Copying Apple's culture

Apple always been a trail blazer for innovation in the tech world, but why is it that everybody want's to copy the company's products and not the company itself?

Apple’s products are the envy of the world. They have been spectacularly successful and are widely imitated, if not copied. The expectation that precedes a new Apple product launch is only matched by the expectation of the replication of those products by competitors.

This cycle of product mimicry was succinctly summarised by Marc Andreessen regarding a rumoured Apple TV product:

And once the television launches, everyone will scramble to copy it. ”There’s a pattern in our industry, Apple crystallises the product, and the minute Apple crystallises it, then everyone knows how to compete.”

This idea that the basis of competition is set by Apple and then the race is on to climb the trajectory of improvement is so well understood that it’s axiomatic, “it’s just the way things are”. Apple releases a product that defines a category or disrupts an industry and it becomes obvious what needs to be built.

But what I wonder is why there isn’t a desire to copy Apple’s product creation process. Why isn’t the catalyst for a new category or disruption put forward by another company? More precisely, why isn’t there another company which consistently re-defines categories and repeatedly, predictably even, re-defines how technology is used.

Put another way: Why is it that everyone wants to copy Apple’s products but nobody wants to copy being Apple?

Note that I don’t suggest that there isn’t a capability to copy. It may or may not be possible, but capability comes after desire and without desire there can be no capability. What I’m suggesting is that there isn’t a desire to “be like Apple”. If there were a desire, we would be seeing a massive search and debate into what makes Apple successful. Management consultants would be pounding the pavement pitching the “Apple way”. Wall Street would be sizing up companies to a standard of “Apple-ness” and rewarding those who conform and punishing those who don’t.

None of this is happening. I can think of two reasons why:

  1. Apple is not to be imitated because it’s not worth copying. I.e. Apple is not a successful company.
  2. Apple is successful but Apple cannot be copied because its success is a magical process involving sorcery.

There is a great deal of evidence for the first hypothesis. The idea of Apple being successful is not something reflected in its stock price. Being valued at a lower P/E ratio than its competitors, and indeed lower than the average company in the S&P 500, indicates that to whatever degree Apple was successful in the past, it’s not seen by the vast majority of observers as successful in the future (no matter when you choose to make this observation).

Why should one bother copying Apple if it results in being punished with a low valuation? You work really hard at innovation and then that innovation becomes commoditised very quickly. Why should one bother?

And yet if we look outside the investor community, especially if we ask operational managers and entrepreneurs, there are some who would say that Apple is actually a success story. However, when asking innovation practitioners what makes Apple successful the answers regarding the causality of this success border on the mythical. Answers which reference “skills”, “culture” and “teams” abound. The culmination of this hypothesis is the “chief-sorcerer” theory of success which places one magician in charge of casting all the right spells. These resource-defined explanations are unsatisfactory because they are vague. Without specificity they don’t help us understand why they can’t be copied.

But what about Apple’s own opinion of what makes it tick?

Bill C. Shope: How do we think about Apple’s culture of innovation today?

Timothy D. Cook: Innovation is deeply embedded in Apple’s culture. The boldness, the ambition, the belief that there are no limits, the desire among our people to not just make good products [but to] make the very best products in the world. It’s in the values. It’s in the DNA of the company.

Now if you look at some essentials for innovation, there is no formula. If there was a formula, there would be a lot of companies that have a lot of money that would gone out and bought their ability to innovate.

Some of the essentials for us are skills and leadership. Apple is in a very unique, and, in my view, unrivalled position because Apple has skills in software, in hardware, and in services.

[…] arguably, where you can innovate in hardware, [where] you can innovate in software, [where] you can innovate in services; the real magic happens at the intersection of these.

And you know, the iPad is very magical. And it’s exactly because our company was doing all of those things. And so for many years this idea - [which] some people call vertical integration - it was out of favour. People thought it was kind of crazy. And we never did.

And so through all of those years, we continued to build. And these skills, this isn’t something you can just go write a check for. This is something that you work decades for. Building this experience. And so I think we bring that. I think we’re unique in that. I think we’re unrivalled in that. I think there are people trying desperately to catch up in that. And I think they’re finding that it’s not so easy to do.

Tim Cook refers to integration and a great team as unique Apple advantages (but also note the references to magic and belief.) It’s a better explanation but it is still hard to understand why nobody copies this approach. Integration is something that can take a long time, but it is possible with a Herculean effort.

A few companies are starting to make moves in that direction (e.g. Microsoft.) But efforts are half-hearted. There is no “move the Earth” panic to become an integrated company from Samsung, Google or Microsoft.

Maybe others haven’t quite balanced both the cost and the benefit of being Apple. It’s clearly still mysterious and unclear why one would want to do this. It’s much easier to use what you already have and how you operate to copy what Apple produces rather than how they produce it.

My own suspicion is that Apple is more aware of what makes it special than they are letting on. In other words, I believe that Apple is self-aware but being careful not to share what it knows. However, as Tim points out, it’s not a formula. There is no silver bullet, no single trick.

It’s complex, it’s subtle, it defies explanation but it’s not magic. It’s a process that requires a degree of faith and fortitude. It’s collecting but ignoring data and trusting judgement when data tells you to move in a different direction. It’s a lot of wilful rejection of conventional wisdom. It’s asymmetric approaches to competition. It’s art as much as science. And most of all, it’s a lot of mind-numbing polishing while trusting that only by doing great work is survival even possible.

Horace Dediu is founder and managing director of Asymco, a Helsinki-based app developer/industry analysis advisory firm. You can find his blog here.