Tuesday, December 27, 2011

Steve Jobs way of building companies

I just finished Steve Jobs Biography a couple of minutes ago and for those of you who don’t want to read the entire book, I suggest you read the last ten pages. In those ten pages, Walter Isaacson just let Steve Jobs talk about how to build companies.

His point is that only engineers or product minded people can lead product companies to greatness. He uses one of Henry Ford say to make his point: “if I’d asked customers what they wanted, they would have told they wanted a faster horse”. Once a salesperson or a finance person is brought into the top job, then the focus of the companies changes to an incremental approach rather than a leap forward approach. Both types of CEO would focus the company on creating a faster horse and a sales person would bring the next dollar available and the finance person would optimize to increase cash flow. But none of them would focus on creating the automobile and be able to take a leap like Steve Jobs did with the Iphone and more recently the Ipad.

And once a company has changed its model, it perpetuates itself as people brought in, compensated and promoted are all enabling an incremental approach and the product persons who are able to produce leap forward approaches are not listened to so it becomes a self fulfilling prophecy and things stay that way for a long time.  This is the traditional innovators dilemma revisited when incumbents have lost their edge and new companies are being started to leapfrog them.

Of course, people could argue that Tim Cook’s promotion as Apple CEO is a blow to the entire argument or that the reasoning is biased by Steve Jobs’ own experience or even that the sample he is using is not broad enough and the hypothesis should be tested by Business Scholars to validate his point. All those points are fair and square but even then, I would still think there is a kernel of truth to it. There is no doubt in my mind that Steve Jobs was one of the greatest innovators of his time and that he has found a formula to replicate innovations over and over again. This is bad news for innovators because if there is one replicable model associated with innovation then the risk of the endeavor has now significantly decreased and can be replicated by other companies as well. If that is the case, we should see an exodus of Apple Executives to other companies interested in learning and replicating the model very soon.

The book is rather unclear about the recipe itself and the details are lacking about how to make it work but I found nuggets here and there and the best way for you to make your mind would be to read the book to get your own take on what it is that Apple did of course, join apple and learn from within.
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