Date: March 7, 2012

Author: JT

Tags: , , ,

3 Comments »

Why Apple & Starbucks Failed

Was It Just Leadership?

jtpedersen_excited_jump_relationships_process_leadership_cpApple, Starbucks, Dell, and others are frequently lauded for their incredible successes.  Yet each was on the verge of becoming failures…at points after their initial successes.  Why?

In each case, they had founding CEOs that had led their early successes.  And then they left, voluntarily or involuntarily.  The companies’ subsequent CEOs were all highly respected executives.  So why did the companies lurch, falter, and begin spiraling downward toward failure?

In each case, bringing the founding CEO back allowed them to regain—and exceed—their earlier prominence.

Much has been written about why some of the founding CEOs departed.  For instance, the attraction, later repulsion between Sculley and Jobs at Apple, followed by Jobs’ expulsion, plays a key theme in The Elephant in the Room.  But that’s a discussion of why they left, not why the subsequent leaders couldn’t make their companies succeed.

I believe the answer is simple.  The founders were the ones with the dream.  They were the ones with the, ‘fire in the belly.

From my perspective, both Apple and Dell had follow-on CEOs that came in to ‘run a business.’  That certainly seems true in Sculley’s case at Apple.  Great guy, but could you expect ‘technology fire in the belly’ from a soda-pop exec?

Was It Process-Based?

Wall Street is known to place a premium on stocks for any number of reasons.  One of these is the promise of ongoing innovation, process execution, and in general an attempt to use historical performance as an indication of future success.

In the case of each of these companies, stock performance has certainly been given healthy premiums for exactly these reasons.  How else can you define Apple’s market value trading at its current levels?  There is the assumption the company can, and will indefinitely, continue to deliver the way it has in recent history.

Now, as Apple begins moving forward with new CEO Tim Cook, it is fair to ask the question, “What is more important: Ongoing Innovation or Business Process Excellence?

Going beyond was it just leadership, asking about business process excellence seems a logical extension.  Yes, process is important for ultimate success. But, like quality, it is simply expected.

When I pick a vendor to partner with or outsource to, I look at things like their financials, their processes, and industry reputation. Process is important.  It is a key component I look at for any company I consider working with, or for.

But process does not define a relationship. For those of us with an iPhone, iPad, or other iDevice, we feel we have a relationship with our devices, with the ecosystem they let us participate in. When we go to a Starbucks, its often not because of their sterilized same-thing-everywhere approach. (While traveling we may, because we have no time for relationship. We just want a known-good-product.). We go because of the atmosphere.

We form relationships, real or imagined, with companies that espouse their dreams, drive hard to achieve them, and that tend to deliver. I know nothing of the assembly/delivery process for my iPad. I simply appreciate it’s delight-factor and the relationship I have with it and, by extension, Apple itself.

What makes me excited about going to work for, or with, a company is it’s fire.  Do I feel a fire in my own belly about working with them?  In these cases, Fire in the Belly trumps business process.

(My thanks to Teresa Jurgens-Kowal for planting the seed for today’s post.)

Image credit: S. Braswell

JT Pedersen

3 Responses to “Why Apple & Starbucks Failed”

  • (@Hauke_Borow) (@Hauke_Borow) March 7, 2012 at 4:28 pm

    Why Apple & Starbucks Failed http://t.co/Lot4GLYQ

  • Andrew Stein March 8, 2012 at 1:33 pm

    JT, you have nailed it. Fire in the belly, “vision”, “mojo”…, whatevery you call it, I just don’t understand why CEOs and leaders in the C-suite are so over-weighted in operational efficiency, finance, and accounting. You can only squeeze in so much operational efficiency, and tighten budgets so far, before the asymptote of growth becomes “zero.” Where does Growth come from? It comes from the passion of people that know what customers are looking for. People that can read and interpret market trends (industrial, or consumer). It comes from the Marketing Professional domains of Product Management (traditioal inbound marketing), Product Marketing, and so on. We need more Marketing people rising through the ranks to the CEO spot. That is, quite frankly, what Steve Jobs did at Apple.

  • Menno Jongerius (@mhjongerius) March 27, 2012 at 1:05 am

    +1 RT “@TheCharlesCain: Why Apple and Starbucks Failed http://t.co/94LXKhp4<– great post!”

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