Apple is wandering in the wilderness, lost and without direction. If you don’t believe me, just look at any of the product announcements they’ve made in the past few years. The lack of focus and clarity, and the 1970’s variety show feel, are a clear indicator they don’t know what they are or what they want. That former employees are speaking up only reinforces this. They’re even becoming a punchline.
Most Obvious Demonstration Of The Problem
Apple’s product announcements over the last few years say it all. Before, they were tight, snappy, well-rehearsed, and well-choreographed numbers that had you thinking “it’s over?” at the end. One person, up on stage, eagerly and excitedly showing off the latest and greatest. We got “just one more thing” occasionally to blow us away. We got hard numbers and real data that made us feel like we were on the inside. It felt like “hey guys, I’m going to let you in on something…”, not “here’s a few vague data points and platitudes, thanks for coming”.
Now we get a Cast of Thousands, hosted by the amiable and affable Tim Cook. We’ve got executives! We’ve got women! We’ve got visible minorities! We’ve got outsiders! It smacks more of the now-defunct Barnum & Bailey and less like an Apple that was laser focused on their mission. These events are a repetitive tedium that leave us wondering “when will this be over” when we aren’t even half-way through the presentation.
Apple can never truly fix their product announcements until they find a vision. Going back to having a single person present the new stuff smacks of a cargo cult mentality. It’s building airports out of bamboo hoping the planes will return. It’s a fresh coat of paint on your $500 car that doesn’t always start in the morning. Apple doesn’t know where it is going, and fixing the surface doesn’t fix the structure.
“Operational Excellence” Isn’t Vision
What Apple is doing now is something we’ve seen before. We saw it with Microsoft. It happened with Disney. Apple is actually going through this a second time. There are hosts of examples. In all these cases, a company’s visionary leader left (either retirement, forced out, or they died). Their successor was originally hired as the operations guy, to make sure that all the “t’s” got crossed, the “i’s” got dotted. They weren’t hired to design or develop product, or create new lines of business. Their goal was to make sure the ship had fuel and provisions. They made sure that the crews were at their duty stations, that the decks were swabbed and repairs were made.
Guys like Tim Cook and Steve Ballmer are very, very good at that kind of stuff. Steve Jobs didn’t hire Cook for his abilities as a product visionary. He hired him because he probably knows more about supply chain management than any other two people in the business. Bill Gates hired Ballmer because Ballmer knows how to built corporate structures and run things day to day. Before Steve Jobs’ first departure, he hired John Sculley to take care of the day-to-day stuff while Steve focused on product. Sculley was hired for his ability in operations, not in product vision.
Apple’s primary goal in life isn’t to be a operationally efficient, the same way that my goal in life isn’t to exercise and eat right. Customers don’t reward you for operational excellence. They reward your for having the products and services they want. If you do your job right, they’ll pay a premium to own your products or use your services. Operational excellence is necessary to manufacture and distribute desirable product efficiently and effectively. But it doesn’t create new and exciting products for customers to buy.
Momentum Masks Problems
If you look at Apple in the mid-1980’s and Microsoft since the late 1990’s, you have two companies where financial momentum was masking fundamental problems. Under Ballmer, Microsoft hit all the right notes when it came to numbers like revenue and profit. That contributed to a healthy and growing share price. But Microsoft was missing out on key changes in the industry. They had zero meaningful presence in web and cloud technology. They became largely irrelevant in mobile.
The same could be said with Apple under John Sculley (and the CEO’s that followed before Steve’s return). The company was profitable, and revenue was good, even though both had started to decline in the early 1990’s. Replacing Sculley with Michael Spindler didn’t change anything. Replacing Spindler with Gil Amelio did nothing to reverse the decline. As the momentum eventually ground to a halt, Apple kept replacing operations guys with other operations guys, and never, ever addressed the gaping hole that was product vision. Fortunately for Apple, Gil Amelio is a smart guy, and he arranged for the NeXT purchase to get Steve back. I suspect Amelio knew he was basically firing himself to save Apple.
Apple’s current trajectory is eerily similar to that of the early 1990’s. Profit and revenue have declined all through last year. There might be a small bump this quarter, courtesy of pent-up demand for an updated MacBook Pro. But I would bet that it’s temporary. It may not look like the sky is falling, but it is sure starting to get overcast.
Plans Need Visions, Visions Need Plans
Now, some may say “but Apple still has Jony Ive. They have Craig Federighi, Eddy Cue, Phil Schiller and Angela Ahrendts. They’re all smart and creative people. Surely they are carrying on the vision.” They are all very, very smart people. They are very good at what they do, which is executing a plan. But executing a plan isn’t the same as coming up with the vision. Creating the vision is about crafting a direction and a purpose. I’m not convinced you can do that by committee, and I don’t know that anyone on Apple’s senior team has that elusive “it”, that creative spark that lets them envision something few have thought of before.
Adding a few features isn’t innovation (and it sure as hell isn’t invention). Moving from metal to glass or ceramic isn’t innovation. Those all fall into “improvement”. It’s about making an existing product a little better. That’s all good and right and useful and necessary. But it doesn’t open up new markets. It doesn’t add new customers, and it doesn’t create new sources of revenue. At best, it holds on to the customers you have, and gets them to replace what they own with your latest thing. But that’s not growth. That’s running in place. It’s preaching to the choir.
Is Apple Doomed (Again)?
I have a tee shirt at home with the words “I was a Mac user when Apple was doomed”. Is Apple doomed? Certainly not in the short or medium term. Even with lower revenue and profit, they’ll still generate a ton of cash. They’ll still own most or all of the smartphone profit for the next few years. The Mac will probably continue to eke out small gains while the overall PC market continues to shrink. The Apple Watch will dominate the ambivalent and questionable smartwatch space. But nothing they are doing is going to reverse the decline or open up new markets.
Tim Cook may be managing Apple, but he isn’t leading it. Apple doesn’t need a manager, they need a leader. They need someone who can craft a vision, communicate it and convince everyone to eagerly “follow me!” over some new horizon. To do that means finding someone to fill that role, which also likely means Tim Cook either takes a demotion back to a COO-type position, or Tim ends up leaving. It would be unfortunate if Apple were to lose Tim’s singular ability to craft complex yet reliable supply chains. With the intense pressure to move manufacturing to the US that the company will now face, having someone who knows how to get product built efficiently and economically will be essential. Tim Cook is more than capable of doing that.
But Tim isn’t a product visionary. He seems like a very nice person, and he certainly is very smart. However, creating products doesn’t appear to be his thing. And that’s okay. Not everyone is an inventor or visionary. Someone has to make sure that the roof doesn’t leak and that there are groceries in the fridge. That’s important too.
Apple may not be “doomed”, but they will likely continue to diminish in importance when it comes to leading the technology industry. They’ll fall back into the crowd with HP, Microsoft and IBM, all leaders at one point, but now the boring bedrock of the technological status quo. Apple will still sell a lot of product, and will still make a lot of money. But until they regain a vision, meaning they find a new visionary leader, we can expect more of the same for the next while.