Only Apple, Only Google, and Only Amazon

on November 4, 2013

Every company, in order to compete, must have a secret recipe. Something that helps their offering in the market standout from a sea of competitors. Those companies best poised to succeed in the future and adapt as necessary in a fast paced industry such as technology are the ones who know exactly what their recipe is and why it is successful. This is something I believe only a few companies have a strong grasp of.

Sports provides a context that I feel helps to best understand the idea of the secret recipe. All good sports franchises understand this concept. The secret recipe runs deep into a team’s philosophy, playbook, recruiting, culture, etc. While preparing to compete a team must understand what its strengths are and what its weaknesses are. This is the best way to create a plan that not only caters to your team’s strengths but also exploits your opponents’ weaknesses. The best teams in sports build around what makes them unique and creates a path forward based on that recipe.

Three companies in tech–I believe–do this well.

Only Apple
Tim Cook has said a phrase several times over the last few earnings calls that consistently struck a chord with me. Several times  Tim Cook ended with “only Apple can deliver.” Tim Cook understands the secret recipe at Apple, perhaps better than any current CEO of any company.

Apple’s vertical approach, specifically its deep desire as a part of the recipe to own hardware and software, was the single biggest roadblock to  success in the early days of computing. In that time, Apple was an incompatible player in a market that grew based on compatibility. However, where Apple’s recipe was a barrier then, it is an enabler now. Apple has spent the last 37 years perfecting the recipe. Everything from philosophy, playbook, recruiting, culture, etc., has been focused on being the best at this recipe. This recipe, and this recipe alone, yields genuine differentiation. Genuine differentiation is the only way to fight the battle against commoditization.

Apple’s recipe is obvious, it is clear for all to see. Yet extremely difficult to duplicate.

Only Google
Google also has a secret recipe. Google is the largest machine learning project in the history of computing and it is evolving before our very eyes. Only Google can provide the kind of superior search experiences it delivers. Google’s recipe is based fundamentally on cream-of the-crop engineering related to web search, web services, machine learning algorithms, and more.

In fact, I could create an argument that only Google could have done with Android what they did. Android’s role is often overlooked. When Google bought Android with the intention of releasing a free OS for smartphone makers, I do not believe it was targeting it to be an Apple competitor. Android was developed and driven by Google to go specifically where Apple had no intention–the low-end. This is where 85% of Android’s growth comes from. Android was released as a defensive play for Google to go after the market where Apple’s recipe simply doesn’t enable them to go. Android was deeply strategic to keep Microsoft from going after the part of the market Apple never would and it did its job well. ((Google did buy Android prior to the iPhone be released. Regardless of what then CEO Eric Schmidt may have known about the iPhone prior to its launch, I still believe he targeted Android at the low-end and specifically to disrupt and keep Microsoft from dominating mobile devices.))

Google has done as good of a job as any as building its playbook based on its recipe. This again is everything from philosophy, playbook, recruiting, and culture.

Google’s recipe is obvious, it is clear for all to see. Yet extremely difficult to duplicate.

Only Amazon
Amazon is another company with a unique recipe whose success is tied fundamentally to this recipe. Amazon is a retailer, fueled by the best e-commerce experience on the Internet. It has built arguably the best logistics, inventory management, and supply chain infrastructure outside of Wal-Mart. Every business Amazon invests in becomes profitable. Once it does, those profits are re-invested in new businesses that eventually become profitable.

Like Apple and Google, Amazon has a clear philosophy and playbook and its recruiting and culture support the unique recipe.

Amazon’s recipe is obvious, it is clear for all to see. Yet extremely difficult to duplicate.

Concluding Observations: ((Each of the three companies outlined above make up the majority of conversations I have with Wall Street analysts. Fascinatingly Google and Amazon’s secret recipes are viewed as valid long-term barriers for competition yet Apple’s is not. Something I strongly disagree with on yet I’m not surprised by. Until Wall Street can evaluate Apple with a fresh set of eyes, the company will continue to defy their logic and outdated templates. ))
What is interesting is who is left out of this conversation. For example, Microsoft. When I think about this, what strikes me as intriguing is what is Microsoft’s recipe? For a company that did so well for decades it is intriguing to me that it is having so much trouble adapting to current market conditions. Its recipe was built with business customer in mind and that recipe is being challenged. Intel is another whose recipe may need adaptation. What about the PC OEMs, smartphone OEMs, wearable technology companies, Facebook, etc. There are many companies for whom this analysis can be done.

What are the secret recipes of these companies that are not only defensible but difficult to duplicate? Every company has to wrestle with what they are uniquely positioned to deliver and recognize it as a key to strategy planning.