What if Apple Bought Us?
So, here’s Apple at about $600 per share, sitting on a huge pile of cash, with a new iPad just out, the iPhone 4S, new MacAirs and MacBooks, and expectations rife over iTV, etc., everything new, everything bright and shiny, everything very successful! And, then, here we are...sitting in a slow-moving, far-from-lean, bureaucratic organization producing average offerings and once again settling for another year of mediocre results. Is this fair? Ever ask yourself: "What would we be like if Apple owned us?"
Just a week or so ago, I was working with a globally-respected, fast-moving-consumer-goods (or so the industry title suggests) company, where much of what I heard was moaning and groaning about the constraints that were holding them back as an organization, and then, from somewhere, the question arose: “What if Apple bought us? What would we be like then?” and a super-energized conversation took-off with all the possibilities that Apple would naturally see, but the incumbent management was blind to. Apple once again had come to the rescue with answers to all of our problems…maybe not, but there is some merit in asking the “What if?” question.
Intel founder, and former CEO, Andy Grove once wrote about just such a moment in real life, when, in his words (in his book Only the Paranoid Survive) : “…Intel got out of the business it was founded on and…refocused its efforts on and built a new identity in a totally different business” as a direct result of asking the “what if?” question. In the 1970s & 80s, Intel’s business was built on computer memory chips — dynamic random-access memories, or DRAMs, and from the beginning it was the DRAM industry leader: “Intel…stood for memories; conversely, memories meant (usually) Intel.” Then, came the Japanese onslaught, and despite new products, massive R&D spending, and lots of operational efficiency, the bottom dropped out of demand, and the industry became a “commodity” business. Intel was“…wandering in the valley of death.” What to do? Despite the debacle in their industry, and despite consistently losing business and money to their Japanese rivals, getting out of DRAMs was unthinkable; after all, DRAMS were Intel!
The breakthrough for Intel came, according to Groves, one evening, when:
“… after this aimless wandering had been going on for almost a year. I was in my office with Intel’s chairman and CEO, Gordon Moore, and we were discussing our quandary. Our mood was downbeat. I looked out the window…and I turned back to Gordon and I asked, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Gordon answered without hesitation, “He would get us out of memories.” I started at him, numb, then said, “Why shouldn’t you and I walk out the door, come back and do it ourselves?”"
It was neither easy, nor painless, but Intel’s leadership team made the call before someone else had a chance to do it for them, and they have never looked back. Groves points out that had new leaders been brought in: “I suspect that the people coming in are probably no better managers or leaders than the people they are replacing. They have only one advantage, but it may be crucial:… the new managers come unencumbered by…emotional involvement and therefore are capable of applying an impersonal logic to the situation. They can see things much more objectively than their predecessors did.”
A similar sentiment has been expressed by Jack Welch, who in defending his exhortation to fire the bottom 10%, observed something to the effect that new managers coming in have no problem at first identifying the bottom 10%. After 3 or so years, however, this becomes more difficult, yet when they are replaced, the new manager once again has no problem identifying the bottom 10%.
So, what did my managers do with the Apple question? They thought that the real question would be not if Apple took them over, but Samsung. Samsung is a more complex organization, had gone through an amazing organizational transformation of its own, was less flashy than Apple, yet was built to deliver on the latest innovation, and, in truth, was apparently more content to be a solid number 2 [behind Apple]; it fits my managers’ style a bit better. Yet, they had no hesitation in predicting big changes with such new leadership. Under Samsung, “things would be done faster, they would be more ambitious, and the organization would be much more aggressive in funding R&D.” Now, the question remains to be asked: “Why can’t we do this ourselves?”