Tuesday, January 21, 2014

Did the Apple Fall Too Far From the Tree? Restoring Steve Jobs’s Culture of Innovation Is the #1 Job



In a recent discussion about the future of Apple, I heard something that is becoming all too common these days. “I sold my shares in Apple,” muttered a chief marketing executive of a global spirits brand. He then sighed, “I’m losing my faith.”

In a post-Jobs era of innovation, I, like many others, wonder whether Apple’s current position as the world’s most valuable business has run its course. Yet Apple continues to perform notably hovering close to its 52-week high of $575.14, an impressive 67% stronger than its 52 week low of $385.10. Granted, $575 is generous these days considering its commanding $702.10 price on September 19, 2012. In a recent article in USAToday, Analyst at Brean Capital Frank Longman shared his professional assessment that Apple is "becoming just another stock." He too believes, "The phenomenon is unwinding."

Is the Magic Gone?

I guess the answer depends on whether you place your value in historical performance or in futures. Certainly Apple’s recent performance is helping the company recoup billions in market capitalization. And, other analysts are taking notice. Research firm UBS upgraded its position in December 2013 from Neutral to Buy. In October 2013, wealth management and private equity firm Robert W. Baird upgraded its position from Neutral to Outperform.

None of the above changes in status or outlook answer the question though of whether or not Apple’s magic is fading. Financial performance is not enough to restore my faith in the company’s ability to enchant customers and markets. With the passing of Jobs, Apple lost a public leader and a voice for change. He was not only a visionary, he was also a convincing showman, equally captivating customers and investors.

Tim Cook is a proven CEO and was hand-picked by Jobs to helm his juggernaut. Although charming in his own right, Cook is not a gifted showman nor visionary. More so, Cook is not an architect of the future and without the gift of vision and persuasion, he cannot communicate the future of Apple. This missing link is affecting the company’s potential and testing the faith of Apple’s devoted fans. As the world’s highest paid CEO, Cook’s leadership is set to be tested in just a few years.

Why?

Incrementalism vs. Innovation

Since the passing of Jobs on October 5, 2011, Apple has demonstrated a product release pattern that communicates a culture of incrementalism versus that of innovation. Thinking back to the past two-plus years, we’ve seen incremental changes in the company’s flagship products ranging from the iPhone to iPads and MacBook Pros and MacBook Airs. The company’s greatest innovation is courtesy of the Mac Pro, which initial technology reviews place it in a league of its own. Even with a dramatic redesign and groundbreaking performance, the cylindrical dynamo remains progressive rather than inventive.

Beyond incremental product releases, market share advances only help prolong the inevitable. Apple’s pre-holiday agreement with China Mobile to supply it with the latest iPhone 5s and iPhone 5c sent the stock up 3% on December 23, 2013.

In fact, each product is garnering greater market share.

But, where’s the “next big thing?”

Prior to his passing, Steve Jobs knew that Apple could lose its shine, and more so, its dominance if the company shifted into cruise control and ceased disrupting or inventing markets. He was after all a visionary. Many believe he was even a genius. Many eventually learned that he also jerk. As author Walter Isaacson noted in his best-selling biography Steve Jobs, there was a “good Steve” and also a “bad Steve.”

Skate to Where the Puck Will Be: The Four Year Roadmap

Regardless of what he was like to work with, Jobs competed for the future instead of the moment or the next earnings report. At the Macworld Conference and Expo in January 2007, Jobs famously quoted Wayne Gretzky, “I skate to where the puck is going to be, not where it has been.” He then shared that his mantra for Apple was to always do just that.

Shortly after his death, reports circulated that the Jobs left plans for four years of new products. Additionally, he also fought to safeguard plans for the company’s spaceship-inspired headquarters in Cupertino.

For years, rumors have circulated around the infamous iWatch and other wearables, TVs or TV-related products, gesture-based controls, in-car platforms or perhaps even iCars, etc. Based on Apple’s recent hiring and acquisition movements, educated deductions point to the enlivening of some part of these rumors or something altogether new in the near-term.

In September 2013, Nike’s famed FuelBand designer Ben Shaffer joined Apple’s supposed wearable project.

In November of this year, Apple acquired PrimeSense a 3D motion-tracking company behind the first Microsoft Kinect sensor.

Also in November, Burberry’s turnaround queen Angela Ahrendts joined Apple to spearhead strategy, expansion and operations of its retail and online stores.

What does each move have in common beyond a shared employer? They now possess the opportunity to create history.

Even Steve Jobs left us with a tease about the future. In his biography, Isaacson quotes Jobs as revealing a hint about his vision for the future of television, “I'd like to create an integrated television set that is completely easy to use,” he told Isaacson. “It would be seamlessly synced with all of your devices and with iCloud.” Isaacson shared that this ultimate product would no longer make users fiddle with complex remotes for DVD players and cable channels. “It will have the simplest user interface you could imagine. I finally cracked it," exclaimed Jobs.

If speculation around Apple’s product pipeline is true, the company’s future will indeed be bright and shareholder value will again mount. Certainly wearable devices from Apple will change consumer behavior. A TV could be a game changer and a TV-related product would disrupt the cable industry. I’m sure there’s another product under the veil of secrecy that Jobs envisioned. Combined, these products will remind us of the eminence of its once artful leader.

But what happens after this supposed four-year plan?

“Death is very likely the single best invention of life. It's life's change agent. It clears out the old to make way for the new.”

Steve Jobs once said, “Death is very likely the single best invention of life. It's life's change agent. It clears out the old to make way for the new.” In a post-Jobs Apple, the company now needs its change agent to shift from mourning and incrementalism to innovation.

Tim Cook should be commended for his work in steering Apple toward lucrative waters in what was a disconcerting time following the passing of Steve Jobs. Success though takes more than promises, stellar progress reports, and positive financial outlooks. Competing for the future takes leadership. Although Tim is promising “big things” for the company in 2014, it is 2015, 2016 and the years after that I question.

This is Apple’s time to think out of the orchard. Acquire Tesla and secure its chief visionary Elon Musk! Crazy? Veteran tech analyst at Berenberg Bank Adnaan Ahmad, wrote an open letter to Cook and Apple Chairman Art Levinson on October 25 suggesting just that. If anything, it’s this kind crazy thinking that demonstrates the limitless boundaries in which Apple can move.

Stay Hungry. Stay Foolish

Raise the pirate flag.

Raise the anchor.

And set sail into bold new waters...once again.

Apple wasn’t just another great tech or consumer electronics brand; it became a lifestyle and a pinnacle for creative aspiration and innovation. As such, Apple needs more than the next Steve Jobs. The company needs someone who can see beyond what Steve secretly left behind; someone who can “put a dent in the universe.”

See, Jobs wasn’t just another great business leader. He captivated the world’s imagination. He set out to challenge the status quo. He urged people to think differently. As of now, the church of Apple is without its preacher. To change that though, Apple must become much more vocal, more daring, and give the world something to believe in again. This takes more than company memos and analyst calls. To survive beyond Steve’s alleged four-year roadmap, the company must not only “stay hungry,” it must also “stay foolish” and persistently remind us that brave words supported by diligent actions can also instill faith and confidence.