Lessons from the Giants
I forget who said to an American audience in the early ’90s, “Look at the constantly increasing number of foreign cars appearing on our freeways! Why do you think that is? I’ll tell you one thing: It’s not for lack of American manufacturing capacity because our domestic dealerships are loaded to the rafters! It’s because we are not making the cars that American people want to own! How dumb, how arrogant is that!?”
Less than 10 years after that, in an oil-aware world General Motors built the Hummer – a gas-guzzling truck in which to drop the kids to school and pick up the groceries – for everyday use. Less than 20 years after that speech General Motors was bankrupt. Why? Because of a lack of manufacturing expertise? Or because of an explosive combination of arrogance and stupidity?
Mobiles
Contrast that strategy and those results to a consumer-focused Apple who announced a 2nd quarter 2009 net profit of $US1.67 billion on the back of record sales of iPhones – and followed that good news with the teaser that it had “really great new products in the pipeline for 2010”.
If you’re even tempted to think that Apple’s results were courtesy of a friendly market sector you’d better check the results of their biggest mobile phone competitor, Nokia, who announced an $85 million loss for the same period.
What’s the contrast lesson between General Motors, Apple and Nokia? Apple gives people what they want – and sometimes what they don’t yet know that they want! GM tried feeding the market what GM wanted to build; and Nokia is stuck back in the world where a mobile phone was just that – a mobile phone – while Apple has hijacked the playing field and moved it to a world where it is an entertainment and multi-mode social networking centre.
In doing so, Apple increased iPhone sales by a staggering 625% and drove their 2009 net profit up 46% to $US1.67 billion. Any multi-billion dollar company that can knock out an 18% bottom line impresses the daylights out of me!
Lessons
OK, so your business hasn’t hit a billion a year yet – in fact you’re struggling to hit the next (or first) million; so do GM, Nokia and Apple hold any lessons worth your learning?
• Did Apple invent the “touch interface” (that oh-so-cool fingertip scrolling and expansion stuff)? Nope! They spotted it in the market place and bought it (and the company that invented it) to enhance their iPod, then fed it into their first phone.
→Lesson: You don’t have to be an inventive genius, you just have to be so close to your market that you can sense what they want, then find it and give it to them. You have to be a sensitive genius!
• Have Nokia accepted that the definition of their device has changed? Nope, they are still making “phones” and trying to “add stuff on” to make them look like iPods, instead of using their huge technological grunt to go back to the drawing board to create the “next thing to the iPod”.
→Lesson: When you don’t accept that the world has tilted (think Polaroid cameras and digitals) it’s only a matter of time before you’re obsolete.
• Could GM have survived? Yep! They had decades in which to listen to their customers; study why they were losing them; and catch up and then pass their competition. Did they? Nope! They were too big to fail – or notice, or care, or listen.
→Lesson: When you spend more time focused on what the people in the mirror want than what the folk outside the window want, it’s only a matter of time before you’ll be reading your own obituary.
So, what do these lessons have to do with how you manage your business?
