Introducing the Apple Effect (Part 1)

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.

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