Test small before making a big bet
Apple kept the iPod small until putting iTunes on Windows proved strangers wanted it.
The Knowledge Project Podcast · Jim Collins — Good to Great — The Knowledge Project #67After Steve Jobs returned to Apple in 1997, he did not bet the company on a new future. Business researcher Jim Collins says Jobs first steadied costs, revived the Macintosh, and rallied longtime loyalists who still cared about the original mission. Apple made a small music player, the iPod, as the MP3 format was taking off.
Collins calls the method bullets before cannonballs. Collins puts it this way: "imagine you have a ship bearing down on you." If you load all your gunpowder into one cannonball and miss, you are finished. Instead, fire small bullets, see where they land, recalibrate, and only load the cannonball once you have a calibrated line of sight. In his research, what mattered was "the ability to scale the right innovations," not being first with an idea, a distinction Collins said separated winners.
Apple followed that sequence. In its 2002 or 2003 annual report, Collins notes, the iPod got about three sentences as a natural extension of its digital hub strategy, with the Mac still at the center. Then came the calibration step, putting the iTunes software needed to use the iPod onto Windows machines. Suddenly people who were not original Mac users sought out iTunes, and iTunes led them to the iPod. The idea was now proven by real customers.
The method works only if you fire enough small tests and execute each one well. You cannot know in advance which bullet will merit a cannonball. Intel tried digital watches and other ideas that never earned a bigger bet. Collins says struggling companies do the opposite. They fire too few bullets, they fail to follow a good bullet with a cannonball, or, most dangerously, they fire big uncalibrated cannonballs. Collins's rule for the test itself is to execute it with excellence, so a miss means the idea failed, not the work.
Questions people ask
How do I know when a bullet has actually hit?
Collins points to the iPod's own small momentum, excitement inside Apple, and then Windows users seeking out iTunes and finding the player. That outside demand showed the idea worked beyond the original Mac audience.
Does starting with a bullet mean doing it cheaply or quickly?
No. A bullet is small in cost and scope, not in quality. Collins stresses that you must execute it excellently to get a clean test. That way, if it misses, you know the idea was wrong, not the work.
What did the cannonball look like after the iPod test?
It committed heavily and extended the same strengths into smart handhelds, which became a larger part of the company than personal computers. Collins cites similar second acts at Marriott, from restaurants to hotels, at Intel, from memory chips to microprocessors, and at Disney, from films to theme parks.