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Why Apple will survive Steve Jobs

Thu, 20th Jan 2011

Tom Peters tweeted this week: ‘Predict Apple post-Jobs "ordinary" within 15 years. The way of [corporate] nature.’

That’s the conventional view, and one I used to share.

Apple is a remarkable, indeed unique company. Not content with triggering the personal computer revolution with the Apple II and then the Mac back in 1984 (I had one of the first of those quaint beige sit-up-and-beg boxes in the country) it has also, since Jobs’ second coming in 1998, annexed the music industry and redefined mobile phones. Now, if you please, it is back to computers, where the iPad is biting deep into the PC market and has bodily wrenched the industry that it helped to created on to a new path.

No other company has successfully disrupted not just one but three major industries. Apple has defied convention in another respect. It has become the world’s most valuable technology company, and will probably this year become the most valuable company of any kind, not by pursuing volume à la Microsoft but by ‘doing a BMW’ – creating what are initially niche products that redefine and thus eventually become mainstream – in three different sectors. That takes some doing.

And how has it done it, exactly? If you believe the markets, which marked Apple down sharply the day after CEO Jobs announced another medical leave of absence (before marking it back up again on the back of record quarterly results), it’s all down to the company’s mercurial co-founder.

It’s certainly true that Jobs, perfectionist and ferocious taskmaster as he is, has been crucial in bringing Apple back from the brink and turning it into today’s supremely confident $316bn bundle of value.

But while he hasn’t left it an obvious sucessor (although chief operating officer Tim Cook is a more than competent deputy), in two important respects the company is no longer in thrall to Steve Jobs.

First, unlike many other firms, Apple knows what Apple can do. You know the joke about Jobs’ ‘reality distortion field’: his ability to dazzle, charm, and bully co-workers into believing that the impossible is not only possible but achievable tomorrow. Well, the joke is actually on the jokers: the Jobs RDF works. In his estimable Weird Ideas That Work, Stanford’s Bob Sutton notes that the best way to carry off really difficult stuff like innovation is to ‘decide to do something that will probably fail, then convince yourself and everyone else that success is certain’. In other words, use self-fulfilling prophecy as a management weapon. This is Jobs – and now Apple – to a T.

The secret of Apple’s systematic mastery of the RDF lies in turn in its greatest innovation. No, not the Mac, iPod, iPhone or iPad: but iTunes and its spiritual heirs, the App Stores.

What iTunes did was give the music business back to its customers. While the music majors were busy threatening their most ardent and knowledgeable consumers with legal action – rarely a winning long-term strategy – for file-sharing, Apple was making it ridiculously easy for the law-abiding majority to pull what they wanted from the great jukebox in the sky. Consuming music was no longer about paying large amounds of money for the cynical offerings that the labels pushed at them. It was about choice. It was also fun. You could browse, combine and play music in ways that you, not the producer, wanted. It was music for the rest of us.

The App Store pulls off a somewhat similar trick for hardware. More than a chunk of metal, glass and silicon your mobile phone has become much a part of you as a hand or arm. All human life is here. You can have an iStethoscope or a detailed map of Israeli settlements in Palestine, according to taste and profession. The iPhone has become iYou.

The iPhone App Store was about differentiation in a highly competitive market. In the case of the iPad, the App Store's role is even more intriguing.

When Apple introduced its first mobile device, the Newton, in 1993, it had no idea what a tablet was for, and consumers had no way of telling it. Newton was a flop, a rotten Apple.

When it launched the iPad, Apple still had no idea what the function of a tablet was – but this time it didn’t need to, because there was an App Store pullulating with other people’s guesses and urgings for consumers to browse among. Let the consumer decide. The result: the iPad is a roaring success even without a killer app. It is a blank slate, as it were, on which anyone can write their desires. This chameleon character seems to be particularly reassuring to corporates; having consistently distrusted the Mac’s individualist, even maverick image, they are reportedly taking up the iPad in droves.

It is no surprise that Apple has just launched an App Store for the Mac. At one level what’s going on here – a powerful idea in its own right – is reducing friction: Apple differentiating itself by making it ever easier for buyers to identify with their purchases by making them an extension of themselves. More profoundly, though, as shown particularly by the iPad, Apple is capitalising on its customer relationships – and in the iTunes/AppStore model it has the mechanisms to do it over and over again.

Unlike almost all conventional companies, Apple is thus not a standard corporate dictatorship. Although certainly casting apprehensive glances over their shoulder towards their demanding boss, Apple employees are mostly, and rightly, facing towards their customers. Apple, in short, is an ‘outside-in’ organisation rather than just a top-down one – and Jobs’ sometimes unattractive control-freakery serves to enforce this orientation. That, not its CEO's obsessive genius, is Apple’s greatest strength. In time it may be seen as Jobs’ most important and lasting legacy.

 


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