art-apple-starbucks

DE APPLE A STARBUCKS O EL ARTE DE CRECER

(FROM APPLE TO STARBUCKS OR THE ART OF GROWING)

Article by Christopher Smith published by Puro Marketing, 2013.

 

A few weeks ago we learned the last quarter of 2011 had been the most successful ever in the history of Apple, with quarterly revenue of 46.000 million and a profit of 13,000 million. Three facts underline the magnitude of the numbers: one, an income equivalent to 1.2% of US GDP in that quarter; two, the company’s reserve money accounts for more than Slovakia’s GDP; and three, Apple controls 60% of the tablet market. But these numbers are so commented, that trees don’t let us see the forest. Success is not a result of the millions of devices sold, but something deeper that goes back thirty-five years ago back.


“Obsessed with growth, we had been forgotten soul of our business. We could not blame it on a bad decision, a bad tactic, or on a particular person.”

Apple’s success has to do with their stubborn belief in a business concept patiently developed since its foundation on April 1, 1976, and based on the notion of not taking decisions based on financial results but the quality of their products’ user experience. It is not only the application of those basic lessons we all learned as a child: if you concentrate when studying, you’ll get good grades; if you train hard, you’ll play better football; if you rehearse every day, you’ll play the piano well. That is, the end is nothing but a mere consequence of the means employed. If you practice, you will improve. But in the business world, it seems that these ideas for most people have remained just that: a child’s play.


Strive to grow is clearly the reason to be of a company, but when management focuses too much on numbers strategies become his undoing as interim decisions, which really affect user experience, are taken not taking into account business sustainability or consumer benefit, but meeting short-term goals. Objectives which, by the way, are rarely challenged. Howard Schultz, Starbucks chairman and CEO illustrates this strategic error with great success in the book The challenge Starbucks: “Obsessed with growth, we had been forgotten soul of our business. We could not blame it on a bad decision, a bad tactic, or on a particular person. The damage came slow and quiet, increasingly. Decision to decision, store to store, customer to customer, Starbucks was losing some of the features on which it was founded.” What Schultz points as the cause of the 2007 Starbucks debacle is precisely Apple’s key to success: the need to protect the vital principles of organizations.


Javier Fernández Aguado, the author of the study “The Soul of organizations” whose practical application I’m developing with his advice, argues that organizations are composed of a vital principle and organic matter. This vital principle, which originates in the dream on which a business or a project is built, is what Starbucks neglected by focusing solely on selling more to get to happy shareholders, a strategy that capsized with a fall of 40% in its shares in 2007. On the other hand, it is what Apple has precisely managed, to the delight of its shareholders, to permeate masterfully into the consumer experience in all of its brand areas: its products, communications, people, and the environment.


Reading missions and corporate visions, it seems that all companies have their vital principle identified, but reality is that it is not so. Virtually all of them lack two key things:


  • Depth understanding of the reason to be of the company, with most of them written as superficial and functional obviousness (i.e. be the category leader by example, without explaining how or why).

  • A true illusion -alien to profit, of course- that drives a way of doing things and a quasi-cosmic understanding of the existence of the company.


The lapidary question made by Steve Jobs to John Sculley to bring him out of Pepsi and into Apple -with dire consequences in the long term- expressed by itself what is to have a vital principle: “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?.” The sentence contained all the enthusiasm and deep self-concept of his project and is still the same fuel that keeps moving the powerful machinery of the bitten apple brand every day, even after the demise of its charismatic leader.


The conclusion is that those companies that care display and feed the sound illusion of helping to create a little better world and manage to keep it alive long enough not have to worry about their bottom line, quarterly sales or market valuation. The share price will take care of itself. But how many managers today have enough patience and high-mindedness to maintain such a noble purpose when the numbers falter or greed looms? That’s growth real enemy.