Adam Lashinsky, in his excellent book, “Inside Apple” reveals a number of success factors that have created the “ultimate” Tech Company. Part 1 of this blog reflected on how Microsoft’s 1997 investment saved a troubled, niche computer manufacturer from oblivion and Apple‘s obsession with secrecy, its ability to focus and its product-first approach laid the foundation for the success story that it is today.
If you played a word association game with Apple supporters, and detractors, you would hear words like: imaginative, decisive, inspirational, obsessive, idiosyncratic, demanding, insightful, persuasive, brutal and visionary. Many of these descriptors relate to the company’s “hungry-as-a-bear” start-up attitude. Apple does not conform to the structures found in many multi-national corporations where profit centres, regional groups, product divisions or, worst-case scenario, matrix structures are applied to resolve the complex, functional, specialist approaches found in many global businesses.
There are no divisional P&Ls on the basis that they would promote the wrong behaviours at the expense of product-first innovation. There is one, single advertising budget, not a series of de-centralised pots for different product groups to manage. A significant aspect of the Apple management process is accountability, in the form of the DRI, or directly responsible individual. The DRI policy means that there are fewer layers and committees, quicker decisions, more clarity of action, deeper collaboration and cross-pollination. The major downside is that failure is unlikely to be tolerated, so while the DRI is a sought-after (and well rewarded) role, it can come at a price.
The DRI reports into Apple’s management system which is lean and detail driven. The Executive team meets weekly, typically on Mondays, and reviews all products and projects on a 2 weekly cycle. It’s pretty much impossible to keep delays, problems, project risks and poor performance hidden. This constant feedback provides clarity of purpose, a sense of urgency and a preference for getting things sorted out on a face to face basis to achieve the deadline. Of course it helps the process that Apple has a reputation for hiring “wicked smart” people.
As far as the outside world goes there are two fundamental attributes of Apple’s approach. The first is to own the message. What little communication that does emanate from Cupertino is strictly packaged and controlled to the extent that even senior executives are chastised for going “off message” or speaking on a matter without authorisation.
The second is the desire to dominate competitors, and even partners. Apple is out to win and will not tolerate other parties eating its lunch. This week Apple was awarded $1bn damages against Samsung for various patent infringements.
Samsung, a significant smartphone competitor, is also a major supply chain partner providing 26% of the component cost of an iPhone through its flash memories, DRAMs and applications processors. The next meeting between Apple’s Supply Chain team and Samsung’s components team will be interesting.
As I write Apple stock has surged to an all-time high of $665.15 per share, making it worth around $624 bn, the most valuable company in Wall Street’s history. Not only that, it’s worth over 54% more than the next company in line, Exxon Mobil Corp and has surpassed the all-time high value (not adjusted for inflation) of Microsoft, which reached $620.58 bn in 1999, at the peak of the Internet boom. Apple is worth more than Comcast, News Corp, Time Warner, CBS, Viacom, and Sony combined!
Maybe some of the ways Apple goes about its business are worthy of adoption. Don’t call it copying though just in case the Apple legal team has filed a few patents for its value system and management process. You can be sure they’ll come after you if they have, but right now, it’s probably safe to see how they might work in your own business.