On the Long-Term Viability of Apple’s Customer-First Strategy

Great piece by Jason Kottke, “Asking ‘Who’s the Customer?’”:

This might be off-topic (or else the best example of all), but “who’s the customer?” got me thinking about who the customers of large public corporations really are: shareholders and potential shareholders. The accepted wisdom of maximizing shareholder value has become an almost moral imperative for large corporations. The needs of their customers, employees, the environment, and the communities in which they’re located often take a backseat to keeping happy the big investment banks, mutual funds, and hedge funds who buy their stock. When providing good customer service and experience is viewed by companies as opposite to maximizing shareholder value, that’s a big problem for consumers.

This is my biggest long-term concern regarding Apple. They’ve gotten to this pinnacle by focusing on making great products for us, their customers. I believe Tim Cook and his executive team are consciously aware that they need to maintain that focus — that maniacal focus on great products and doing right by their customers is the foundation of the machine. And while the profits continue to grow, “the market” seems to agree that for Apple, this product-driven customer-first focus is aligned with shareholder value.

But eventually they’ll hit a dry spell. Slumps are inevitable. And I worry that eventually, during such a slump, “the market” will put irresistible pressure on Apple’s future leadership to start acting more like a typical company — one that only pays lip service to creating great products and putting customers first. For just a small taste, consider all the 2013 pieces, written at the time with straight faces, about Samsung “out-innovating” Apple.

Apple University exists to perpetuate Apple’s product- and customer-driven culture. I think it’s a wonderful idea, one of the smartest things that company has ever done — a signal of institutional self-awareness that Apple’s success, no matter how large, is fragile. But it’s only a way to strengthen the company’s focus internally. External pressure, from investors and “the market” — is outside the company’s control.

The best example I can think of is the airline industry. With few exceptions, airlines are set up to please investors ahead of passengers. Perhaps the most depressing business news in the last year was JetBlue succumbing to investor pressure to add baggage fees and reduce legroom in their cabins. It wasn’t because JetBlue was unprofitable, it was because they weren’t profitable enough to satisfy their investors.

No one but a fool would argue that Apple is not profitable enough today. But as soon as they stop growing, the chorus will start. And someday, inevitably, Apple will find itself in a slump such that the chorus will grow loud.

We can still laugh at reporter Bob Keefe asking Steve Jobs why Apple doesn’t booger up its computers with “Intel Inside” promotional stickers back in 2007, but silly though it seems, those stickers are sort of like airline baggage fees. As noted by John Siracusa at the time, Jobs’s final line in his answer to the question was telling:

“We put ourselves in the customer’s shoes and say, what do we want?”

Apple’s leadership still understands that this customer-driven focus is what drives their exceptional success. But it would be better for the company’s long-term prospects if everyone else — Wall Street in particular — understood this too. It’s not a luxury Apple can afford because it’s insanely profitable; rather, it’s the reason why the company is insanely profitable.

Ads via The Deck Ads via The Deck