How does Apple cure cash cow disease?

Applecow
Photo by Justine Otto

It's both easy and fun to be a critic of Microsoft and Google's failed innovations, but as so often in the tech world, Apple confounds most theories. Michael Dell advised Steve Jobs to close shop in 1997, to avoid wasting more of the shareholder's money. Later, MP3 players looked like a classic loss of focus. The mistakes MS and Google made are only obvious with hindsight, and any simple rule you apply to weed out Kins or Waves would also kill the iPod.

Microsoft's track record on innovation is terrible, and Google's is starting to look troubled, so what's Apple doing differently? The key word from the original article is 'discipline'. There's a legend that when Steve returned, he asked employees who ended up in an elevator with him "What do you do for Apple?". Anyone who couldn't come up with something convincing by the end of the ride was fired. Whether or not that's true, it sums up the company culture.

Apple builds products that people pay for, at 30% margins. If your project can't meet those tough criteria, even as an idea, no resources are wasted on it. There's obviously cases like Safari that appear not to fit, but do you notice how the OS folks beg and borrow everything they can from the open-source world? That's because they're incredibly small teams of engineers, focused on supporting the money-making divisions.

Apple's different because everything it does is focused on making a near-term profit. Demanding money for products gives a flow of hard information about what's working, something other big tech firms have lost. They make mistakes just like any other company, but there's a tight feedback loop that catches them early, and lets them take baby steps to execute on big visions.

Both Microsoft and Google's big successes came after years of massive investments with little visible progress, so they seem relaxed about money-losing projects. That leaves them deaf to the grumbles of the market, unslapped by the invisible hand. They don't have to stay grounded in reality. Apple are rigorous about demanding money from their users, and so they pay close attention to what people in the real world actually want. That's how you avoid catching cash cow disease.

One response

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: