“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
Stay Hungry
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
Stay Foolish
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
Stay Focused
“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
Fabulous.
This might just be your best one yet. So much good stuff. Not just about Apple but life in general. Great job.
Thank you so much. Honesty compels me to agree with you – one of my very best.
“I have often wished I had time to cultivate modesty but I am too busy thinking about myself.” ~ Edith Sitwell
I agree the post was long. And grasping the sweep of it was not easy, reading it on an iPhone 8-). But it conveyed a sense of the passion and focus inside Apple that a dry, minimal rendition could never do. Thank you for writing it.
“It is not a sin to be second-rate. The only sin is not to try to be first-rate” – Doris Lessing
Agreed. Like I commented quite some time ago, John should teach at Apple University.
“John should teach at Apple University” – Nangka
I am patiently awaiting their call. 🙂
Meh…like a FOX! Good one.
I might be alone with this opinion, but I think this article/post is too long and repetitive with its’ messaging. I guess the recovering attorney is the give away to your writing style.
I appreciate your coverage, but I would love to hear your opinions in your words and less a collection of quotes.
“I might be alone with this opinion…” – lb51
You’re not alone. Some people like the quotes, some people don’t. And I know that this article was Loooooooooong. (I know it was long, because I was the one who had to take the time necessary to write it.)
Truth is, I’m going to have to cut back on both the length of my articles and the number of quotes included. And maybe that’s a good thing.
As always, I appreciate your feedback. I’ll try to do better next time. 🙂
please keep the quotes – they help make such an enjoyable read!
Thank you for the feedback Alex. Great to hear.
Yes I’m in the “for” camp with quotes. They reinforce the messages John is putting across. With or without quotes, John’s articles are such a pleasure to read.
“Now you may say that prioritizing the user experience over profits and growth is all a lot of hokum”
No, not hokum…just plain rhetoric and marketing. At best you can say Apple does not (or at least tries not) to sacrifice user experience for profits. But the reality is that Apple is focused, indeed hyper-focused, on profits. Apple does not make its profit only because it focuses on design and user experience. It makes profits because they target the most profitable segments of markets and, more importantly, because operationally, they run a really tight ship. All the best designs in the world would get them nowhere if they were not able to manufacture and distribute their products as efficiently as they do. Put another way, where would Apple be if it could not make 10’s of millions of iPhones or if iPhones cost a lot more than $200 to make. Also think about how important negotiations with carriers and content providers have been key to their success and profits.
That is not to say that design does not matter. Apple is great at design and they are very profitable. But correlation and causation are not the same thing. Its just sexier to talk about design than to talk about operations or to talk about user experience instead of carrier subsidies.
Apple already goes out of its way to stress the importance of design (hence those ads). Repeating the party line and backing it up a little is nice. But, really, there is way, way more to the story.
“just plain rhetoric and marketing” – DarwinPhis
The man who questions opinions is wise. The man who quarrels with facts is a fool. ~ Frank Garbutt
You’re entitled to your own opinion, but you’re not entitled to your own facts. All the facts in evidence support the proposition that Apple is doing exactly what they say they are doing: making the user experience priority #1.
If you have facts to support your position, please share them with us all so that we may consider them together.
I am not challenging your facts, just your conclusions. You do know the difference between the two, don’t ou?
Your thesis is that Apple’s profits are directly or primarily the result of their focus on design and user experience. The only facts you seem to use to support this belief are that Apple is very profitable and that Apple designs great products. I accept these as true; I just do accept that the former is the direct or primary result of the latter. You really give little more than correlation; where is the causation?
My counter thesis is that excellent design is only one of the reasons why Apple is so profitable, perhaps not even the most important. Again, this is not fact, but a conclusion. One of the facts that I presented is that Apple is able to produce 10’s of millions of iPhones for far less then they sell them for. Design may explain why there is great demand for the iPhone, but does not really explain Apple’s manufacturing triumphs. Again I ask: how profitable would Apple be if the iPhone cost, say, $400 to make and manufacturing capacity was an order of magnitude lower. How does focusing on design explain this? I also raised the issue of negotiated deals with content providers and carriers. These have helped Apple’s profits and have little to do with design.
When Apple goes on about how they focus on design it is because that is where they want to focus of the discussion. This make sense: its hard for a consumer products company to market around the slogan, “We negotiate the best deals to your benefit”. But when others accept this and do not look beyond the company’s statements, it simply demonstrates laziness or a a lack of analytical depth.
Over the years there have been numerous examples of Apple spending time, money and other resources on design features which do not provide a return. In other words, they over-design. This should be proof enough that design, not profit, is their higher priority.
And they put a lot of resources into the packaging! It’s a pleasurable experience opening any Apple product 🙂
I’ll grant that even though you aren’t giving any specific examples. It is hard if not impossible to determine the return of many of Apple’s effort since so many things get rolled up into single products: I could argue the return on iOS or Safari or the Lightning connector are zero since they are not sold independently of devices. Because design and development costs are spread over so many products, the cost of over-design has very little impact on the cost of final products.
I am not saying Apple only focuses on profits or that they do not focus on design. But profits, especially the massive amounts Apple makes, are the results of many business processes. Your claim suggests that Apple is is not laser focused on securing key components, negotiating favourable deals, optimizing production, etc. Apple can afford to over-design from time-to-time because they are so profitable.
“I’ll grant that even though you aren’t giving any specific examples” – DarwinPhish
The external antenna that caused them so much grief, making the phone ever thinner when better battery life would have suited most consumers better (a case of sacrificing user experience in the blind pursuit of design), metal over plastic bodies, the aluminum unibody, the refusal to release a white iPhone for over a year, a refusal to build a larger phone until they get it right, refusing to release the phones in colors, refusing to put out a lower priced phone, waiting over a year to implement cut and paste, not going with 3G initially and later LTE…that’s stream of consciousness, off the top of my head.
I don’t keep a list of these things but I do believe that if I were to start collecting “design over profit” examples, the list would be both long and impressive.
Your list has a lot of items that are not design over profits decisions. Do you really think Apple missed out profits by being late with cut & paste and do you really think that was a deliberate design choice?
That said, I acknowledge that Apple, like just about every other company, makes deign choices that can sacrifice profitability. Apple certainly makes more than most but that is mainly because their high margins give them luxury to do so. The key point is that none of Apple’s choices seem to have added significant costs to their products nor resulted in significant lost sales.
If Apple is so focused on design and so regularly prioritizes design over profits, why has the cost of building an iPhone remained relatively constant over the years? Is that just a happy coincidence or have they also been focusing on keeping parts and manufacturing costs under control and on scaling production and distribution?
“Do you really think Apple missed out profits by being late with cut & paste and do you really think that was a deliberate design choice?”
Of course it was a design choice. What other reason would there be for the delay?
I’m not saying that Apple ignores profits, far from it. I’m just saying design first.
There have been numerous articles throughout the years that talked about Apple’s hidden design decisions that most people will never see and many, if they did see them, would not understand. Those are often how things are laid out internally or in the code, etc. I wish I could remember any of those examples or articles, but they do exist and support your point. Sorry I couldn’t be more help.
Joe
I’m the same. I’ve seen lots and lots of evidence, but I haven’t collected it.
Frankly, I don’t feel much of a need to argue over the matter. If one has been paying attention, one knows. If one doesn’t want to accept the conclusion, no amount of evidence will convince them.
Thank you for the supporting comment. Much appreciated.
“No, not hokum…just plain rhetoric and marketing.”
I would say you need to go back and find what Steve Jobs said about design, that it isn’t how things look, but how they work. It is a far larger holistic (and more accurate) definition of design. And it is the only way Apple could be profitable, by placing design as a higher priority. Great marketing does not make great products or profits. Great products do. Apple’s method for creating great products is by focusing on design.
Joe
I never meant to imply that marketing is what makes Apple or its products great. The rhetoric and marketing I am referring to is all the execessive talk about design and how its all about the design.
I acknowledged that their focus on design is why they make great products. What I do not agree with is the belief that profits somehow magically flow just from making great products or that Apple is not highly focused on making profits. To make profits you need a great product AND you need to be able to produce it for less than you sell it for AND you have to be able to scale production & distribution to satisfy demmand. Considering how profitable Apple is, Ithink they do a lot more than just focus on design.
Want an example? Apple spent about half a billion dollars to buy a company which makes flash memory controllers. One of the main reasons why they did this was to reduce their costs. Yet Apple still marks up flash memory by over 1000%. The purchase was a shrewd business deal meant to increase profits. A company which focused primarily on design probably wouldn’t have made this deal and a company which prioritizes design over profits wouldn’t give their customers a strong incentive to settle for less.
“Ithink they do a lot more than just focus on design.”
I don’t think Falkirk said that. I believe he said design first. However, I’ll extend that to say even your example shows design is first and all your “AND”s are driven first by the design.
“A company which focused primarily on design probably wouldn’t have made this deal and a company which prioritizes design over profits wouldn’t give their customers a strong incentive to settle for less.”
As Apple articulates what they believe about design, I think this conclusion is incorrect.
Joe
Mr. Kirk, great article. Amazing quotes.
Do you believe Apple’s current and future leaders can withstand the pressure of the Carl Icahns and other activist investors? These people seem to want all that Apple is not. They would be better served as Microsoft investors.
However, I don’t recall any of these investors trying to push Steve Jobs as hard as they are pressuring Tim Cook now.
The more successful Apple is and the more profits it makes, the more cash it will generate. This will only increase the pressure from these type investors.
In the end for these investors money now is the goal, even if it ends up killing the goose that lays the golden eggs . . .
“Do you believe Apple’s current and future leaders can withstand the pressure of the Carl Icahns and other activist investors?” – Henrique
Easily. Tim Cook has a different style than Steve Jobs. Steve Jobs didn’t suffer fools gladly. Heck, Steve Jobs didn’t suffer ANYONE gladly.
Tim Cook is more of a southern gentleman. He’ll listen quietly and politely. They he’ll do what he wants.
So far, Apple’s stock has benefitted from Icahn’s two “tweets” and Tim Cook got a meal made by a professional chef. I’d say that Apple is ahead on the deal. 🙂
Thank you.
I am sure Mr. Icahn is thinking along the lines that “there are no free lunches . . .”
Hopefully Apple’s leadership will remain focused for years to come. Few companies make great products over long periods of time without falling for the trap you mention.
Thanks again for your reply.
I think I have to disagree with you here.
Yeah, Tim Cook might “withstand” the pressure this time around.. but the fact is he already caved by initiating the first buyback, something Jobs would have never done. Once the process has been initiated, things come down to circumstance. Tim Cook can say “hell no” right now cuz the 5s is awesome and is performing great. But what if it hadn’t? Would he still have been able to categorically refuse?
I believe it is just part of the strategy of dealing with greedy people by initiating the buyback and i believe from now on Tim Cook will just ignore what these greedy folks say.
I feel that he should not be entertaining these group of short term so greedy investor and i believe they are better serve by buying Amazon shares and leave Apple alone and let it do what it do best that is making great products.
Just my thoughts.
Buying your own shares if you believe them to be good value and you have spare cash is an excellent way to spend it. Warren Buffet told Steve Jobs to do the same thing. I don’t think it is short termism.
After working with Steve Jobs for 13 years, I think Tim Cook can withstand pressure from the Carl Icahns of the world!
Excellent point.
I think people easily miss or misunderstand this very simple fact
“The cure for boredom is curiosity. There is no cure for curiosity.” ~ Ellen Parr
Attributed to both Ellen Parr and Dorothy Parker, but no one can find evidence of Ellen Parr’s existence, other than the quote and attribution in a 1980 Reader’s Digest.
Kirk to Earth!
Your Apple articles, insight, analysis are so spot on, it’s almost like you must have a direct line to Jobs!
The last three articles alone should be read by all companies to learn how it should be done!
Thanks for your wonderful writing & keep up the great work!
It’s easy to be the cheerleader when things are going great. But if you had had the stones to publish this during a “down” period — say, during the lull between the 4s and the 5, when the stock was down and the Galaxy S3 was all the rage — I think it would have been far more compelling.
Also, no use in beating the dead/dejected/demoralized horse that is Microsoft as a point of contrast. That’s just mean haha
So you never read anything by Falkirk before, shame on you.
Misplaced quote:
http://uncannyvolley.com/why-not-combinator-podcast/2013/9/22/north-stars
FIXED!
My thanks to you and my renewed apologies to the author.
The Uncanny Valley is a great article. Highly recommended.
It’s a must read indeed. I think the title is North Stars, and the blog is titled Volley? Not quite sure, that site is full of mysteries.
Like a great novel, I didn’t want this article to end! Very well done!
Great article, made my day.
Fair critique and noted.
To my point, 16/23 non insider posts on the homepage are not about Apple.
Mr Kirk mainly writes about Apple and perhaps you should read other writers of this blog and you need not waste your time reading My Kirk’s work if it made you feel retarded.
Me not too smart but appreciate intelligent writing when I see one.
Excellent article, John. I really enjoyed the flow of pulling together all the quotations to support an organized story. Of course, we long-term investors expect the story to live out as you tell it – in spite of everything the “experts” (well, “analysts”) say.
I usually visit techpinions couple of times a week just to ensure there is a better thought process of industry analysis and stuff like that. Last few weeks have been worst of what I have seen in the recent past as far as tech writing’s concerned. Latest was about, iPhone 5s not produding 720p slow-mo but a scaled up version from 480p – via gsmarena (not interested to provide link for such stupid article). I scrolled down there and checked discussion. One guy simply asked ‘why so called original 720p photos from Samsung Galaxy has same screen coverage area in the picture’. Good point, I checked further, to only get that point validated. Simply showing ‘different looking’ photos and adjudicating one of them as inferior, is quite ridiculous. Of course, I personally do not like Samsung/Android. But fact is world is not flat, people do make choices and Samsung/Android definitely has a place in the technology world. Just because a few phones have battery swelling issues, does not mean that, Samsung is doomed in a week time. Thank you John for coming out with such resourcesful articles.
Mr.Kirk,
Thanks for your excellent article! It is very inspiring and I love all the great quotes.
What most companies fail to realize is that people want products and services
that “just work.” It’s going to be interesting to see how Apple transitions to new
leadership and what Steve Jobs influence will be at the campus headquarters.
Just to be clear, the way you use the word “problem” assumes that the proper goal of a company includes living forever.
We always follow your beautiful content, I look forward to the continuation.
Great website. Lots of useful information here. I look forward to the continuation.