1. Company is product-quality focused
2. Beats competition and creates mini-monopoly
3. Sales becomes somewhat inelastic to changes in quality
4. This leads "cost-cutting" and marketing focused execs/decision making to beat out product quality execs/decision making
5. Company's product quality takes predictable linear path to the bottom
https://hbr.org/2012/04/the-real-leadership-lessons-of-steve...
It's the same basic message from Jobs, but this time about Xerox.
Thanks for sharing!
From what I understand, their network was overengineered and they generally put out a very high quality product, and didn't need to do a lot of marketing.
And considering the landfills that are filled with things that replaced "expensive" goods like a Bell phone—maybe the tradeoff isn't worth it?
I doubt any consumers then had heard about 'economic externalities' (in fact, I'm not sure enough have heard about it now).
With how Apple has avoided ever becoming a monopoly in pretty much any area, and instead tries to just take the top most profitable customers, it really meshes well with this idea of not becoming a monopoly and having the company rot.
Edit: looks like this might be from Triumph of the Nerds, a series released on PBS in 1996. So before Jobs' return to Apple and Apple's turn around.
I think they are only the majority in tablets, right? And tablets seem to be, oddly enough, a bit stagnant.
Of course, this could be overthinking a plate of beans, maybe Apple just aims for a high price point and high profit margin. But if you did want to take most of the current profits, and most of the future profits, you'd ensure you got enough feedback to not become a monopoly. You'd aim to take only the high profit margin customers and intentionally ignore the lower profit margin customers to let some form of competition continue to push on you.
"Because they were taught to believe that the efficiency of capital was a virtue, financiers began measuring profitability not as dollars, yen, or yuan, but as ratios like RONA (return on net assets), ROIC (return on invested capital), and IRR (internal rate of return)...
All of this makes market-creating innovations appear less attractive as investments. Typically, they bear fruit only after five to 10 years; in contrast, efficiency innovations typically pay off within a year or two. What’s worse, growing market-creating innovations to scale uses capital, which must often be put onto the balance sheet. Efficiency innovations take capital off the balance sheet, however. To top it off, efficiency innovations almost always seem to entail less risk than market-creating ones, because a market for them already exists."
https://hbr.org/2014/06/the-capitalists-dilemma https://www.youtube.com/watch?v=rHdS_4GsKmg
Sounds like a plan to me. (Oh, wait, because lobbying. NM.)
[Yes, I'm a yankee.]
> There were certain things about the business where it was obvious – speaking to people who had been on that journey for 25 years before I joined – that they were not likely to change in the future because they hadn’t changed in the previous 25 years. The first thing that struck me was an absolutely rock-solid commitment to gaining the trust of the customer, the employees, the suppliers and business partners. Almost every rule or method or procedure of the company was built around ensuring that.
https://inpractise.com/articles/aldi-culture-and-operations-...
And regardless, I have quite a lot of flexibility as a grocery customer. I can go to Safeway, Whole Foods, Grocery Outlet, or my local small grocery around the corner. Target and Walgreens even have some groceries too.
Now layer that on top of the decade it takes to get a new plane from drawing board to delivery.
From what I've read, it sounds like Boeing completely lucked into it. It wasn't some smart person who could accurately predict the future.
And to be honest, a lot of companies we think of as being "innovative" and having "foresight" are that way. They made the best business decision they could, based on what was known at the time, and the stars lined up to make it a huge hit.
Saying that a company can plan for future profitability isn't supported by the facts.
>But when the McNamara discipline is applied too literally, the first step is to measure whatever can be easily measured. The second step is to disregard that which can't easily be measured or given a quantitative value. The third step is to presume that what can't be measured easily really isn't important. The fo[u]rth step is to say that what can't be easily measured really doesn't exist. This is suicide.
Cutting corners on something can save money now and can be measured but the hit to reputation can't be.
Hard times create strong people
strong people create good times
good times create weak people
weak people create hard times
Of course that’s not a guarantee either as they’re liable to take a few billion and run off into the sunset.
Cost-cutting is always unpleasant, and never done just for fun. Typically companies cut costs when they're feeling squeezed, i.e. they have to.
A company with a "mini monopoly" would not feel squeezed - quite the opposite.
"Enshittification" is not based on cost-cutting or optimizing for profits. It's when a product that's already "perfect" and widely used, has lots of money/effort invested in it to chase further growth, and the changes end up making the product worse for its existing userbase.
4.1 Company starts to talk about politics instead of products in their marketing campaigns
4.2 Company starts to cut cost on workforce by pushing out experienced people and hiring cheap newbies
4.3 As a result of the previous one, expertise drops rapidly and product quality starts to drop
4.4 As the product quality decreases, bleeding experienced people makes it impossible to stabilize
4.5 There is nobody left to innovate. The cafeteria manager is the best path to become an IT director (real case: 3 consecutive cafeteria managers in the same office were promoted as IT directors in one of these companies), so the best expertise the management has is to pick the right beverages for the automated vending machines in the office
4.6 Principles and values disappear, corruptions grows, while internal controls don't even bother to look into frauds less than $1 million per incident
4.7 stock price drops, even if the company continuously spends money on shares buybacks
When 4.1 changes the direction into politics, you start doing it internally. That leads to the next points.
And therefore, B2B companies run ads, e.g. to sway public opinion on government policies, or (now) to restore flyer confidence in their product. If US airlines get enough emails and letters from customers saying "I'll never fly a 737 MAX again!", that gives the airlines huge negotiating leverage against Boeing.