The Most Admired Company in the World!

Apple Inc., as of January 2017, as you would surely know, is the largest publicly traded corporation in the world by market capitalization.

Its products ship in ginormous quantities – a 5% year-on-year slowdown in the last quarter of 2016, notwithstanding – and have created a legion of loyalists (or ‘evangelists’ as the company calls them).

And while some experts opine that Apple’s latest product offerings are indicative of a once luminous company losing its mojo, the fact remains that the company ended fiscal year 2015 with global revenues of $233 billion (its 2016 numbers aren’t out yet). Certainly, not a number you could trifle with.

Leaving aside Steve’s genius

Now, of course, you know that Steve Jobs was a visionary genius who crafted not mere products, but veritable objects of desire. Of course, you know that his penchant for perfection was a double-edged sword that on one-hand yielded the multi-billion dollar products that Apple sells today, but also left a bruised and battered workforce in its wake. And of course, you know all about Apple’s birth in a garage, the ebbs and flows of its corporate fortunes and how Steve rescued it from the brink of failure.

This lesson is not a discussion on Apple’s back story, its financial performance, nor Jobs’ genius. Much ink has already been spilled on these subjects.

Considering that we are amid a discussion on Big-Picture Orientation, especially the three mindsets that we have been exploring hitherto, this lesson focusses on Jobs’ ability to think like a Craftsman, an Architect & a Grandmaster. Specifically, we will see how these shaped Apple as an organisation, and helped script the near mythical success and awe it has engendered.

Simplification, simply put

“Simplicity”, read one of Apple’s early marketing brochures, quoting the great Leonardo da Vinci, “is the ultimate sophistication.” It was, and remains, Apple’s design philosophy, and exhibits its commitment to making things simpler and more intuitive for the user.

The story about how Apple created its Macintosh line of computers (as well as the Apple Lisa) is a case in point. While the specifics are sketchy and debatable – different versions seem to provide varying details – Jobs, they say, was inspired by the guys at Xerox’s Paolo Alto Research Centre in his development of Apple’s Graphical User Interface (GUI) and mouse design.

Xerox’s R&D guys had created a computer featuring a graphical user interface and the mouse. Jobs, on a visit to Xerox, instantly identified that this was going to be the future of computing. However, he also recognised that Xerox’s GUI and mouse weren’t quite the finished product. Jobs recounted this later in an interview with Robert X. Cringely for the PBS show ‘Triumph of the Nerds’. “Now, remember [the GUI] was very flawed. What we saw was incomplete, they’d done a bunch of things wrong.” For example, Xerox’s GUI operated with a pop-up window. Worse, the window did not open automatically by double-clicking on a document, but had to be opened manually.

Jobs thought this to be irksome. So, he got his team to develop a simpler, more intuitive UI, which allowed for features like drag and drop to be performed. Xerox’s mouse also had three buttons, something Jobs found cumbersome. He hired an industrial design firm to create one that had a simple, single touch button.

Drawing in the disinclined

It took them five long years of painstaking labour to pull off, but the result was the Macintosh, which released in 1984. It was the company’s first mass-market personal computer featuring an integral, icon-based GUI, a mouse, and the ability to show you what a printed document would look like before you printed it.

Upon its release, BYTE, the influential American Microcomputer magazine from the 1970’s and 80’s, hailed the Macintosh as “being able to attract people who previously hated computers … There is, apparently, something about mice and pull-down menus and icons that appeal to people previously intimidated by A> (Command Prompt) and the like”.

Though expensive and plagued with technical and supply issues, it helped Apple retain its position as the number two computer manufacturer at that time. Most importantly though, Jobs’ ability to craft products that were simple and intuitive to use had helped it draw in those disinclined towards computers, and further Apple’s reputation as a design pioneer.

Why you can choose between font types on your PC

The next story is probably one that you have heard of.

One of the subjects that Steve Jobs continued to study even after he quit college – he dropped out of Reed College after one semester – was calligraphy. His understanding of typography (font design) is the reasons you and I can choose between multiple font types on our computers. In Jobs’ own words: “I learned about serif and sans-serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great… If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it’s likely that no personal computer would have them.”

Here’s a little request: the next time you play around with different font types on your computer, do remember to express a word of gratitude to Steve Jobs.

Three little clicks

Tony Fadell, who led the iPod team, recounts his experiences of working on the design for the iPod interface. He says that Jobs constantly tried to find ways to cut clutter in the device’s interface design. Jobs insisted on being able to get to whatever he wanted on the device in three clicks. And the click had to be intuitive. If he couldn’t figure out how to navigate to something, or if it took more than three clicks, the feature in question had to go.

For example, one navigation screen asked users whether they wanted to search by song, album, or artist. “Why do we need that screen?” Tony recalls Jobs challenging the team. Turns out they didn’t. One button that most designers would consider an absolute must-have on any device would be the on/off button. Jobs asked his designers to convince him that this button was needed on the iPod.

They couldn’t.

The button was soon discarded.

Boxing way special

Now, it wasn’t just the product that Jobs cared about. He cared equally about the packaging in which the product would ship. He believed that the unboxing routine was a crucial part of the customer experience. Every product Apple released under Jobs had to be carefully packaged, a practice dating back to the original Mac release in 1984. He believed that unpacking a product was a great way to introduce unfamiliar technology to the consumer — they explore the components as they unbox them.

And the packaging had to look beautiful, too. He knew that people form an opinion about a product or a company based on how it is presented and packaged. “We’re going to package [our products] cleanly so that you know they’re high-tech. We will fit them in a small package, and then we can make them beautiful and white.” Steve has been quoted saying. He believed that unpacking was a ritual like theatre, and heralded the glory of the product. “When you open the box of an iPhone or iPad, we want that tactile experience to set the tone for how you perceive the product,” Jobs said.

By the way, did you know that Apple has a patent on the box design that the iPhone is sold in?

Digging deeper for higher ground

Now, simplicity is never to be confused with being simplistic. The effort to make things simpler, can often render products intimidating or unfriendly for users to navigate. Jobs did not simply knock off buttons, a keyboard, screws from its devices, or icons from the user interface. That isn’t how you make things simple. That would be simplistic, not simple. Simplicity is about making things easier and more intuitive for the user.

Says Sir Jonathan Ive, currently Chief Design Officer at Apple, and the perfect foil to Jobs’ drive for beauty from simplicity, “Simplicity isn’t just a visual style. It’s not just minimalism or the absence of clutter. It involves digging through the depth of the complexity. To be truly simple, you have to go really deep. For example, to have no screws on something, you can end up having a product that is convoluted and complex. The better way is to go deeper with the simplicity, to understand everything about it and how it’s manufactured. You have to deeply understand the essence of a product in order to be able to get rid of the parts that are not essential” [italics added].

Simplicity required everyone at Apple to drill down and understand the essence of the matter: why and how everything works the way it does. It called for people to dig deeper to reach higher ground.

It was one of Jobs’ greatest strengths, and what allowed him to design vastly more sophisticated products. It is also at the heart of everything uber cool that we have come to associate with Apple, today.

United we stand, as we buck the trend

Johannes Kepler, the 17th century astronomer, known for his Laws of Planetary Motion, once declared that “nature loves simplicity and unity [Italics added].”

Turns out, so did Steve Jobs.

His desire for ‘unity’ in Apple’s offerings was a natural extension of his love for simplicity. So intently focused was Jobs on user experience that he would hyperventilate at the thought of unapproved software, applications, or content ‘contaminating’ the perfection of Apple’s delightful hardware. Equally, he couldn’t reconcile with the thought of Apple’s stellar software powering uninspiring hardware developed by rivals. He wanted whoever experienced anything that Apple put out to have a uniformly fabulous experience.

It led to him to decide to take charge of “the whole widget” and subsequently to the creation of Apple’s famous ‘ecosystem’ model. The iPod – as did the iPhone and iPad later – was a triumph of Jobs’ insight that design simplicity was best accomplished by integrating hardware and software.

It pays to note that the dominant practice at the time of the iPod’s launch was companies creating software for hardware. For example, Microsoft, developed and then licensed out its Windows operating system software to hardware makers, such as IBM and Dell. The result was products that were functional, but far from being desirable. They couldn’t also be classified as engineering design marvels.

Apple, on the other hand, created products that were tightly integrated from end to end. In that sense, Apple was seen to be bucking the trend. When the first version of the iPod was released, the Macintosh hardware, the Macintosh operating system, the iTunes software, the iTunes Store and the iPod hardware and software were tightly meshed together. The iPod connected to a Mac with iTunes software, allowed for the device to be simpler, syncing to be smoother, and glitches to be rarer. The more complex tasks, such as making new playlists, could be done on the computer. This allowed the iPod to have fewer functions and buttons.

This ‘unity’ in design allowed the iPod to be simpler and more intuitive to use than rival MP3 players, such as Diamond Multimedia’s Rio. “What made the Rio and other devices so brain dead was that they were complicated,” Jobs explained. “They had to do things like make playlists, because they weren’t integrated with the jukebox software on your computer. So, by owning the iTunes software and the iPod device, that allowed us to make the computer and the device work together, and it allowed us to put the complexity in the right place.”

Jobs integrated hardware and software and ended up achieving the intuitiveness, simplicity and, consequently, the sophistication that define Apple’s products.

Collective connectedness

As all you Apple users would know, Apple’s ecosystem is a means of ensuring that you can carry what you are doing seamlessly across devices.

For example, you can start browsing a webpage on your iPad, and pick it up on your iPhone or Macbook. You can make a call on your iPhone, and continue it on your Mac. You can view, compose, and respond to your Messages from your iPhone on your Mac, iPad, or Apple Watch. You can start a movie on your Apple TV and continue watching it on your iPhone or iPad.

All your devices, your iPhone, Mac, iPad, and/or Apple Watch are connected via Apple’s iCloud and other Apple services like iTunes. And as Apple aficionados – and the rest of us, likewise – would vouch, this ensures that Apple’s top-notch user experience is replicated across devices. No buggy, crappy hardware of software created by other manufacturers to spoil the fun. [Sure, Apple gets things wrong too. Apple Maps being a case in point, but there is no doubting the overall user experience with Apple’s products].

This seamless interconnectedness between devices was Steve Jobs’ vision. And it all stemmed from his desire to ensure simplicity, intuitiveness, and top-notch user experience.

Why people pay Apple to be ‘trapped’

Creating such an interconnectedness is expensive to manufacture, and requires, in the words of Sir Jonathan Ive, “total collaboration between the designers, the product developers, the engineers and the manufacturing team.”

The truth is that when you own an Apple device, you are likely to own another. And that allows Apple – controversial as it is – to lock in users within its ecosystem. It also helps the company generate billions of dollars in revenues. For example, Apple’s ecosystem is why many iPhone users also have a MacBook or vice versa. Some features of either device would just not work with the same ease and precision if you mixed it up with a Windows computer or an Android phone.

It was all part of Jobs’ grand design. He was convinced that if he could create these seamless connections, ‘he could lock in users to Apple for life’. He said it in those many words in an email that he sent out to participants of Apple’s annual ‘Top 100’ meeting in 2010, a meeting attended by the top 100 employees in Apple.

It is what gives Apple its edge. Interbrand, the global brand consultancy, in its annual Brand Value Report for 2016, listed Apple as the most valuable brand in the world. For the fourth year running!

Apple’s ecosystem, says Interbrand, is the biggest contributor to its brand valuation. Interbrand’s report has this to say: “The fastest growing businesses in the world, and the strongest brands, are those with the most cohesive business systems… Apple shows how ecosystems drive value. Analysts have often pointed out that ‘Apple has superior products.’ While true, this opinion undersells the brilliance of Apple’s functionally-integrated model. Its software, hardware, and touchpoints are connected not just by beautiful design aesthetics, but by a level of interoperability that justifies the Apple premium and discourages defections to another platform. The more data you share, the more personal it becomes— adding new devices is painless and the thought of switching increasingly unpromising. Apple is the Alpha of Cohesiveness in full effect.”

The ecosystem concept seems to have paid off handsomely. In 2014, Apple became the first company to be valued at over US $700 billion.

 

Cannibal Phone-cast

The iPod released in the year 2001. However, it took a while before bright white headphones dangling from the ears of music lovers became a raging fad. The iPod’s share of the digital music player market showed a rapid rise between 2004 to 2005, growing from 31% to 65%. From 2005 to 2007, Apple’s market share grew to 74%.

In January of 2007, Apple recorded revenues of US$7.1 billion. The iPod contributed 48% of that figure. In April 2007, Apple announced that it had sold its one hundred millionth iPod. No other music player in history had sold as much.

And then Steve Jobs did the unthinkable:  on the 29th of June 2007, the same year that iPod had made history, he released a breakthrough product, the iPhone, that had an inbuilt music player. Jobs had, in essence, cannibalised on a history-making money spinner that was contributing around half of Apple’s revenues!

To many, that decision smacked of stupidity. Who in their right mind would kill the company’s cash cow? And why?

Sure, the iPod was a huge success. But Jobs, ever the visionary, began to worry about what might endanger this success. He recognised that the success of digital music players would tempt mobile phone makers to start adding music players to their mobile devices. Jobs decided to beat them to the wire. He cannibalized the blockbuster iPod himself, by creating the iPhone, which bundled in its own music player.

“If we don’t cannibalize ourselves, someone else will,” he said.

Trend surfing with the iPhone

The iPhone’s ubiquity today often fails to do justice to Jobs’ ability to recognise and capitalise on market trends.

Neither the iPod Nano Touch released in 2005 (the iPod Touch came in 2007), nor the iPhone released in 2007 were the first touchscreen devices that Apple retailed.  That would be the Newton MessagePad released in 1993. A fairly polarising product, the Newton had its fair share of fans and detractors alike. Now, around the time of the iPod launch many an Apple faithful was requesting that Apple continue to manufacture Portable Digital Assistants (PDA’s) like the Newton. And into this mix came Microsoft who released the first tablet PC, in the year 2001 – Apple’s iPad came in 2010 –  and who began extolling the virtues of the tablet form factor.

But Jobs, with his keen eye for consumer preferences, recognised it was neither PDAs nor tablets that consumers were most interested in. Rather, he recognised a different trend that seemed to be growing, and at a rapid clip: mobile handheld devices. Jobs decided that Apple would ride this wave instead. He had Apple focus on the iPod, the iTunes software, and phones, rather than on a follow-up to the Newton PDA or jump on to the tablet form-factor bandwagon.

Recognising the mobile trend, Apple – against all intuition – initially teamed up with Motorola to release the ROKR E1, the first mobile phone to use iTunes. However, Jobs unimpressed with Motorola’s creation, soon decided to discontinue supporting the ROKR and built the iPhone.

Today, with more than 1 billion plus units sold, the iPhone is the lynchpin of Apple’s aforementioned ‘ecosystem’ and the largest contributor to Apple’s revenues. It is also testament to Steve Jobs’ ability to recognise trends and steer the organisation towards profiting from these.

Something to chew on

Here’s something to put all that we have learned into perspective: the company Steve built, is today a US$612 billion global behemoth!

Discussion Questions

  1. Please note: this question is intended to lay the groundwork for the more important discussions (Questions 2 – 4).

The case study mentions various abilities Steve Jobs’ possessed. Can you correlate the lessons from the online module on Big-Picture Orientation, especially on the three mindsets that constitute such an orientation, with the various anecdotes about Steve Jobs and Apple mentioned in this case study? Identify, which of the three mindsets you observe being depicted in the incident under consideration?

 

  1. Considering the nature of projects that your department is called upon to implement, how might possessing the three mindsets help? What would be the Craftsman, Architect, and Grandmaster questions/ considerations that you as a strategy advisor would need to get your customer to factor in to their plans?

OR

Considering Edelweiss’ ‘10X in 10 years’ mission and its quest to be ‘the Amazon of Financial Services’, how might possessing the three mindsets help? What would be the Craftsman, Architect, and Grandmaster questions/ considerations that the strategy advisor would need to get senior management to factor in to their plans?

 

  1. Is it possible for any one person to acquire the ability to think like Steve Jobs? Justify your response. If you responded in the affirmative, then mention how one could do so. Start by identifying some of the ways in which Steve Jobs & Apple acquired and implemented the Craftsman, Architect, and Grandmaster mindsets.

 

  1. If you were to practically apply the lessons on a Big Picture Orientation in the context of your own work, you need to first assess what growing in each of these three ‘mindsets’ would mean for you. Here’s what we suggest:

In this session

  • Team up with fellow programme participants from your domain and identify the specific knowledge or skills that you would you need to possess to help you – given your domain – hone the three mindsets? You will be required to share this with the rest of the class

 

Post this session (action planning and implementation)

  • Please share this list with your mentor and/ or business heads, and obtain their inputs on the comprehensiveness of your list
  • The detailed list of skills and knowledge that a strategy advisor in your domain needs to possess is to be shared on the portal. You will receive a link, via email, to help you capture these details
  • Based on this final list created, identify what your own knowledge or skill development areas would be. Again, this ‘action plan’ is to be shared online
  • Lastly, share the details of your implementation with your mentors. Notes on your implementation are also to be captured on the portal
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