APPLE IS LOSING ITS SPARKLE. HERE IS WHY
Apple, the iconic tech giant has been the world’s most valuable listed company for nearly 5 years, largely thanks to the sale of over 700m iPhones. Just today (27.01.16) Apple announced the biggest quarterly year-on-year results by a public company in history. Apple announced: “Record quarterly revenue of $74.6 billion and record quarterly net profit of $18 billion. These results compare to revenue of $57.6 billion and net profit of $13.1 billion, in the year-ago quarter. Gross margin was 39.9 percent.”
These are staggering results and ones which Tim Cook, Apple’s CEO, and crew are rightly proud of, but the results skew the probability that company is running out of road and the last quarter is a high road result Apple will not reproduce for sometime to come, if ever again. The Verge, a technology news network, commented that Apple:
“also predicted that revenue for the second quarter of 2016, which for Apple is the first three months of this year, would come in between $50 and $53 billion. That is down from the $58 billion in revenue it booked during the second quarter of 2015, and would mark the first year-over-year revenue decline for Apple in the last thirteen years. This led to slew of questions from investors and analysts who wondered if Apple will now be seen as a value stock, one with a great business but not explosive growth. It was the best of times, it was the worst of time.”
At TomorrowToday we self-confessed Applephiles, we simply love their products. (Well most of the time because recently some of our team have experiences catastrophic crashes on their MacBooks and iPhones). But in this declaration “we love their products” there lies the problem hampering Apple’s future competitive growth. Apple has become all about products and in doing so it has lost sight of the founder’s original dream and quest.
Steve Jobs said: “We’re here to put a dent in the universe. Otherwise why else even be here?” Apple is no longer putting dents in the universe, rather sadly they are now plugging products. Don’t get me wrong they are great products, after all I’ve confessed to being an Applephile, it’s just Apple has lost its gloss and shine. Apple used to stand for something magical, but now it’s fallen into the trap of so many other successful companies. Apple has become about product and quarterly results. This allows competitors to catch up – as Samsung and Huawei are already doing. A review by Phone Arena, an mobile phone dedicated website, gave the Huawei Mate7 a user rating of 9.8, compared to an 8.8 for the Apple 6 Plus. The Mate7 even boasts a 13 megapixel camera, compared to the 6 Plus’s 8 megapixel camera. In almost every category, the pretender Huawei matches if not betters the Apples offering, and it does this for almost half the price. If Apple continues to compete on product, people will ask, and they already are, why pay the price for an expensive Apple, when you can get an equally good product from a competitor for a lot less.
Apple achieved dominance by putting dents in the universe. Launching incremental product variations like the iPhone 6S doesn’t even dent the stratosphere let alone the universe and allows competitors to erode market share, profit and Apple’s dominance.
To reclaim the sparkle Apple needs to rediscover its quest, its meaningful purpose that challenges the impossible. Apple’s employees, shareholders and customers need to clearly understand the destination that is targeting. If Tim Cook wants to achieve greatness he has to articulate the dent in the universe he wants Apple to make. But he is not. He needs to be bolder, have more courage and embark on audacious journeys that involve risks and ones that also make the world a better place. Cook needs to stop being a leader and become a quester.
In my new book Quest: Competitive Advantage and the Art of Leadership in the 21st Century I show how questers look at the world differently. They examine markets and rather than think how can I create a better product, app or service; they look at the systems, often using first-principle thinking, and identify what is broken. They then ask: “How can I fix it?” This is a subtle but important difference. When Google began experimenting with self-drive cars, they were not thinking how do we build a better car, but rather how do we end road fatalities.
Questers put fixing the world first, far ahead of making a profit. They recognise that profit is an outcome of making their world a better place. Profit and shareholder return is the result, it is not the goal – the goal for quester leaders is to fix their world, fix what is broken, to make their world, the world they influence a better place. And, the results speak for themselves, our studies show that questers and quester organisations are doing tremendously well financially.
When Steve Jobs started Apple he was on a quest to make the world a better place, to change the world. Tim Cook does not have long to change the trajectory of his ship, but with significant cash reserves and some bold, courageous thinking Apple could continue to achieve magical things. I hope Apple continues to put dents in the universe, but I worry that those days may be over. In which case will the next quester please step forward.