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Strategy - BLOG

Why Apple Made the Right Call on Apple Maps

Laurence Capron |

By Laurence Capron and Will Mitchell Though it has been widely available for only a few days, mounting complaints over Apple’s new mapping application, seen as a poor substitute for the Google Maps application that it replaces, are tarnishing the launch of the iPhone5. The episode is clearly a rare misstep by a company whose obsession for delivering outstanding product functionality is legendary. Indeed, CEO Tim Cook quickly and publicly issued an apology.

Behind this mis-mapping misstep, the most disappointed of Apple’s fans voice a tougher criticism: Apple is becoming arrogant and self-centered.

Is that fair? Apple is certainly known for its strong preference for internal innovation. Replacing Google Maps with its own mapping software, combined with geographic data that it licenses from the Dutch firm TomTom, reduces Apple’s reliance on a competitor’s product. But it comes at a cost: damage to Apple’s customer-centric ethos. Even a company with millions of fans needs to care deeply about their opinions. For that cost to be acceptable, Apple’s preference needs to be based on more than corporate pride.

In our opinion, even though it has created problems for Apple, the choice makes sense. The mapping functionality has become a key part of the SmartPhone experience and that means that the question of who has control becomes more important. Smart firms change the basis on which they have access to a capability or resource as the strategic value of the capability or resources evolves. There is clear empirical evidence to back this up: in our research of about 150 firms in the telecommunications industry, we found that the more successful firms all took this active approach to managing their capability and resource portfolios.

Apple’s switch to a new mapping partner and its greater investment in an in-house solution is pushing it to develop a stronger set of internal skills and cross-border relational skills. In parallel, Apple has made a series of small acquisitions of online mapping companies including Placebase in the U.S., Poly9 in Canada, and C3 Technologies in Sweden that are bringing in new skills. These initiatives are collectively creating a mapping capability that will allow Apple to both shape and be shaped by its customer’s use of the mapping functionality in a way that never have happened with the Google tool.

In fact, the shortcomings of the new mapping tool may even be a necessary, if unfortunate, by-product of the initiative because the software Apple is developing internally and with its partners and new acquisitions relies on the accumulation of user experience. Reliability will improve as people use the iPhone maps and the software integrates the experience from the clouds of information.

This deep feedback will create opportunities to improve the new mapping software and functionality well beyond what would have been possible with the product that Apple previously borrowed from Google. The strategic goal looks forward: the crowd-sourcing benefits that internal control makes possible will compensate for the costs of enduring a few weeks of users’ complaints. In a real sense, Apple is following the experience of industry leaders such as Microsoft, which regularly frustrates users during it operating system and applications software upgrades by providing only partial backward integration — because it actively seeks to create new functionality that does not become constrained by prior design choices.

It is difficult to know when and how to change your level of control over a critical resource — but making the changes is critically important. Existing relationships often generate strong inertia, both with resource suppliers and from expectations that your customers have about your products. Yet if you do not take the risk of a short-term hit to your reputation — while, of course, working hard to manage the damage during the adjustment period — you face the much greater risk of becoming obsolete. That, we believe, is the benefit behind Apple’s decision.

This post originally appeared in HBR

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