Tag Archives: AAPL

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.


EXPOSED: Most Successful Business Leaders are Natural Born Cheaters!

Steve Jobs may be the most accomplished cheater of them all

This past week, after Steve Jobs announced his resignation as CEO of Apple Inc., the entire business community, along with the business academia and media knelt before him to offer their hosannas to the God of business vision.

It was not always that way for Jobs. There was a time when Jobs earned little but slings and arrows.

It probably made little difference to him, but there must have been some small twinge satisfaction to have those who had been most critical, pay the highest homage. It is important to note that Jobs was not being lauded as a manufacturer, inventor and certainly not as a manager, but as a leader.

What separated Steve Jobs from the never-to-be-remembered herd of mindless business executives and placed him in the pantheon of other mystical business leaders was his willingness to challenge—and when needed—cheat on the norms and rules of business. It should not be lost on us that when we think of other great business leaders such as Walt Disney, Sam Walton, Henry Ford, Bill Gates, Warren Buffett and Fred Smith (FedEx), the one thing they all have in common was the willingness to go against the tide of the way things were done to do what others said could not be done. They all challenged and cheated on rules that the masses meekly accepted as gospel.

Looking Back to Humble Beginnings

Dropping out of college after only one semester, Jobs adopted a metaphysical and counter-cultural life philosophy that he carried over into his business career. Unlike the traditional business leader who is schooled in college and business school (not to mention in bureaucratic companies) to follow and use the “proper” processes and procedures of management, Jobs had a natural inclination to question and challenge traditional business and management mores. Managers follow old rules to keep doing what has been done; leaders challenge old rules to do what has not been done.

In 1976, when Jobs and a couple of buddies (one of which was Steve Wozniak, left) started Apple in the proverbial garage (it became a myth that all technology companies had to be created in a garage, just as all presidents should be born in a log cabin), the “accepted” operating system for all computers was DOS. Jobs seemed to sense the limitations of DOS and believed that the most effective way to compete – especially against established companies – came from being different, not from doing more of the same. With that in mind, Jobs sought an “object oriented” system for his computers. The idea was to intuitively identify what the consumer wanted to do – not be limited by what the computer could do – and help him do it. The rest, as they say, was history.

Ironically, the early success of Apple led to the (temporary) downfall of Jobs. As the company grew larger, his management style and ability were questioned by a board of directors who pushed for the traditional organizational processes and procedures that they had learned in business school and employed in their companies. This all came to a head when, in 1985, the board forced Jobs out and replaced him with an individual schooled in the accepted approach to management and structure. By 1996, Apple had not only lost its innovative edge, but was virtually bankrupt. With no other options, the board was forced to go on bended-knee to beg Jobs to return to leadership of the company. In between time, Jobs had co-founded Pixar, the computer-animation movie studio that was sold to Disney for $7.4 billion making Jobs the largest Disney shareholder.

When Jobs reclaimed the helm of Apple, the immediate results were as dazzling as switching on the lights of a darkened room. After Jobs returned, Apple immediately changed course and not only did it survive, but started on a growth path that culminated in the week before he resigned when the stock market valued Apple (for a brief period) as the most valuable company in the world. Apple has created more than a few millionaire shareholders along the way, too: Apple’s stock price (AAPL) has climbed from $14.50 in 1985 to $383 and change at Friday’s close. Phenomenal.

How could this happen? Jobs was not any smarter, he was certainly not a better manager and he did not return with a bagful of new ideas, but he did return with a style of management, a philosophy of culture, a vision of the future and a willingness to challenge the status quo, combined with a willingness to take the risk to cheat on the rules that others slavishly followed.

The Different Between Jobs and Most Corporate Managers

In simple terms, Jobs is the anti-Christ of the typical corporate manager. Corporate managers learn the processes and procedures of command and control to maintain what has been accomplished. The corporate manager is infused with a steady-as-you-go, don’t-make-any-waves, mind-the-store mentality. Jobs, and others like him, are imbued with a “damn the torpedoes,” don’t-wait-for-it-to-happen, make-it-happen attitude. It is significant that Jobs has always eschewed rigid structure, peer-group analysis, best practices and market research. His philosophy was simply to find out what people wanted to do and then use judgment, a commitment to perfectionism and a gut feel to offer products to help them do it. This attitude is another example of the difference between leaders like Jobs and the typical corporate manager. The leader deals with complicated issues by making them simple, while the manager deals with simple issues by making them complicated.

Even Jobs’ approach to advertising was breathtakingly original. Who can forget Apple’s introduction of the Macintosh computer with his masterpiece commercial, 1984. Jobs’ entrepreneurial view of the computer world and his leadership role in it was obvious: An unnamed heroine “saves humanity” from the dystopian future of conformity as IBM attempted to dominate the computer industry. Sheer genius.

The leadership philosophy of Jobs was probably best encapsulated by Steve Lohr in a New York Times article (August 25, 2011) when he wrote, “Steven P. Jobs, one of the most successful chief executives in corporate history, once said he never thought of himself as a manager, but as a leader. And his notion of leadership revolved around choosing the best people possible, encouraging them and creating an environment in which they could do great work.” And Jobs might have added that he believes in giving others the freedom to challenge the way it has always been done and to do what others say can’t be done. The greatest legacy of Jobs’ leadership will be that he created a culture and environment that gave others the license to cheat on rules that needed to be challenged and changed.

Apple’s Future is Not So Clear

The big question hanging over Apple now is whether the culture of risk-taking, challenge, innovation and rule cheating can survive the loss of Jobs’ leadership. If Apple follows the trajectory of other companies that were built and led by visionary leaders who later departed, then fueled by the momentum of Jobs’ cheating style Apple will move forward for a period of time, but ultimately the tank will run dry and it will fall prey to the infection of corporate managers and bureaucracy. Just as a visionary leader is effective at instilling a challenging, risk-taking entrepreneurial culture in a company, the traditional corporate management system is effective at neutering and destroying that type of culture in the name of structure and order.

There are numerous examples – Disney, Wal-Mart and Starbucks – but probably the best illustration of this phenomenon is Microsoft. Under the visionary cheating leadership of Bill Gates, Microsoft became the icon for the successful company and entrepreneurial culture that challenged the status quo. As Sloan School of Management professor, Michael Cusumano has said, (Wall Street Journal, August 26, 2011) “Microsoft has never been the same since Bill Gates handed the reins to Steve Ballmer (at left).” The company that was once the razor edge of technology has become almost sedate and settled in its temperament of sameness. No longer does it successfully challenge the status quo, but instead seems intent on milking as much profit as it can from its aging Windows and Office systems. (Possibly the reason Microsoft has accumulated more cash than the federal government is that they don’t have any idea where to invest it.)

From a personal standpoint, I found it revealing and amusing when The Wall Street Journal (August 26, 2011) reported that as Steve Ballmer prepared to take over at Microsoft for Bill Gates, he studied the writing of German sociologist Max Weber in order to learn how organizations handled the loss of “charismatic leaders.” Who better than the Germans to study in order to learn how to maintain a culture of participation, innovation and challenge to the status quo?

And the Moral of the Story …

There is a distinct difference between successful managers and successful leaders. Successful managers operate within the system in order to maintain it. Successful leaders challenge and change the system in order to make it better. What makes business leaders such as Steve Jobs, Bill Gates, Walt Disney and Sam Walton stand out so clearly is because there are so few of them. But that is natural, because the objective of established management systems is to promote consistency, stability and predictability. We should not be surprised by the rarity of real leaders in business because the very nature of the business system is to suppress leadership. The goal of accepted business management schooling and experience is to glorify sameness. Leadership is about making a difference, while management is about eliminating difference.

. The good news is that simply because so many accept the acceptable the future is rich with opportunity for any of us to follow in the footsteps and build upon the accomplishments of such outstanding leaders as Steve Jobs. As we learned from Jobs and other successful business leaders, all that is needed is a willingness to challenge what is acceptable and create an environment that makes being different acceptable. Thanks, Mr. Jobs . . .

Postscript: If you want to learn more about how to cheat on the dishonest rules of business and improve your leadership, read Cheat To Win.