Tuesday, July 31, 2012

First principles

Wired.co.uk has a brief interview with Jonathan Ive, in which he reiterates a point first made by Steve Jobs:
"We are really pleased with our revenues but our goal isn't to make money. It sounds a little flippant, but it's the truth. Our goal and what makes us excited is to make great products. If we are successful people will like them and if we are operationally competent, we will make money."
I suspect that there will be two reactions to this statement. Those who are inclined to hate Apple will think, "What a bunch of self-serving bull$%&^." Those who are sympathetic to Apple will think, "Yes, exactly -- and that's what makes all the difference."

My own orientation is that Ive is on the level, and for one reason: it explains something that is otherwise inexplicable. The puzzle with Apple isn't how it managed to get so big -- other companies have been big before, and others will become big in the future. The puzzle with Apple is how it manages to overcome the famous innovator's dilemma. Companies are not supposed to be able to disrupt themselves, as Apple did by naming the iPhone the best music player it ever built at a time when the iPod was critical to its bottom line, and by releasing the iPad in the full knowledge that it would cannibalize sales of the highly profitable Apple laptops. The principles of sound business management are supposed to make it impossible to choose an uncertain market over a certain one. And yet Apple has done this repeatedly.

The key, I believe, is in Ive's statement. The innovator's dilemma describes a manager's inability to abandon a profitable position in order to develop a market that might become profitable later. A manager whose professional well-being depends first and foremost on profits will experience this problem. But take the same manager and focus him instead on making the best product, tell him not to worry about profits, and that changes everything. Then the company disrupts itself as a matter of course. With that one change in perspective, the innovator's dilemma becomes almost irrelevant.

If this orientation accurately describes what it's like to work at Apple, building that culture within the organization was Steve Jobs' greatest achievement, and the biggest test of his successors at Apple will be how long they can maintain that focus on product over profits. It's the key to everything.