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Why big companies can’t change

Wednesday, December 21, 2011 · 10:05 am · 14 Comments

“There’s a very good TED Talk by Simon Sinek about how great leaders inspire companies by asking why? I think it also goes a long way toward explaining why big companies don’t handle change well,” Bob Cringely writes for I, Cringely. “It’s not that they can’t ask why?, it’s that the answer doesn’t make sense at their scale, though it should.”

“Looking at Apple we can see the why of the iPod and iTunes was ‘to take your entire music collection with you wherever you go,’” Cringely writes.

“Looking five years ahead for business justification isn’t done any more. Heck, five quarters is a long time in business today,” Cringely writes. “But then the average CEO tenure is also, what, four years? And that’s why big successful companies roll over and die.”

Read more in the full article here.

Categories: News

Tags: Apple Inc., business philosophy, corporate philosophy, Cringely

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Comment Feed

14 Comments

botvinnik

Wednesday, December 21, 2011 - 10:19 am · Reply

well, they can roll over and die with long-time CEO’s also, i.e. Beleaguered RIM and the gradual self-destruction of Microshaft.
Predrag

Wednesday, December 21, 2011 - 10:52 am · Reply

The TED Talk that Cringely is referring to is over two years old. Cringely’s point is still valid, though. The whole concept of asking “Why?” specifically relates to the emotional and personal aspect behind the idea. Sinek focuses on that much more than Cringely, using MLK and Apple as examples how an emotional and personal message relates on a much deeper level than listing out twelve-point list (or plan). He obliquely cites “Think Different” and “I have a dream” as examples (for the latter one, he contrasts it with “I have a 12-point plan” as the opposite alternative, the way marketing is done by large companies of today).
Tilted Sideways

Wednesday, December 21, 2011 - 11:04 am · Reply

Steve Jobs didn’t ask, “Why?” Steve Jobs asked, “Why not?”
Marty

Wednesday, December 21, 2011 - 11:04 am · Reply

That video is great and all, but I’d say companies also need to ask “why” when hiring people… I’ve noticed the larger companies get, the more people they hire for the wrong reasons.

I’m an industrial designer, and have worked with companies during large growth periods and during recession.

They tend to think just because sales are up, they need more people to do the same jobs. The marketing department will all of a sudden have 5 new people, and all they do is toss in their ideas and complicate things to secure their job.

Same with product development. A bunch of new “developers” pop in to “develop” products, but all they really do is complicate things and act as high paid spec sheet forwarders.

Overall it slows down the process, and makes things become generic, since 20 people from all walks of life are giving input to one project. Then the sales slow down, 30% of the staff is cut, and things still run smoothly (often better).

The method used to grow is often the method you should use to continue growing. Don’t fix it if it ain’t broke!
Ballmer's left nut

Wednesday, December 21, 2011 - 11:09 am · Reply

It’s difficult to prove or disprove a hypothesis until after the fact. Will Intel be buried by the gradual but perceptible migration to mobile? Does this foreshadow the implacable rise of ARM? Until events play out, everyone making bets on the survival of their platform stands an equal chance of winning, that is until a disruptive event arrives to put a grenade under their comfortable assumptions.

RIM is an interesting case study. How management is intrinsically stuck in a mindset that brought them success but is unable to respond to a seminal event, like a Steve Jobs inspired meteor strike. Microsoft is in a similar position of not seeing the arrival of mobile computing in a big way and is still developing a response to it.

For one reason or another Microsoft is unable to make a break from its past and leave the Windows branding behind. To most consumers Windows equates to office work and thus has no association with mobile. The only difference between RIM and Microsoft being that when the iPhone comet hit, RIM’s entire business was dependent on mobile which gave it little time to innovate or die but Microsoft is largely insulated from this due to the Windows and Office monopoly which is throwing up scads of cash. This gives Microsoft more breathing room to react to changes in the mobile market.
- Chaz
  
  Wednesday, December 21, 2011 - 11:28 am · Reply
  
  Don’t think Steve Job’s didn’t understand how critically important it is to have that cash pile, or cash cow. In Apple’s case, it really doesn’t have a Cash Cow (windows and office), it has to continue to innovate, hence the Cash Pile is necessary. Apple’s products can be dropped in a hurry if a new better product comes out. Apple needs some breathing room to have a strike or two. Apple walked a tightrope going from near bankruptcy to today with hit after hit. No one can be right all the time.
  - Thomas65807
    
    Thursday, December 22, 2011 - 7:50 am · Reply
    
    This sounds like an elaborate justification for Apple’s huge cash hoard.
    
    But “Apple’s products can be dropped in a hurry if a new better product comes out” is just an empty phrase that doesn’t ring true.
    
    First of all, Apple’s ecosystem creates ‘loyalty’ to its products: music, video and apps residing on the device work ONLY with iTunes and Apple devices, and consumers are reluctant to abandon those. Second, experience suggests that better products than Apple’s seldom come along. Third, Apple’s retail stores do a good job of selling product and create brand loyalty while insulating the company from decisions other retailers may make not to sell Apple products. Fourth, Apple has a reputation for quality that’s known around the world, and that open markets overseas that other companies would struggle to break into.
    
    In short, Apple’s ecosystem plus its superior products INSULATE the company from negative events. These are reasons that Apple needs LESS cash (and securities) than other firms, other things being equal.
    
    Apple already holds $80+ billion in cash and securities and could easily have $120 billion a year from today. It uses its cash flow mainly to purchase Treasury bills and securities overseas that are at risk if there’s a financial meltdown in Europe. It makes few acquisitions, and the largest in its history cost about one-half billion dollars. It does use cash to establish long-term deals with components suppliers, but has already taken care of its immediate needs in that area.
    
    It has been said that Apple uses its cash more effectively than investors can, so for that reason it should retain its cash rather than paying it out to investors. That may have been true up to a point, but today it holds cash/securities mainly to avoid paying US taxes … and in doing so exposes itself to risk of financial chaos overseas.
    
    Under the circumstances, it’s time for Apple to begin paying a regular dividend. If it’s true that Apple can deploy cash more effectively than investors, then investors can always use the dividend to purchase more Apple stock.
    
    The ‘theory’ behind investing in stocks is pretty basic: the company uses your resources to earn a profit, then returns a share of that profit to you in the form of dividends. If there’s never going to be a dividend even when the company earns massive profits and it has no business use for the cash, then why invest in the first place?
    
    If Apple can’t justify paying a dividend — a significant one, like 3% — then no company in America can justify it. And if an Apple dividend is justified, then its failure to pay one scares away investors and depresses its stock price.
    - JWSC
      
      Thursday, December 22, 2011 - 4:19 pm · Reply
      
      Don’t like the way Apple makes decisions about it’s shares, don’t buy Apple stock. (By the way, you failed to make a compelling case for dividends. I could have done better and I still don’t think it’s the right think for Apple.)
BoC

Wednesday, December 21, 2011 - 11:21 am · Reply

I have minimal experience with mega companies, but have had contact with MBA division managers.

Most of them indicate they are looking at 18 months or so in their position and then they expect to “move up”.

Is it any wonder that plans for long term success in a product line that takes many years to develop and perfect often don’t get run right or finished correctly?
- DaSeuss
  
  Wednesday, December 21, 2011 - 2:15 pm · Reply
  
  I can’t agree more. I work for a Fortune 20 company with a 1/4 million employees. We have a joke we like to use when we get a boss we don’t like. Just wait 18 months and we’ll get a new one. We’ve suffered from the paralysis of merger after merger with process and systems that don’t work together and we don’t ever have a management team that sticks around long enough to fix those problems. I do believe size can kill a company.
awesomepirate

Wednesday, December 21, 2011 - 11:29 am · Reply

clicked on the “read more of the article here” and was immediately attacked by a virus. WTF!
Zbig

Wednesday, December 21, 2011 - 1:55 pm · Reply

An example of Sinek’s talk are two apps in the App Store that basically do the same thing: iDetective Logic Puzzles app and PunkStar’s Logic Puzzles. With iDetective, you can feel the ‘why’ behind it: the creator obviously loves logic puzzles and probably loved reading detective books to solve cases like Sherlock Holmes or Ellery Queen. You can see the care in the user interface and the puzzles that are beautifully and interestingly executed. With PunkStar’s Logic Puzzles on the other hand, the impression one gets as to why it was made is “hey, this app is pretty easy to make, I’ll get this done quick and sell as many as I can.” Thus the user interface is uninspired, the puzzles are blah. Basically the same functionality but different philosophies behind them. Look at their sample screens and app descriptions:

iDetective Logic Puzzles:
http://itunes.apple.com/us/app/idetective-logic-puzzles/id364024345?mt=8

Logic Puzzles
http://itunes.apple.com/us/app/logic-puzzles/id309575622?mt=8
- janeshepard
  
  Wednesday, December 21, 2011 - 11:55 pm · Reply
  
  I haven’t as yet examined your links but I wanted to give you high marks for providing an accessible, real-life concrete example. As those TED talks get longer in the tooth, they need refreshing. Thanks.
Derek Currie

Thursday, December 22, 2011 - 6:16 pm · Reply

And that’s why big successful companies roll over and die.

As usual Cringely dramatically over-simplifies the situation. Fine, there’s one aspect of ruining a company. But it’s barely a scratch on the surface of the entire phenomenon that has been proceeding post haste over the last 10 years.

I continue to point directly at Marketing-As-Management as one of the surest and fastest ways to tank a company. Can you fathom that complexity Cringely?