“What ruined Apple was not growth … what ruined apple was values… They got very greedy … Instead of following the original trajectory of the original vision, which was to make the thing an appliance and get this out there to as many people as possible … they went for profits. They made outlandish profits for about four years. What this cost them was their future. What they should have been doing is making rational profits and going for market share.”
These are Steve Jobs Words from a 1995 interview by the Smithsonian Institution, which some have called The Lost Interview.
In this segment Jobs describes his life pre, and post apple.
At age 23 Jobs was worth over a million dollars, at age 24 over 10 million, and at 25 over 100 million. As he comments, the money wasn’t that important because he never did it for the money. Money does enable you to invest in things that don’t have a short term payback; but it was the company, the people, the products, and what you are enabling people to do that truly mattered.
He explains how Apple left itself vulnerable to disruption and market share collapse. He was correct then, and its possible Steve Jobs may be right once more.
Last year the IPhone’s profit margins were close to 55%, with the IPhone accounting for 65% of Apple’s overall profits. Two-thirds of its profit comes from one product with awe-inspiring, yet unsustainable margins.
Advice to Apple and to innovators everywhere:
Long term thinking & market share:
Hone the ability to see long term and develop a determination to see the vision through. Investors have stopped rewarding huge iPhone profit margins.
As Brad Reed has said, Accepting “reasonable” profits in the short-term is not something most CEOs are wired to do. As Facebook’s (FB) Mark Zuckerberg has quickly discovered, Wall Street is always harping upon companies to produce larger margins quarter after quarter and is generally unsympathetic to companies who plead for patience while executing a long-term strategy.
Steve may be considered an atypical by his a willingness to take a long term view instead of being driven by the quarterly reporting cycle, but in a world where “innovation in America is somewhere between dire straits and dead,” perhaps the key lies in planning for the long term.
As stated in Robert’s Rules of Innovation, although companies and especially public companies are driven and pressured to deliver quarterly results, it is an imperative to create and sustain innovation by focusing on NPD (New Product Development) “Concept to Launch” and LTD (Long-Term development) programs . Remember that a strong R&D team, while not delivering immediate ROI, will most likely be delivering the all so important breakthrough and patent-able innovations for your company. Dedicate separate resources for NPD and LTD, have focused strategy and priorities but don’t hesitate to mix resources while protecting deadlines and focus.
If you want to see another great interview of Steve Jobs, take a look at another one of his “lost interviews”. This one is from Triumph of the Nerds in 1995. Taken from a VHS tape and now on the internet here it is in its entirety: http://vimeo.com/51138991