“There are three rules for running a successful business.
Unfortunately, no one knows what they are.
The Now Of Apple
A man is known by the company he organizes. ~ Ambrose Bierce
Steve Jobs’ Greatest Creation Was Apple Itself
Steve Jobs’s most important, but least recognized, contribution to the world was, not as a visionary, designer or a salesman, but rather as a management innovator. When Jobs was asked whether his greatest creation was the iPad or iPhone, he replied:
No. Apple — the company. Because anybody can create products, but Apple keeps creating great products.
With Apple, Steve Jobs showed us what can happen when a company realigns its priorities in order to focus totally on adding value for customers. The ironic result? The company makes loads and loads of money.
My passion has been to build an enduring company where people were motivated to make great products.
Apple’s continued success depends upon current management’s ability to understand and extend the management principles that Steve Jobs put in place, while also recognizing and minimizing its shortcomings.
[I want] to make Apple a great $10 billion company. Apple has the opportunity to set a new example of how great an American corporation can be, sort of an intersection between science and aesthetics. Something happens to companies when they get to be a few million dollars — their souls go away. And that’s the biggest thing I’ll be measured on: Were we able to grow a $10 billion company that didn’t lose its soul? ~ Steve Jobs
Traditional companies — fueled by monetary incentives and ruled by hierarchical bureaucracy — have their limitations and seem destined to fall into the Innovator’s trap. Apple’s style of doing business seems to neatly sidestep the Innovator’s dilemma, but does so by exposing Apple to a wholly novel set of incentive-related dilemmas.
Apple, The Functional Organization
Jobs rearranged Apple into a functional organization. He made the user experience priority number one, stripped away middle management, eliminated traditional monetary incentives and career paths and centered the organization on himself.
The functional organization is ideally suited for innovation. That is Apple’s strength. And that is Apple’s weakness.
The Yin And The Yang Of Apple
Critics say that Apple is too hyper-focused; can’t juggle multiple critical tasks; focuses far too much time, energy and money on product features that aren’t particularly practical or appreciated by their customers; that Apple only makes modest product upgrades; is out-of-touch with mainstream market tastes; is constantly playing feature “catch-up” with over-priced, slow-to-market, easily-copied products that contain far too few features, far too few choices and far too many constraints.
Perhaps, even worse, is Apple’s overall attitude. They’re self-assured to the point of hubris; they’re stubborn, insular, isolated, elitist, pretentious, secretive, obsessive, cocky and paternalistic. They’re undemocratic and controlling, creating over-designed, bleeding (not cutting) edge products that – when accompanied by their my-way-or-the highway stance – are a slap in the face to the vast majority of consumers.
Guess what? All of these criticisms are mostly true but they’re also mostly irrelevant. They’re trade-offs. Apple gains something in exchange for each thing that it gives up and, for the most part, those exchanges are asymmetric, with Apple gaining far more than it loses.
None of the above criticisms are any threat to Apple’s continuing success. On the contrary, many of the things that Apple is criticized for are the very qualities that are responsible for Apple’s current mega-successes.
So if that’s not the problem, then what is the genuine issue that confronts Apple?
The How Of Apple
To finish first you must first finish.” ~ Rick Mears
Apple’s North Star
Take a look at the following compilation of Apple’s stated priorities; their self-professed “North Star”:
Our north star is to make the best product … we’re about having the best experience and having the happiest customers … Apple is focused on product-quality first, price second … the products, not the profits, are the motivation … the goal of the company is to delight the customer … we want to really enrich people’s lives at the end of the day, not just make money.
Now you may say that prioritizing the user experience over profits and growth is all a lot of hokum but, as they say, actions speak louder than words (just not as often). And every action that Apple has taken reinforces their words — they really don’t prioritize profit and growth. Which is swell and all except for one thing…
…everyone else in the world — including their employees, their creditors and their investors — DOES prioritize profits and growth.
That Which Gets Incentivized Gets Done
Making the customer experience priority number one is very noble and all, but it doesn’t address the needs of the employees and the investors.
Apple is NOT prioritizing growth. You may find that admirable – I do – but the Street doesn’t care. And, frankly, shouldn’t. ~ Ben Thompson (@monkbent)
Apple has the exact opposite problem of Microsoft. Microsoft has everyone incentivized to make money and, therefore, innovation suffers. Apple has everyone incentivized to innovate and, therefore, focus on things like career paths and market share and profits suffer. Apple constitutionally cannot maximize profits because they’re committed to innovation.
There are no internal incentives for Apple to pursue profit/market share. This, of course, is problematic for a platform company. ~ Ben Thompson (@monkbent)
That Which Gets Measured Gets Managed
What gets measured gets managed. – Peter Drucker
The danger of bad metrics is what gets measured gets done. ~ RogerKay (@RogerKay)
Apple’s functional organization turns traditional management issues on its head. The problem with most companies is that they measure the wrong things, therefore their managers drive their people to do the wrong things. At Apple, the problem is that their priorities are hard to measure in any meaningful way, therefore it is difficult, if not impossible, to manage and incentivize in any meaningful way.
The problem with Steve Jobs’ business solution is that THERE IS NO FOCUS.
Effective leadership is putting first things first. Effective management is discipline, carrying it out. ~ Stephen Covey
Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.~ Stephen Covey
Again, the problem with most companies is that their managers are very effective at carrying out policy; at driving people up the ladder – but the priorities being carried out are the wrong ones; that the ladder is up against the wrong wall.
No so at Apple. Apple has its priorities in order; their “ladder” is against the right wall, but they have no managers, no management incentives, no career paths to drive people up that ladder.
— At Microsoft, the primary problem is that no one is responsible for, in charge of, the defender of, the champion of, innovation. No one “owns” innovation at Microsoft.
— At Apple, the primary problem is that no one is responsible for, in charge of, the defender of, or the champion of, market share and profitability. No one “owns” profitability at Apple.
— At Microsoft, the sales and money guys are running the asylum.
— At Apple, the design guys are running the asylum.
— At Microsoft, not only are they keeping their “eyes on the prize”, but they can’t pries their eyes away from the size of the prize long enough to realize that without innovation their company dies.
— At Apple, all minds of every kind are behind the designs that they find fine. Money? Market-share? Investors? A happy, but happenstance, side-effect. A paradoxical beneficiary of the same friendly fire that has simultaneously devastated competitors like Palm, Nokia, RIM, HTC, and Microsoft.
The Great Leader
Of course, the answer to “Who’s in charge” used to be crystal clear — Steve Jobs. Jobs was THE driving force behind Apple. Loss of focus a problem? Not so long as Steve Jobs was at the helm.
Now, however, Steve Jobs, the visionary founder is gone. Without his leadership, most pundits feel that Apple’s current management has no choice but to re-introduce traditional hierarchical bureaucracy to run the company. The company will then steadily go on defense; the salesmen and the money-men will take over; and, in time, the managers will cease to understand either the company’s products or its customers and Apple will start its inevitable descent into mediocrity and irrelevance.
So far, Tim Cook and Apple have rejected that course. They’ve continued to function as a functional organization. But they’re doing so without the man who put the “fun” in functional.
There’s no doubt that the good ship Apple has lost its Captain, its visionary. But has it lost his vision too?
Has Apple been left adrift in a fog of indecision, floating in sea of doubt, helplessly waiting for the next wave of innovation to toss them upon the rocks?
The Old Guard
Steve Jobs knew that he was dying and he did everything in his power to pass along his management philosophy to his Lieutenants. If you watch the words and the actions of Apple’s top management, it is clear that they are committed to Jobs’ management approach and that they, in turn, are doing everything in their power to implement and maintain Jobs’ management philosophy.
Apple’s Old Guard was there in the down times. They suffered and survived Apple’s near-death experience. They will not forget. They will not waiver. They are committed, resolute and hungry to prove themselves. They’ll do all that they can to extend Jobs’ — and their own — legacy.
But what happens when the Old Guard is gone? What happens when new blood – those who have enjoyed nothing but mega-success at Apple – take over? Will they be capable of, or willing to, maintain the discipline and focus necessary to keep Jobs’ management dream intact and alive?
THAT is Apple’s true dilemma.
The Tao Of Apple
Tao |dou, tou| noun (in Chinese philosophy) the absolute principle underlying the universe, combining within itself the principles of yin and yang and signifying the way, or code of behavior, that is in harmony with the natural order.
Literally Chinese for ‘(right) way.’
Priorities tell us what we should be doing. Values tell us how we should be doing it. Motivation tells us why it’s worth doing. Principles tell us who we are striving to be. Culture maintains and reinforces who we are.
Apple is trying to institutionalize the priorities, values, motivations and principles of a functional organization. They are employing the staying power of culture to counter and combat the perverse effects of entropy and ennui.
Priorities Are The “What”
“The most important thing in life is knowing the most important things in life.” ~ David F. Jakielo
Apple has made themselves very clear: Their number one priority is the user experience.
“We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent.” ~ Jeff Bezos
Jeff Bezos’ words. Apple’s philosophy.
He who wants to do everything will never do anything.” ~ Andre Maurois
Fools think that everything should be a priority. But, of course, when you prioritize everything, you actually prioritize nothing.
The whole point of getting things done is knowing what to leave undone. ~ Lady Stella Reading
“The bottom line is, when people are crystal clear about the most important priorities of the organization and team they work with and prioritized their work around those top priorities, not only are they many times more productive, they discover they have the time they need to have a whole life.” ~ Stephen Covey
The odds of hitting your target go up dramatically when you aim at it. -Mal Pancoast
The successful man is the average man, focused. Apple is hyper-focused on what they need to do in order to remain hyper-successful.
Values Are The “How”
In most things, 80% of perfection is not only “good enough”, it’s actually optimal, because the cost expended to achieve more is disproportionately greater than the benefit gained.
The opposite is true in things like brain surgery, and submarine and space travel. The last 1% is just as important as the previous 99% because anything less that 100% is literally fatal.
The new ensign was trying to impress the master chief with his expertise learned in sub school. The master chief cut him off quickly and said, “Listen, it’s really simple. Add the number of times we dive to the number of times we surface. Divide that number by two. If the result isn’t an even number, don’t open the hatch.
Neil Armstrong once said, “You only have to solve two problems when going to the moon: first, how to get there; and second, how to get back. The key is don’t leave until you have solved both problems.”
What Apple does is neither brain surgery nor rocket science but they choose not to accept 80% of perfect as their norm. They strive, instead, to walk the extra mile and pay the extra price necessary to be excellent and move their products ever closer to the unobtainable goal of perfection.
“(F)rankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.” ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call
“Excellence is rarely found, more rarely valued.” ~ Johann Wolfgang Von Goethe
One’s natural instinct may be to do what’s easy; to do the least that we can do. A better, but still self-centered, instinct is to do what we do best. We’re only at our very best when we do our best to do WHAT’s best.
Quality means doing it right when no one is looking. ~ Henry Ford
Motivation Is The “Why”
“The purpose of life is a life of purpose.” ~ Robert Byrne
“Being the richest man in the cemetery doesn’t matter to me… Going to bed at night saying we’ve done something wonderful – that’s what matters to me.” ~ Steve Jobs
The best thing in life aren’t things. ~ John Ruskin
“We believe that we’re on the face of the Earth to make great products, and that’s not changing.” ~ Tim Cook
A person is only as good as what they love. ~ Saul Bellow
- Making a computer work is an act of engineering.
- Making a computer work the way we do is an act of creativity.
- Creating a computer that does real work is an act of engineering.
- Creating a computer that makes work feel like play is an act of genius.
- Microsoft makes computers work.
- Apple makes computers fun.
I think that the following is one of the key differences between Microsoft and Apple:
Principles Are The “Who”
Find out who you are and do it on purpose.” ~ Dolly Parton
People should know what you stand for. They should also know what you won’t stand for.
A piece of spaghetti or a military unit can only be led from the front end. ~ George S. Patton
Culture may start at the top, but it has to be made into a habit so pervasive that it permeates the entire organization.
“Motivation is what gets you started. Habit is what keeps you going.”-Jim Rohn
Company culture isn’t ping-pong tables or vacation policies. It’s the set of principles by which decisions are made when the boss isn’t watching. ((This quote came from an article entitled “North Stars“. It’s a great article and I highly recommend it. I originally cited it without attribution because I had lost the link, but a commentator was kind enough to provide it. My thanks to the commentator and my renewed apology to the author of the Uncanny Valley. Your tolerance is greatly and sincerely appreciated.))
(R)egardless of who is in what job, those values are so embedded in this company that Apple will do extremely well. ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings
Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny.
Rules Are Not The Answer
The problem with rules is that they begin to ossify the moment we begin to codify them. We start to practice the letter of the law rather than its spirit. We begin to rely upon routines. We assume. We stop pursuing the Way and presume that we know the Way — or worse — we presume that the way we’re currently doing things IS the Way.
Never assume the obvious is true. ~ William Safire
Most of our assumptions have outlived their uselessness.” ~ Marshall McLuhan
Never, never rest contented with any circle of ideas, but always be certain that a wider one is still possible. ~ Pearl Bailey
So if rules are not the answer, then what can Apple do? How can they constantly refresh their outlook, keep their minds focused and continuously make the major, and minor, course corrections necessary to ensure that they stay on the path?
Questions Are The Answer
Somebody once told me, “Manage the top line, and the bottom line will follow.” What’s the top line? It’s things like, why are we doing this in the first place? What’s our strategy? What are customers saying? How responsive are we? Do we have the best products and the best people? Those are the kind of questions you have to focus on. ~ Steve Jobs
Apple asks itself some of the very best questions that I have ever heard any corporation ask.
The greatest challenge to any thinker is stating the problem in a way that will allow a solution.
I was going to write out some of the questions, but I really think you should take the time to view the following two short videos, instead. They’re just over one minute each. Do yourself a favor and watch them (again and again).
Some critics mocked these commercials; said they were pointless and pretentious. Talk about throwing pearls before swine.
A man may fulfill the object of his existence by asking a question he cannot answer, and attempting a task he cannot achieve. ~ Oliver Wendell Holmes
Apple is flat out telling us (not that many are listening):
We are Apple.
A wise man’s question contains half the answer. ~ Solomon Ibn Gabirol
We have not grown complacent.
It is not the answer that enlightens, but the question. ~ Eugene Ionesco
Nor have we forgotten the way.
Judge a man by his questions rather than his answers. ~ Voltaire
We will ask ourselves these questions, and more, to ensure that we stay on the path; that we follow our North Star.
“We make our world significant by the courage of our questions and by the depth of our answers.” – Carl Sagan.
We are Apple. This is what matters.
The Wow Of Apple
See it big, and keep it simple. ~ Wilferd A. Peterson
The cure for boredom is curiosity. There is no cure for curiosity. ~ Ellen Parr
“The reasonable man adapts himself to the world. The unreasonable man persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”-George Bernard Shaw
Almost all really new ideas have a certain aspect of foolishness when they are first produced. ~ Alfred North Whitehead
“Invention requires a long-term willingness to be misunderstood. ~ Jeff Bezos
Today’s mighty oak is just yesterday’s nut, that held its ground. ~ David Icke
If no one is telling you your idea is crazy, it’s probably not a very good idea.” ~ Francis Ford Coppola
The greatest pleasure in life is doing what people say you cannot do. ~ Walter Bagehot
“It’s kind of fun to do the impossible.” – Walt Disney
“When life gives you lemons, make grape juice, then sit back and let the world wonder how you did it.” – Unknown
All truth passes through three stages: First, it is ridiculed; Second, it is violently opposed; Third, it is accepted as self-evident.” — Arthur Schopenhauer
“I recently experienced a small epiphany: I think the never-ending worry about Apple’s future is a good thing for the company.” ~ Jean-Louis Gassée.
I agree. Far from resting on their laurels, Apple is desperate – as always – to prove themselves. The naysayers have, quite unintentionally, through the gift of adversity, given Apple exactly what it needs…focus.
Adversity is your greatest professor ~ Greg Evans
As a rule, adversity reveals genius and prosperity hides it. ~ Horace
A successful business is not a trouble-free, worry-free business. A successful business is an edifice that must be rebuilt every day. As Winston Churchill put it:
Success is never final. Failure is never fatal. It is the COURAGE to continue that counts.
When it comes to courage, Apple seems to have more than enough. Despite all storms that they have successfully survived, despite all the shoals that they have successfully navigated, every day they rise to the jeering of the hecklers who assure them that today is the day that they’ll sail the good ship Apple off the edge of the earth and into oblivion.
Life is not about waiting for the storm to pass. It is about learning to dance in the rain.
I’ll close with these words from the mighty (and mighty quotable) Albert Einstein. It’s almost as if he had Apple in mind when he penned them:
Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” ~ Albert Einstein