Bad Apple

Google's corporate philosophy is, "Don't be evil." It treats its employees like kings and expects them to produce great products. It is the open concept that permeates most of Silicon Valley.

Yet, Apple, the biggest Comeback Kid in the Valley, plays by the old rules - secrecy, opacity, and near-hysterical proprietory protectionism. But it works for Apple.

Wired has a great article on how Apple implements the Old School philosophy and why it works for them.

Honestly, I don't think Apple is probably a place that I'd thrive, given Steve Jobs' reputation for shrieking at underlings. Who needs the stress?

But I accept that others thrive on such stress and Apple's success is undeniable. Its secretiveness has spawned websites dedicated to the Mac rumor mill. As a marketing strategy it has worked wonders.

Even I can't wait to watch Jobs' keynote addresses when Apple makes them available. Actually, I'm almost a fanboy, except that I maintain some objectivity. I remain objective about new products.

I knew the early music phone between Motorola and Apple sucked the minute the details about it were released. I knew the iPhone would be a success the first time I saw its details.

I still remain skeptical about the AppleTV until DVR capabilities are added. Recent patent office filings show Apple is at least considering adding the capabilities to its media device. With that addition, I'd definitely want one. I'm not sure why Apple didn't have DVR capabilities on the AppleTV from the beginning. But it admits it made mistakes and is working to correct them.

Better than almost any other company, the contemporary Apple knows how to cut its losses, or wait for the market to catch up to it while it learns from its mistakes and improves the products to a point that they are hits.

But Apple also knows how to take risks. It will try new products that leverage its specialty - combining sleek hardware with user-friendly user interfaces and software - knowing that it has a better than average chance to make it successful.

For instance, the iPod reportedly started out as the brainchild of Tony Fadell, an independent contractor and hardware expert. His idea was not just for the hardware, but for the tie-in to a music store that integrated with teh MP3 player.

He left his job to become an independent contractor. He then shopped his idea around the Valley. Everyone turned him down, except Apple. He sold the idea to Apple management and predicted that it would totally change Apple in ten year's time to be a music business instead of a hardware company.

Apple hired him, gave him the resources to complete his idea, polished the Apple with its usual secrecy. Apple contracted with PortalPlayer to create the device prototypes. There were a lot of obstacles and tight supervision by Jobs himself. There was a lot of consumer tests to perfect the design.

Jobs micromanaged the device and interface design. He wanted to play music within three clicks. He couldn't hear the music and had them make it louder (thanks to Steve's reported partial deafness, we all can hear our music sitting by jet engines).

He almost killed the entire project just before it went into production because the battery drained in three hours, even when off. When the energy usage issue was resolved, Apple bought a majority stake in PortalPlayer before the product was released.

When Apple released the product, it took time and further improvements to become the juggernaut it eventually became. With the addition of the iTunes Store in the second generation iPod, Fadell's vision came to fruition. The one-two punch of the hardware and software/music store is what ultimately hit the consumer's nerve.

Before Apple, loading an MP3 player was cumbersome and cludgy. Apple created iTunes to make ripping CDs easy and device loading effortless. When it completed iTunes with the iTunes store, Apple had created the Golden Path of Least Resistance for its end users.

In addition to the article on the iPod development, another article on the iPhone development process shows how the company polishes its Apples.

Apple reportedly shopped the iPhone around to all the major U.S. carriers. All balked at the demands that Apple made. Carriers enjoyed great power over hardware manufacturers and the software on the hardware prior to Apples entry into the market.

User interfaces on cellphones were proprietary and every one of them was distinctly user unfriendly. The thought seemed to be that users would wade through badly written manuals to discover how to use new features and services.

Then the carriers couldn't understand why users didn't widely adopt new technology the carriers offered, such as photo mail or internet access. No amount of marketing could change the rule of nature: people take the path of least resistance. If you don't build your product to be easy to use, the end user will resist the learning curve.

Apple offers easy to learn interfaces that are fairly consistent across new iterations. For instance, although the iPod clickwheel interface went through many iterations across the generations, once learned, the user didn't have to relearn very much to use each new one. It was always intuitive and required little effort. Apple provided the path of least resistance intentionally.

Likewise, even though the multitouch interface was a new one, it was easy to learn even without reading the manual. Apple provided commercials and tutorials that showed how easy it was to use. It wrapped its interface in its sleek contemporary minimalist hardware design. Apple did everything right that prior hardware manufacturers failed to do properly.

Apple knew it had a killer product. It demanded concessions from carriers in exchange for having its product on their network. Apple sought to change the economics and power paradigm of the wireless industry in the same way its iPod shook up the music industry.

Carriers probably didn't like the idea of opening their networks up to allow for visual voicemail. They probably balked at subscription payments to the manufacturer. They definitely didn't want Apple in the drivers seat.

Only one carrier took the risk and reaped the rewards - AT&T. It didn't have the best network footprint, nor the best data network, but it had the ability to take the risk and trusted Apple to provide a premium product.

In contrast, imagine how different Sprint's market standing would be if it had been the iPhone carrier. No other carrier stood to gain as much or lose as much. The iPhone, combined with Sprint's other problems, has nearly crippled the company as droves of customers left the company. The iPhone would have bought Sprint time to fix the other problems.

For better or for worse, Apple's iPhone has changed the wireless industry. Although some balk at buying the iPhone in Europe where deep discounting of handsets is king, more than a few people are ponying up the purchase price to get Apple's superior design and interface.

When the iPhone 2.0 is released in June, Apple is set to conquer the corporate wireless market, bringing yet more rewards to AT&T. The IT critics of the iPhone have almost all been converted as Apple delivered all of its wish list.

Even the iPhone's other critics, who wanted to be able to put software on the iPhone, have been largely silenced as iPhone 2.0 brings the ability to not only put software on the iPhone, but even market and sell it in an iTunes-like Apple store.

Of course, Apple knew it had the interface and technology to make it work, so it demanded some concessions of the software world. All programs had to be vetted by Apple to be included and no one is allowed to add programs outside of Apple's process (although jailbreaking doubtlessly will continue).

Wired's article points out that most Silicon Valley companies subscribe to a variation of Google's practice, treat employees well and good things will float to the top. Apple subscribes to the older draconian business philosophy but still succeeds. A company must select the business philosophy that works best for it.

Apple, like Jobs, is demanding, obstinate, secretive and doesn't necessarily have the best employee benefits. Trust of employees or suppliers will never be its second nature. But it usually delivers because everyone there knows they will all win if the product succeeds.

Finally, Steve Jobs gets results from his employees because he has high standards that he consistently employs, he expects the best from his employees and lets them know when he is disappointed, and he praises his employees when they succeed. He knows he has to praise as well as pummel.

The business lessons I have learned from Apple are:

1. Take risks that leverage your key strengths.
2. Work on a product until it meets it exceeds customer market expectations.
3. Don't be afraid to cut your losses on a product if it doesn't work.
4. Don't retreat from a market if you fail.
   
5. Learn from your mistakes.
6. Use your mistakes to make a better product.
7. User interface, user interface, user interface. (Golden Rule of Path of Least Resistance)
   
8. When a market reaches saturation, the only differential is design.
9. Design can only be effective if it is combined with a great user interface.
10. Demand concessions if you have the best product.
11. You can only pummel your employees for failure if you also praise them for success.

Although the last one doesn't quite fit my management style, I do take to heart that one can't provide superior manage if one doesn't expect superior performance and provide the tools and structure to allow employees to succeed or fail.