Thursday, October 6, 2011

The Qualitative Steve Jobs

Innovation distinguishes between a leader and a follower.
                                             Apple Co-Founder Steve Jobs

Steve Jobs was a discontinuous innovator. Like Edison with the light bulb and Benz with the automobile, he introduced products that not only changed human behavior, but also fully altered the course of human history. He was never happy tinkering with – or even improving upon - whatever already existed.

He was not a continuous innovator like John Sculley - the suit from Pepsi who followed him and fired him in 1985. Or like Jack Welch – the one-dimensional, six-sigma bore whose ego refuses to go away, or any of the tens of thousands of clever accountants whose only contribution to the mélange of distortion is in concocting new ways to add and subtract numbers to make the results look better.

Don’t get me wrong. Continuous innovators are important and they make up the vast majority of the labor force. But they are good at only one thing – tinkering with what already exists. They do not have the capacity to create things that do not yet exist. And they certainly do not alter the course of human events.

It was the questioning of what already existed that fueled the genius of Steve Jobs – and irony of ironies it was that revolutionary spirit that helped fuel Apple’s remarkable resurgence in revenue and stock price since his return to the company in 1996.

And if you think this is all pie-in-the-sky, earthy mumbo jumbo, let’s put it in terms that the continuous innovators and Wall Street carnivores can understand – financial results.

First, in terms of Apple’s revenue. In the years following Apple’s IPO in 1980, revenue increased at an average rate of over 50 percent per year under Jobs. Then he was fired in 1985. During the next 12 years without Jobs, Apple’s revenue grew at an average rate of 13.5 percent. Upon his return to the company, revenue has increased nearly 1000 percent – an average rate of more than 20 percent per year. Even more impressive is the rate of revenue growth since 2004 – more than 40 percent per year - unprecedented in American business history for a company more than 25 years old.

How did this happen? Two words: Steve Jobs.  It was Jobs and his penchant for discontinuous innovation in the form of the iPod, iPhone and iPad. He didn’t just introduce new products like so many other schmoes. He changed the way we communicate. He changed the way we are informed, the way we are entertained.

Second, in terms of stock price. Let’s say you had an extra $20,000 lying around in May 2000 and wanted to place two $10,000 bets in the stock market. Your broker urges you to buy General Electric – the darling of Wall Street and a stock that just the day before split 3 for 1. You are also impressed with Jobs and Apple so you place your bets on May 8, 2000: $10,000 in GE stock yielding 191 shares and $10,000 in Apple stock yielding 91 shares.

Eleven years later, on the day that Steve Jobs dies, you check in on your bets and realize that while your investment in GE has shrunk by more than 70 percent, your investment in Steve Jobs has increased more than 12 fold!

VALUE ON 10/05/11

Steve Jobs proved that someone without a Harvard MBA could use the qualitative side of his brain to create what convention has been unable to do - to all at once deliver historically unmatched organic growth while rocking the hell out of Wall Street.

Steve Jobs proved that growth could happen unconventionally – that the qualitative can drive the quantitative. This is the same spirit that must drive the Qualitative Revolution – where you listen to your heart, take control of your life, and shape it as only you would shape it.

Aldus Huxley once said that “a child-like man is not a man whose development has been arrested; on the contrary, he is a man who has given himself a chance of continuing to develop long after most adults have muffled themselves in the cocoon of middle-aged habit and convention.”

This was Steve Jobs. His “child-like” spirit is a lesson – and a gift – for all of us.

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