With Apple’s phenomenal success of becoming the most valuable company on the stock exchange and arguably the premium brand on the consumer stage, one has to admire Steve Jobs’ foresight and courage in re-awakening and repositioning Apple from the grave. Desperate hibernation few people thought the company could recover from.
Praise the board
The board let Steve Jobs back into Apple as a last-minute do-or-die decision, with the kind of last-minute socialistic determination with which boards usually tend to act. Apple, at that time, had exhausted all other options and quite literally had nothing to lose.
The unrivaled success Steve Jobs brought back to Apple and the void of his passing brings about even more significant challenges to Apple’s continued success. Apple’s emergence from under the radar and phenomenal success and impact globally requires leadership with a different skill set, not the same as those of Steve Jobs. As a board member myself, I would classify Apple’s current top-level challenges in three main (interrelated) categories:
- Macroeconomics,
- Products,
- Operational excellence.
Along those main pillars – in my view – should the agenda of the board meetings be structured.
Let’s start at the top of the value chain:
Macroeconomics
Under Steve Jobs, a market leadership position was initially achieved by converting existing technology consumers to a premium computing experience on Apple’s device.
No small feat, yet semi-obscure with the company coming from the following market position and flying under the radar, first geographically (iPhones were first available in the U.S. only) and initially with limited greenfield penetration. Now, however, Apple has not only achieved leadership status in many crossover technology segments, but it has also amassed leadership status in a consumer greenfield with the sale or resale of digital music, video, television shows, and soon perhaps textbooks. That overall exposure impacts many other industries, supported only by monolithic computing made by Apple, wakes many up to the macro and socioeconomic impact of Apple on people’s lives. Apple can no longer continue to pound new products into the marketplace without realizing that a massive economic impact is at stake, to which different rules apply.
For the first time in history, Apple now faces growing challenges to stave off regulators concerned with a monolithic technology company’s ever-growing power. And that means Apple needs to build technology products from the start that are not only significant innovations but innovations that embody the free-market principles that lie on the wish list of many gubernatorial and socioeconomic agendas. More importantly for Apple, unencumbered growth Apple cannot continue if it does not implement the free-market principles right into its products that can perpetuate the growth of a winner-takes-all strategy in whatever field it aims to enter.
For example (I can name others): iTunes, while a significant step away from the media theft (Napster anyone?) supported with money from some Venture Capitalists, is in blatant violation of free-market principles, and the demi-cartel formed by its artificially regulated marketplace will sooner or later get punished by the political and socioeconomic freedoms governments and consumers aspire to.
I am somewhat surprised fellow ex-pat Neelie Kroes (European Commissioner for Competition) has not yet followed suit with her investigation into Apple. Just yet, perhaps waiting to see – just like in the past Microsoft case – what the verdict in the DOJ case against Apple can save her efforts in maintaining a fair European playing field. The great thing is, iTunes can “easily” be converted to comply with free-market principles, a change that will yield Apple more than good karma.
In other words, Apple’s growth is bound by what makes technology companies successful in the first place. The same macroeconomics (the desire to play music, for example) that drive technology products’ success will also kill them if it does not operate in compliance with the individual gradation of free-market principles governed or deployed worldwide. Macroeconomic compliance needs to be part of every product Apple brings out to optimize its impending success and promote its unencumbered growth worldwide.
Products
Apple’s past products are undeniably the best technology products greenfield customers can buy, as witnessed by their purchases. The ultimate computing experience focused on lifestyle computing composed by Steve Jobs became so successful because he would spend a considerable time designing, perfecting, and testing them. He raised the bar on innovation while holding back products that were just not ready or misfits, often to the dismay of his subordinates. He realized that only great products could produce perpetual customer acquisition, something operational excellence cannot, a reason why he continually broke ranks to expose the merit of the haves.
As a discretionary but fervent user of Apple’s complete product portfolio (in hardware and software) for business and pleasure, I feel that over the last year (with Steve Jobs’ health and attention to detail waning), the devil in the detail of many products is waning. During his long periodic illness, some incarnation of products and many of the latest incarnation of products released by Apple suggest that some of Steve’s previous reports are behaving like the mice at play while the cat’s away. The waning excellence on specific product details also indicates that the attachment to a cohesive product strategy, and the prioritization of vectors and R&D investments along which Apple measures its internal focus, appear to be suffering too.
For example (with the experience of a 20 year Apple user, 30-second list and in no particular order): Album art on the iPhone is not in sync with music playing, Music match empties playlists (with an only generic warning), Cannot buy music (can buy video) from the main menu on new Apple TV (with music match and home-sharing enabled), Address book in OS X cannot hold 5,000 contacts without significant performance issues, Auto text correction on Lion is a nightmare, Management of media across multiple devices is a mess, iPhone4 design suboptimal – slides at 0.4 angles, iPad volume buttons placed wrong – change when in cover, Siri produces too many false positives and negatives to be a reliable input “device” for computing. iCloud capability unfit to store anything but media. Final Cut Pro fiasco, Kill advertising – it’s the antithesis to customer value.
Significant product deficiencies and strategic misfits are now left undetected, now reaching unsuspecting customers. Apple needs a technology expert who has a top-level mandate to regulate product release across the board and the knowledge to ensure compliance with the aforementioned macroeconomic criteria.
Operational Excellence
I have very few upfront reservations about Apple’s existing ability to drive operational excellence, as it has demonstrated under Steve Jobs to manage that process quite well during extreme growth times. Few questions and much respect remains here.
Set us free
The challenges Apple faces are in many cases as groundbreaking as its success. This time around, the board needs to manage the company’s outlook beyond the quarterly earnings reports to prevent the company from tripping up again.
I hope for the love of Apple that Tim Cook will address those agenda items, so the company can remain at the top of the world in defining how great technology does not dictate how we operate but sets us free.
