Clay “Innovator’s Dilemma” Christensen penned a very interesting piece in Reuters (thanks to Chetan Sharma for pointing it out to me): “Jobs made Apple great by ignoring profit.”
Christensen argues that one of the keys to Apple’s long-term success — and one of the safeguards against Apple being disrupted by others — is the company’s lack of focus on profit:
Many people have written about what makes Jobs and Apple special, but I think they’re missing what truly set him apart. Jobs has succeeded by eschewing the one thing that most people view as the raison d’être for companies — profit . . .
I have come to the conclusion that what has made Apple so different is that instead of having a profit motive at its core, it has something else entirely. Many big companies like to pretend this is the case — “we put our customers first” — but very few truly live by that mantra. When the pressure is on and the CEO of a big public company has to choose between doing what’s best for the customer or making the quarter’s numbers… most CEOs will choose the numbers.
Apple never has.
As paradoxical as it is that the pursuit of profit is what causes the long-term failure of companies, I believe that Apple’s lack of focus on profitability has actually made it one of the most successful companies in the history of capitalism.
It’s a brief but very interesting article. However the question, now that Apple is the most valuable tech company in the world, is: will Apple be able to keep doing what it has been doing or will it become more conservative under less inspired leadership?
August 30th, 2011 at 5:26 pm
I think the author may be generalizing a bit much — Apple’s intense focus on supply chain and costs clearly is in line with worrying about profitability, and they’ve certainly made some decisions that were not good for some of it’s customers.
The point might be more clearly made that Apple doesn’t chase short-term profits, opportunities and results (which many argue the stock market rewards), but instead is contrarian in taking a focused long-term view of what business it is in, who it’s customer is, and has a process to create great products w/o worrying about external noise or naysayers.
I think even the author misses the point about understanding who the customer is. He characterizes Apple as a “computer company” taking a risk on a gadget (iPod), but that isn’t a risk at all if Apple’s world view is more of a “consumer electronics company” like Sony.
Given they are the dominant personal tech platform for consumers, it would seem they are well positioned to expand on that going forward.
August 30th, 2011 at 6:08 pm
Mike:
I think these are fair points that you make. I would say that more recently Apple has become a general consumer electronics company but that emerged and evolved as the company put out successful products beyond the core PC.
August 30th, 2011 at 6:20 pm
I think the vision for consumer electronics goes far back, John Sculley relates that under his tenure Jobs was enamored with Sony — 25 years ago he wanted to be Sony, not IBM or Microsoft. I agree the widespread consumer payoff has really been the last 5 years.
August 30th, 2011 at 6:27 pm
I stand corrected then. In which case it’s a long-term vision that’s being pursued.