Wednesday, 31 August 2011

Apple and the art of business


By Sreeram Chaulia

Since the ailing Steve Jobs announced his retirement from the chief executive position at Apple Inc last week, tributes have poured in to a giant of a business leader whose personality rivaled few others in corporate history.

Hailed as a genius who steered Apple from a down-in-the-dumps crisis in 1996 to the world's most valuable company (this year briefly surpassing ExxonMobil), Jobs' life imparts a message that individuals can make all the difference even in a complex and diversified global economy.

Of all the stunning insights Jobs has bequeathed, the basic one is that entrepreneurship is an art, rather than a science to be learnt through formal education or training. A college dropout like Microsoft's founder Bill Gates and Facebook's founder Mark Zuckerberg, Jobs read the pulse of consumers like no other business titan of our times, and did so in an uncanny and instinctive fashion without meticulous market surveys, focus group discussions, or commissioned research reports.

One quote that epitomizes Jobs is his response to a journalist when asked how thoroughly he had analyzed market moods and tastes before introducing the iPad tablet computer: "None. It's not the consumers' job to know what they want."

This arrogant statement upends the mythology of capitalism, wherein the "consumer is the king" and corporations compete to serve this master by peddling choices. Jobs' scintillating career demonstrates that the marketplace is essentially a creation and a construction of wants and desires, not an invention to satisfy consumers' own preferences.

Apple, now valued at over US$300 billion, is at the apex of designing new gadgets whose need is not necessarily felt by people ex ante, but which nevertheless become indispensable for millions of buyers after getting launched.

"Coolness" - an ineffable quality - separated Apple from its direct competitors as well as peers in other industries. From the day the Macintosh arrived in 1984 until the latest iterations of the iPhones, iPods and iPads, Jobs imbued in his production stable a magical touch that made their outputs objects of mass desire.

In assessing which model of an electronic device would "click" and emote with the consuming public, Jobs must have performed mental and psychological role plays wherein he became the market, and the market became him. If business leadership is about divining the market and its future shape beforehand, Jobs was a natural at it.

Apart from design cachets in Apple devices, which were premised on gut feelings about American and global popular culture and psyche, Jobs deployed daring marketing tricks, such as keeping the supply of new products scarce and limited and whetting the appetite of customers until they became ravenously hungry. Such a teasing marketing strategy was risky, as impatient consumers could have jumped ship and plumped for an alternative tablet computer or smart phone that was readily available without the agonizing wait.

But apart from technical know-how about logistics and supply chains, Jobs had the supreme artful confidence of a maestro to execute this approach, knowing that the hungry would salivate and wait for the "real thing" rather than substitutes that lacked the X-factor of Apple.

Apple probably has the lone distinction of counterfeits not only its specific products but of its entire stores and retail outlets, as seen in China this year. Even the recognizable facade of the Apple store was fabricated in numerous locations by conmen in just one area - Kunming - until the government clamped down. It shows that a strategy of setting up far fewer sales points than is actually warranted by the mushrooming consumer demand pays off (provided competitors lack your charisma and pulling power).

The way Apple entered and then cracked the Chinese market - which had hitherto been a wild goose chase for several Western technology firms - is worthy of business school case studies. Where literally every other starry eyed international technological firm had beaten a sullen retreat, Apple went into China with its colossal global reputation and tapped into the rising disposable purses of the world's second largest economy. Jobs, the demystifying business guru, silenced market analysts who used to highlight China's cultural peculiarities and how Western multinationals lacked the local discretionary knowledge to woo the Chinese buyer.

As the ultimate capitalist of our times, one who rivals the industrial-age Henry Ford in ambition and vision, Jobs' reading of the Chinese market revealed that culture and local idiosyncrasies can be overcome through global consciousness and integration into a seamless "world market" that defies nationalism and parochialism. With every buyer, including the upwardly mobile Chinese one, glued into the same materialistic dreams, globalization takes on a new universalizing force with companies like Apple at its nerve center.

Chrystia Freeland of Reuters has written about the "Apple economy" as a distinctive phenomenon that globalizes employment and life chances instead of confining them to workers within countries where corporations are headquartered. With the bulk its buyers, manufacturers, salespersons and assemblers coming from outside the United States, Apple under Jobs was the ultimate symbol of a new era in economic organization of the planet. Local identities remain entrenched in some spheres, but ever less so in the high-technology domain, where the likes of Jobs have rendered the nation-state a defunct unit of analysis.

Steve Jobs was like an orchestra conductor who had the command to sway the audience the way he wanted them. He was not an average soap opera producer who went by "what the people like to see". Similar to the great auteur Alfred Hitchcock, who confessed to "enjoying playing the audience like a piano", Jobs delighted in deciding what form and content daily-use technology should take, and the masses lapped up his confections.

Few business leaders can deny that they nurse inner urges to take the market to a different plane, beyond staying profitable within the existing parameters. The premature departure of Jobs (he is only 57-years-old) from active stewardship of the most admired company for innovation is an opportunity to examine what it takes for one individual to remake her or his profession or field. It is a moment to reflect on how the part can transform the whole through unconventional boldness and inspired imaginativeness.

Reminiscing about a low point in 1985, when he was forced to quit as CEO of Apple, a company he had co-founded in 1976, Jobs talked about "the lightness of being a beginner again". Each of us, regardless of the station of life, has a chance to become a "beginner again", unlearn received wisdom and think fresh. Jobs' take-home legacy is a lesson that creativity is within reach if the mind is attuned.

Sreeram Chaulia is Professor and Vice Dean at the Jindal School of International Affairs in Sonipat, India, and the first ever B Raman Fellow for Geopolitical Analysis at the Takshashila Institution. He is the author of the recent book, International Organizations and Civilian Protection: Power, Ideas and Humanitarian Aid in Conflict Zones (I.B. Tauris, London)

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