Posted by: qmaxim | March 14, 2012

Steve jobs and Apple – is Apple the most innovative company?

Recently, I completed reading a fascinating book – Steve Jobs: The Exclusive Biography by Walter Isaacson. This book is a frank profile of  Steve Jobs – as a person, his relationships,  how he built Apple, his shortcomings, failures and strengths. This is no fawning autobiography about how great he was and so on.

  Five things standout about Steve Jobs:

 1. From reading copious amounts   written about him one gets impression that Apple’s innovation engine has been effortlessly releasing one hit product after another. In fact,  innovation happened not by inspiration  alone but hard work, wrong turns, trial and error and failures.

  2. He had the guts to take big bets on only handful (7-9)  of  products rather than hedging his bets on many options & letting  the market decide. The  strategy was completely different from that of companies in the field such as   Nokia. Nokia became the largest cell phone company in the world by introducing hundreds of  models during the same period.

  3. He was not prepared to accept the second best even in areas which customers are unlikely to see, like for instance, cosmetic things like appearance of lines on circuit boards.

  4. He was prepared to wait for the right strategic environment to launch a product rather than being first in the market. iCloud is one such example. Many other companies began offering Cloud computing services much before Apple.

  5. Unlike other companies, he stuck to tightly integrated hardware and software business model. This is in spite of  stupendous   success of  software licensing model pioneered by  Microsoft.

 Is Apple the most innovative company really?

  Surprisingly, in most cases, Apple was (is) not technology leader or a major inventor. Most of the products were in fact  developed  using the existing technologies. Parts were made by  companies such as South Korea’s Samsung and manufacturing was outsourced to FoxConn in China. Innovation was really  in anticipating what customers were likely to buy, developing  outstanding products. Until the very end he managed to maintain aura about himself & about  Apple which made customers camp outside the Apple stores  overnight on the day before product release. Of course, product quality was outstanding. Tight integration with the suppliers and high operational excellence was the major contributor to  the success.  Success was also due to alliances he was  able to cobble together with other industry players (e.g. with  Music industry)  which competitors  failed to do.

In spite of his failing health and being near death, his  single minded focus on work was indeed  remarkable. Ultimate  testimony to  his success is the  $507 billion market cap and enviable profitability Apple enjoys. This market cap is bigger than GDP of many countries.

 Alas, he is not there to enjoy the continued success of Apple.

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