The subtle flip

Jobs in 1998 talking about what happened at Apple:

If you manage the top line, which is the quality of your people, the quality of your partners and the quality of your strategy, the bottom line will follow… If we do the right stuff, Apple will be very successful financially. The goal used to be to make the best computers in the world, goal #2 we got from HP which was we had to make a profit because if we don’t make a profit we can’t do goal #1. What happened at Apple is along the way somewhere those two got reversed. The goal was to make a lot of money and if we had to do good computers, well i guess we could do that too. And it’s very subtle, but it turns out it’s everything. That one little subtle flip means everything and we’re trying to put those priorities back in their proper order.

Despite the poor video quality, I highly recommend watching the whole conference from which Jobs is quoted above. He is very candid and speaks openly on present situations and his vision for the future. It’s really a gold mine of understanding.

However, that passage above which goes largely unnoticed by the audience is probably the most profound idea of the whole conference. It is the guiding principle behind the culture at Apple today. The proof is in the pudding. Apple still wrestles with core ideas such as whether or not to advertise to their users and has always treated user privacy as sacred. All these things make for better products. Any company, like Google, that would let this stuff slide, or convince themselves that people really love watching ads rather than the content they really seek are making that mistake Apple made in the 90s. Those companies are subtly ‘flipping’ priority one for priority two.

The problem with analyzing this approach is it’s hard to pinpoint the exact time and date the company decided that their goal was no longer to create the world’s best products in their respective market but actually pursue financial capital instead. It’s a slow rot. I think one can start to observe a company in trouble or at a loss for ideas when it starts to purchase heavily into other companies or simply buy-out competition. There is something to be said about a quiet confidence in your product lineup, you don’t need outside help and you aren’t desperate to gobble up competing technologies or firms.

For Google, i think this ‘flip’ period was long ago, maybe even 5 or 6 years ago. They were the undisputed king of search, but where to go from there? No doubt they contributed a huge amount to technology as a whole, but like any company or any person, they want to know what’s next. And what’s next wasn’t certain for them. No company is okay with uncertainty, but Google is especially paranoid. This paranoia is getting the best of them as they solidify their advertising strategies and focus more and more on revenue from multiple sources rather than revenue from pure innovation and refinement. Ideas are the most powerful cash generator, they also happen to be what makes the greatest products and eventually push society forward. Paranoia does none of that.

The beauty of a pure innovation and refinement approach is that you are constantly flying by the seat of your pants. You run off of ideas, not established revenue streams. This also explains Apple’s incredible sum of on-hand cash. If ideas aren’t coming as quickly as one wishes, one could simply spend until they reach a new idea or paradigm.

However, if your business model is to entrench and settle in with revenue streams trickling in from various sources, then you run the risk of running out of gas when the next great paradigm shifts. To quote Tim Cook, you end up “pulling all the leg weights” with you as you transition from one paradigm to another.