Pity all the poor non-Apples out there: They want to have the success that the world’s most profitable tech company is having right now – but they don’t have a prayer.
The complex and entrenched cultures of big companies prevent them from busting out of the gate with sleek new products or services. By contrast, there’s Apple (AAPL) – and the power of “simple,” a design concept that, as far back as 1998, Steve Jobs was touting. “Simple can be harder than complex,” he told BusinessWeek. “You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end, because once you get there, you can move mountains.”
How’s this for worth it: In the past quarter, Apple’s profit was over $11.5 billion, and analysts at FactSet predict the company may earn up to $46.9 billion this fiscal year. Apple is also sitting on wads of cash. The dividend it issued in March is already the third largest payout (after Exxon and AT&T). The U.S. government sees less of that profit than it would if Apple was not using offshore subsidiaries to cut its tax bill by billions each year, according to The New York Times. The company says it has complied with all laws and accounting rules and that its U.S. operations generated nearly $5 billion in federal and state income taxes in the first half of fiscal 2012.
Simplicity is one of the tenets of Apple’s philosophy that led to the company’s unprecedented success. When other companies were adding bells and whistles to the gadgets and software, Apple was cleaning up with simple interfaces, sleek designs and intuitive operating systems. “By no means is simplicity the sole factor behind Apple’s success,” says Ken Segall, author of Insanely Simple: The Obsession That Drives Apple’s Success. For twelve years as an ad agency director for NeXT and Apple, he worked closely with Steve Jobs. “Leadership, vision, talent, imagination, and incredibly hard work may have just a bit to do with it,” he says. “But the common thread running through it all is simplicity, which drives Apple to create what it creates and behave as it behaves.”
While working with Apple gave him an appreciation for how the company succeeds, “what really opened my eyes were my adventures with other companies,” says Segall. “Everybody was as frustrated as I was with the [corporate] processes. It’s because they do all these things in such a non-Apple way.”
A key executive at a top company (he won’t name it) once told him, “I love what you’ve done with Apple. So if you can tell me some of the things they did that would help us, that would be great.” But when Segall replied, “Apple doesn’t use focus groups to decide what ad campaigns to run – they know good ads, and if they like something, they run it” – the executive sighed and said, “Oh, we can’t do that here. What else do they do?”
“People think they can choose maybe one thing that Apple does well to make things a bit better for them,” says Segall. “But it’s an all or nothing proposition. Apple has excelled because they had an incredible person at the top who loved and understood marketing. A lot of other companies don’t know about marketing and don’t care much.”
The Fiscal Times (TFT): What else sticks out for you about working with Steve Jobs and the way he ran Apple?
Ken Segall (KS): He wanted things to be done as he saw them. He had vision and he wanted people to act against that vision. He was out to change the world for the better. He was charismatic but also very demanding. He believed that if Apple focused on making great products, profits would be a natural result. That’s a huge difference in philosophy from other places, where they discuss the need to drive up the number of clicks or the number of sales. I was NEVER in a meeting like that at Apple. How many companies do you know that would say, “Guys, let’s just forget the numbers for a quarter or two and let’s do something great.”
TFT: You came up with the “Think different” ad campaign – as well as the iMac name. Describe the experience of naming the iMac.
KS: Steve said the name had to have the ‘Mac’ word in it. That was a priority. He didn’t want it to sound too frivolous. One early name was ‘MacMan.’ But ‘iMac’ seemed to solve all the problems. It conveyed that it was designed to get you on the Internet. It was succinct. It didn’t sound like a toy. Steve was unrelenting in his desire to give this great product a great name. He appreciated the power of words, and in this case, the power of a single letter – the little letter “i.”
TFT: In the brutal quest for results, did he ever worry about being too tough, too rough on people – on pushing too hard?
KS: I don’t think so. His concern was more, “We’re all working hard. Either pull your weight, or we have to get rid of you. The train has to move forward. You’re either on it or off it.”
TFT: Why have the Apple stores succeeded so well?
KS: Steve brought on Ron Johnson, who had done Target, to create the Apple stores. Ron had already made a big name in retail. Now he’s CEO of J.C. Penney. This is a guy who just loves retail. Why do people go to an Apple store when they can buy what they need online? It’s because they can get their hands on the things. It’s because of the Genius Bar, where the employees know the product so well. The experience is worth the trip. Steve was always about the customer experience. People like to be in that world: It’s clean and pleasant and they’re treated well, their intelligence is respected, they get a good quality product.
TFT: Steve rarely if ever accepted the word “No,” as in, “No, we can’t make that happen.” How did he push past the negative to achieve the positive?
KS: One of my more precarious moments was when he wanted to run a magazine insert and there wasn’t enough time in the schedule. My producer told me, “You just can’t do this. They need 6 weeks, and Steve’s asking for 2 weeks.” I went back to Steve and explained that we’d looked into it, and it just couldn’t be done in two weeks. Steve’s reply was, “Well, if you can’t do it, I’m sure I can find someone who can.” Of course, once he threatened our lives, suddenly it was workable. We got it done. I think people tend to compromise too much in business because it’s just a little easier that way. They think, “It’s going to be a big battle to get that done, so let’s just not do it.” Steve didn’t have those inhibitors.
TFT: Tons of people would sure love to have that brash confidence…
KS: It was just his personality. There’s also this debate about the difference between nice-guy bosses and not-so-nice bosses. I would use the Ron Johnson example. Ron is just the world’s sweetest man. People love working for Ron, but Ron’s also tough and decisive. He’s very effective. Do you have to be like Steve to change the world, or can you be like Ron? Ron may end up changing J.C. Penney in a really radical way, but would Ron have been capable of doing the same at Apple with the world of technology? We’ll never know.