Every company wants to be like Apple, Virginia Postrel notes, and every CEO wants to be the next Steve Jobs, but Apple’s success wasn’t magical, and Steve Jobs didn’t work that magic through pure charisma:
In his new book “Good Strategy, Bad Strategy: The Difference and Why It Matters,” Richard P. Rumelt, a strategy professor at UCLA’s Anderson School of Management, offers another explanation: the ruthless execution of good strategy.
Strategy is not what many people think it is. It is not a fill-in-the-blanks mission statement blathering about how XYZ Corp. will ethically serve its stakeholders by implementing best-in-class integrated sustainable practices to grow as a global leader while maximizing shareholder value. Such bafflegab is “Dilbert“-fodder that generates cynicism and contempt. It is, at best, a big waste of time.
Neither is strategy a declaration that the ABC Co. will increase sales by 20 percent a year for the next five years, with a profit margin of at least 20 percent. Strategy is not the resolve to hunker down and try harder — what Kenichi Ohmae of McKinsey criticized in a 1989 Harvard Business Review article as “do more better.” Effort is not strategy. Neither are financial projections. And neither are wishes.
A strategy “is a way of dealing with a high-stakes challenge,” Rumelt told me in an interview. “It’s a way around the obstacles or problems in a difficult situation.”
Every good strategy, he writes, includes what he calls the kernel: a “diagnosis” of the challenge (“What’s going on here?”), a “guiding policy” for dealing with that challenge (the core idea often called a strategy), and a set of “coherent actions” to carry out that policy (the implementation). [...] “Strategy is scarcity’s child and to have a strategy, rather than vague aspirations, is to choose one path and eschew others,” writes Rumelt.
A strategy is not a goal like maximizing shareholder value or keeping America safe from terrorism. It’s not even a plan. It is a design — a coherent approach to defining and solving a particular problem, in which the different elements have to work together.
In this analysis, Steve Jobs is not only a connoisseur and sponsor of good design. He is himself a successful designer — not of products but of business strategies.
Apple’s recent success has made people forget not only how close the company came to failing but also what Jobs did to turn it around when he returned as chief executive in 1997. He diagnosed Apple’s problem: It was hemorrhaging cash and its product lineup was too diverse, confusing and expensive.
In response, Rumelt explains, Jobs “redesigned the whole business logic around a simplified product line sold through a limited set of outlets.” He cut product offerings down to two: a desktop and a laptop, and no peripherals. He moved most manufacturing to Taiwan, cut software development, and eliminated all but one national retailer, opening a Web store to sell directly to consumers.
And, yes, Jobs also got Microsoft Corp. (MSFT) to invest $150 million in Apple and to commit to continuing to make Mac versions of key software. But that agreement wouldn’t have helped much without the rest of the strategy. “I don’t know how he learned that ruthlessness,” Rumelt says. But it worked.
What Jobs did not do, the book suggests, is equally telling. He avoided all the management responses that masquerade as strategies. “He did not announce ambitious revenue or profit goals; he did not indulge in messianic visions of the future,” Rumelt writes. “And he did not just cut in a blind ax-wielding frenzy.”
The organization’s new, coherent design bought the company time and gave it a clear identity on which to build. Apple’s gutsy decision to open its own retail stores in 2001 made sense only in the context of its new strategy. [...] So if you really want to be like Apple, drop the fluff- filled vision statements and magical wishes. Pretend your company’s existence is at stake, coldly evaluate the environment, and make choices. Stop thinking of strategy as meaningless verbiage or financial goals and treat it as a serious design challenge.
(Hat tip to David Foster.)
Thanks for the link. I’d also note that not every company is susceptible to being run with Jobs-style management. General Electric, for instance, could not in my view be run at all with a Jobsian approach at the top: no human could involve himself in the details of jet engines, locomotives, appliances, financial services, lighting, etc. in the way that Steve Jobs has involved himself in every detail of Apple. A GE division, on the other hand, could be and possibly should be run with a Jobsian approach, but not the overall company.