The Apple Effect is a corporate pathology. A set of behaviors that consumer-facing companies engage in, largely in response to perceiving their product and marketing inferiority when compared to Apple. The Four Key Drivers of this success are very visible:
- The Industrial Design of the Apple product line is strong and reflects a tight integration of form, functionality and aesthetic. Apple’s products have often become fashion statements.
- The Interaction Design of Apple’s softwares, including its website, iTunes store, iPhone OS, and OS-X operating system also set standards for usability, functionality and aesthetic.
- The Loyalty of its Customers is extremely high as evidenced by a fanaticism, advocacy, willingness to invest in an Apple-based lifestyle and their willingness to pay premium prices despite blatant time-discriminatory pricing.
- The Ecosystem of Services and offerings that includes the Apple Store, Genius Bar, iTunes content services (movies, music and books, for example), and the massive 3-rd party content networks that the platforms have spawned – podcasts, iPhone applications, OSX freeware utilities, etc.
Apple is so iconic and its role in our lives so significant now that we can easily forget that before the iPhone, the iPod, iTunes, OS-X, etc., Apple was just one of the many technology companies that hoped to accomplish these same things and more. Those other companies were larger, with more money, more market share, more partnerships and more access to content and the consumer.
And the Four Keys are what they do, but they are not how they do it. Having worked with many of the large CE and computer technology companies over the last two decades, I can say that I have rarely seen management in these companies actually understand how Apple accomplished these feats.
Lacking that understanding, companies often try to create the one or more of the four key drivers above through diktat – “We need a sexier product ID”, or “Let’s get some content partners”, “Update our website” or “We need that feature too.”
That is what I call the Apple Effect. It is a very normal human reaction to what is essentially business envy, “Hmmm, they have one…so we need one too.” Often, and probably more often in technology companies because of their tendency to compete through incremental feature additions, someone or some team is given the assignment to bring the company back to parity or near-parity with Apple in one of the Four Keys.
These companies are also responding to (now) being a follower – in many situations one need only replicate what the leader has done to achieve parity. We see this happen in many device categories, where price or feature competition, or even just better marketing helps usurp the leader. Yet in the five years since the middle of 2004 when the iPod gained more than 50% market share, and despite a hoard of contenders competing with different and better features, lower prices, greater compatibility, etc., it has been game-over and Apple never even looked back. In the Apple Effect, often the faster one runs to catch up, the farther behind one gets.
My observation (and I think the evidence of time as well) is that this approach does not work. Competing with Apple or (better yet) competing as Apple does is better done by understanding how Apple created and now maintains a level of supremacy – what the organization did to, um…yes, Think Different.
Over the next couple of weeks, I’ll fill out this thesis with more details. Stay tuned.