
Starbucks
Continued to innovate with being the first to offer many types of benefits to employees and
customers
Employee Benefits and Stock - 1980s
Bottled Products (Fraps), Global - 1990s
Gold Cards, Tazo Tea, Mobile App - 2000s
Free WiFi, Digital NetworkReserve, Teavana, Cold Brew, College Achievement Plan -
2010s
Apple’s "Remakable" History
Apple II and Pro Computers - first popular PCs running non-windows software
From Pro to Consumer (iMacs) - made computers cool and personal, with portability and
usability focus
Desktops to Devices (i-Products) - transitioned from desktops to devices in the early 2000s,
as the PC market cooled and devices enabled access to internet-based content
Apple Store to App Store (Platform) - leveraged its role as a platform to capture value from the
shift in value to content and applications - a powerful, yet controversial move
Twelve Types of Innovation
Geoffrey Moore offers twelve types of innovation that we can use to classify core strategies
These break into three groups, with four innovation types in each:
 Product Innovation
Disruption - new product technology that requires a new business model; e.g. Uber
Application/Solution - new market application for existing products, or a "whole product;"
e.g. iPhone
Product - continued feature improvement; e.g. hybrid cars
Platform - layering and masking legacy for reuse and partnering; e.g. iStore
Customer Intimacy
Line Extension - extending a product to new customers; e.g. grocery-store, based
frappuccinos
Enhancement - improving existing products for an existing market; e.g. better infotainment
in cars
Marketing - outsell the competition with a better pitch; e.g. Air Jordans
Experiential - create a better experience for the customer; e.g. Starbucks as the "third
space" from home and work
Operational Excellence
Value Engineering - extract costs from materials or process / manufacturing ; e.g. textiles
operations
Integration - reduce maintenance and costs with centralization; e.g. All-in-one printer
Process - Remove non-value-added steps; e.g. discount retailers, Dell direct sales model
Value Migration - Redirect businesses model away from commoditized elements; e.g. razor
blades model
There are also two types of renewal that align with innovation types
Organic - solve new problems for existing customers - IBM's hardware to e-commerce
enablement
Acquisition - acquire new company or partner with another company - Apple's partnership
with Quallcomm, Lotus selling to IBM
How the companies aligned with our twelve types of innvoation
 Image Description: This image shows how IBM, Starbucks, and Apple align with the twelve types of
innovation. In Product Leadership, IBM aligned with product innovation, Apple with Application
innovation, Apple and Starbucks with Product Innovation, and Apple and IBM align with the Platform
Innovation. For Customer Intimacy, Starbucks has dominated this area with Line Extension, Enhancement,
and Experiential innovations; and Apple has performed a lot of Marketing Innovation with its Mac Stores.
Finally, under Operational Excellence both Apple and Starbucks have performed Value Engineering, IBM
has integrated its product suites and hardware, Starbucks improved its processes with sustainable
sourcing, and Apple and IBM both have moved their capture of revenue through Value Migration with
services.
Innovation Types Across the Market Lifecycle
Markets progress through three stages
Product adoption as a market is built up to full adoption
The "Indefinite Elastic Middle" of a fully-saturated market
Market decline, as the market moves to new products or services that do the job
The following diagram shows how each of the Innovation types aligns with the Market Lifecycle

Image Description: This image shows the alignment of the innovation types across the market lifecycle.
At the beginning, there is the product adoption lifecycle that is the first derivative of the market size. This
includes the innovators and early adopters before hitting the Chasm, where many products fall short to
become "whole products" that early majority customers can use. This is where Disruptive innovation
occurs. On the other side of the Chasm is Application Innovation, then Product Innovation as the Early
Majority grows and the Late Majority comes in. Finally, Platform innovation finishes the initial market
growth to full saturation. Then once saturated the competition begins for existing customers with
Customer Intimacy innovations including Line Extension, Enhancement, Marketing, and Experiential
innovations. Also, Operational Excellence innovation can occur here too, with Value Engineering,
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