Poor Steve Jobs. Not only has ill health forced him to relinquish the job and the company that he loves, but he must also suffer the Twain-like horror of reading his own obituaries. No doubt many will laud his design sense, his presentational skills, cool advertising, obsession with details and maniacal oversight. But many business leaders have had these talents and few have fared as well. What Jobs has had, par excellence, has been something less romantic but extremely rare: strategic coherence.
Few CEOs these days have a strategy. That's the conclusion Richard Rummelt draws in his new book Good Strategy/Bad Strategy. But once of Jobs' many strengths has been his profound understanding of, and sensitivity to, externalities. When Apple roared back to market dominance and outstanding profitability in 2005, it wasn't just because iPods were cool. It was because, at the beginning of the century, Jobs had put in place a product plan aimed at one great external future event: the moment that broadband penetration in the U.S. exceeded 50%. Once that occurred, digital entertainment became technically and commercially feasible.
In the period 2002-5, Jobs assembled and owned all the components he'd need to take advantage of the new broadband market: WebObjects, Safari, iTunes, QuickTime and the MacOS itself. He also threw a vast proportion of the company's cash at a retail strategy that experts said was extravagant and out of date. When market analysts derided him - as they did, relentlessly, every single quarter - because the company was losing market share, he ignored them. And when broadband took off, so did Apple.
This is text book strategy because it
- Identifies external events that will change customer behavior
- Aligns product development to take advantage of that event - well before it occurs
- Defends itself by owning critical components, thus reducing risk and exposure
- Coheres to distinctive brand positioning
- Doesn't wobble under pressure.
Photo courtesy of Flickr user acaben C.C.2.0