A Worm in the Apple’s Core?

Penetrating Questions about the Future Apple Harvest

This past week, both The New York Times and USA TODAY posted articles suggesting that Apple’s ability to sustain its phenomenal record of growth and success is in question. This concern was triggered when Apple (AAPL) stock briefly dropped below $500 per share, a stunning 29 percent drop from its all-time high of $705 per share high set in September 2012. Shareholders are obviously anxious about the future performance of Apple since, for three of the past five quarters, the company has missed earnings expectations. What sort of earnings CEO Tim Cook will report in its quarterly confessional on Wednesday is anybody’s guess, but Apple investors are apprehensive, and they have plenty to worry about.


At the top of the list, of course, is the loss of the company’s inspirational leader, Steve Jobs, but financial pundits also have other concerns. They point out that it has been three years since Apple introduced a truly market-changing innovation. They fret that Apple is now competing in a market that is becoming saturated with product. That Apple is fighting the law of large numbers and increased competition. Maybe even more foreboding is that others have begun to “out-innovate” the market’s iconic innovator. The real fear of course is that with Apple now such a large and integral part of the American economic and investment market – if only in psyche – any hiccup by Apple has a rippling effect across not only the tech market, but the entire market.

Firstest with the Mostest

As troubling as these signs are for the future performance of Apple, they are not the problem, but rather a symptom of the problem. What is playing out here is a very fundamental conundrum for any successful company. Apple made history by getting to the future first. When you get to the future first, you force others to live by your concept of the future. The competition has to learn and follow your rules. And they will. And when they do, you are no longer alone in the future. Instead, you become mired in the present along with everyone else. In short, if you are not making history, you are history.

There are lessons to learn here and they revolve around both business leadership and its impact on the life cycle of most successful companies.

There are basically three types of leadership mentality: Those who lead by doing what has been done; they are called “bureaucrats”. Those who lead by doing what is being done; they are called “managers.” Those who lead by doing what will be done; they are called “inspirational.”

A new company cannot be successful by doing what established competitors are doing, but by finding a place in the market where the competition is weak or non-existent. A new company secures a foothold in the market, not by doing what others are doing, but by doing what others can’t or won’t do. Companies can go beyond mere success and become iconic game-changers when they offer products and services that create a market that did not previously exist. When that happens, the company for a period of time defines and dominates the market. Be it in the start-up, growth or game-changing phases of a company’s development, inspirational leadership essential.

Once a company has achieved success, it tends to evolve into a phase of overseeing that success. The leadership most identified with this phase is the manager. In the next phase, the company concentrates its efforts in an attempt to protect its success. In the “protect-what-we-have” mode, the bureaucrat emerges. This leads to the final phase in the life cycle of a company which is to be phased-out of the market. The point here is that once a company loses its inspirational leadership or believes that type of leadership is no longer necessary for its success, it begins to slide down the mountain, instead of conquering it.

In the case of Apple, we are seeing in real time what begins to happen when a previously “game-changing” company loses an inspirational leader. Apple has come back from the future and is trapped into competing against others in the present it created, when it was the future. What this means is that under the inspirational leadership of Steve Jobs, when Apple created the iPod, iPhone and iPad it got to the future first, by actually creating it. Who knew we just could not live without a smartphone or iPad until Apple fashioned the future? Apple created a huge market that had not existed and was the only company to serve it. How profitable can a company be if the consumer is more concerned with access to the product, than its price? When customers stand in line to buy a product they didn’t even know they needed. It is the embodiment of the mythical license to print profits.

What Apple did to achieve its success was unconventional. What Apple is doing to preserve its success is conventional; and herein rests the problem. The signs all suggest that Apple is in the managerial phase of leadership; with bureaucrats lurking around the corner. Apple got to the future and created a market that is now being populated by Kindles, Samsung’s Galaxy, Google’s Android and Nokia. Apple is now reacting to competition, rather than dominating it. For the first time in history, Apple was not the first to market when its iPad Mini followed smaller Kindle tablets and Google’s Nexus 7 to market. There is no more profound evidence of the juxtaposition of Apple in the market than to note that the company is now considering ways to cut prices to protect market share. This type of action, moving away from demand, value products, toward price-sensitive commodities is a slippery slope; with margins (if there are any) nowhere near the reported 40 percent that Apple reported last quarter.

All of this leads to the point that if you accept the premise that the future belongs to those who get there first, you can understand the problems that Apple is beginning to encounter. Bureaucrats and managers can’t get to the future first, because they focus on how things were yesterday or how they are today; not how they should be in tim_cookthe future. It is the inspirational leader – Steve Jobs and those of his ilk – who constantly reminisce about the future that Apple now lacks. Apple has become blinded to a future that was once a vision.

The challenge for Tim Cook’s Apple (at right)  – or any company, for that matter – is a difficult one because any number of managers and bureaucrats can be hired, but inspirational leaders must be discovered. It is problematic for a company populated by managers and bureaucrats to discover and accept an inspirational leader, because the mentality of such a leader to reminisce about the future in order to get there first is an anathema to the typical manager or bureaucrat’s experience and approach. The market is apparently unsure that Cook is that kind of inspirational leader.

So what is it that defines this mythical inspirational leader?

Vince Lombardi may have said it best, “Leadership is based on a spiritual quality; the power to inspire, the power to inspire others to follow.” The inspirational leader is passionate – almost to a fault – in the belief that the future just does not just happen, but that it is made. Many have a foreboding attitude when it comes to the future, because they see it as something that creates change that must be reacted to, in order to survive. The inspirational leader welcomes change as a tool to make the future react to it. Most see what has been done and define progress as doing it better. Inspirational leaders learn from what has been done, but define progress as doing what has not been done.

There is often a nostalgia to live in the past, because few are threatened by what they are accustomed to. But the future is something quite different, since we often fear to make changes, especially when what we’ve been doing has been successful. The inspirational leader wants no part of that thinking. He or she lives in the future but acts in the present to paint a vision of the future in a way that allows the followers to reminisce about the future in the same way they reminisce about the past. In so doing, the inspirational leader mitigates the fear of the future. This mobilizes the followers to leave the past behind and bravely work to get to the future first, because the future they create is where they will be most comfortable and successful.

And the Moral of the Story …

It is simple and has been said before, but remains true: The future belongs to those who get there first. When you get to the future first, you make history by determining the future for others. And, when you stop making history, you are history.

It comes down to an analogy of a mature apple tree, producing excellent fruit. The bureaucrat looks at the apple tree and focuses on protecting it and making sure it continues to produce what it has produced in the past. The manager looks at the tree and tries to figure out how to get more and more fruit from the same tree. The inspirational leader recognizes an apple tree can grow only so large and produce only so much fruit. The inspirational leader believes that seeds from the original tree can be planted to grow new trees that in the future will produce new fruit and constantly expand the apple crop.

What Apple needs to do is not to continue to try to get more apples off the same tree, but to get more trees to grow more – and even different – apples, maybe even oranges. This means that Apple needs to get back to the future. If it does not find a way to do so, it will be stuck in the present until it becomes the past.


One response to “A Worm in the Apple’s Core?

  1. The Innovator "I'll be back."

    In Guy Kawasaki’s book about the beginning of Apple he explains there was no motivation other than that which came from inspiration. They were all inspired by what they felt a computer could do to enrich people’s lives and set out to design something easy to use that could take a place in everyone’s home. That was their focus. Not money. Not profits. Not growing a company. Their focus and motivation was beyond everyday business. When Jobs along with his inspiration were ousted from Apple in 1985 the company floundered and shortly after he returned in 1996 Apple resumed inspired innovation. And so it should come as no surprise that once again without him Apple is again losing its way like many companies who have lost inspiration. Jobs would never have authorized the release of one iPhone after another with virtually negligible differences and some like Siri, and the Apple Maps that didn’t work. There was more focus on exploiting product cycles then in achieving inspirational innovation. And now, according to many young people the iPhone is no longer cool. It no longer inspires or innovates as demonstrated by its prices. The original iPhone sold for $500. Now you can buy an iPhone 5 for $127 (2 yr. contract or upgrade) at Wal-Mart. $500 is cool. Wal-Mart is not. There’s even talk of a low priced iPhone for the overseas markets to compete with Samsung and others. From leading to following, yet another sign of the lack of innovation.

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