NO. 1 I AP­PLE TURNS IT ON

Fast Company - - Contents - By Robert Safian

Ap­ple has a val­u­a­tion that’s ap­proach­ing $1 tril­lion. But that’s not why it’s at the top of our list.

The only things more im­pres­sive than Ap­ple’s fi­nan­cial num­bers are the prod­ucts that gen­er­ated them. For a com­pany rou­tinely slagged for not hav­ing had a hit since 2010’s ipad, Ap­ple, which as of mid-jan­uary was val­ued at more than $900 bil­lion, had a heck­uva 2017: Its wire­less Air­pods be­came ubiq­ui­tous from Brook­lyn to Boise, and can now be paired with the best-sell­ing Ap­ple Watch Se­ries 3, which has GPS and cel­lu­lar con­nec­tiv­ity, for a mean­ing­ful, new con­sumer ex­pe­ri­ence. Devel­op­ers em­braced ARKIT, Ap­ple’s aug­mented-real­ity frame­work, like noth­ing since 2008’s App Store (which paid out $26.5 bil­lion last year). Af­ter a year of whin­ing about what the new iphone might of­fer, most skep­tics were blown away by the iphone X, with its fa­cial recog­ni­tion, cam­era qual­ity, bezel-to­bezel screen, and new user in­ter­face. Now, Homepod, first an­nounced last June, of­fers a fresh take on the in­tel­li­gent speaker. Th­ese cat­e­gory-re­defin­ing prod­ucts don’t just defy the adage that scale ham­pers agility and cre­ativ­ity—they oblit­er­ate it. Dur­ing a Jan­uary 10, 2018, con­ver­sa­tion at the newly opened Ap­ple Park (it­self an im­pres­sive prod­uct launch), Ap­ple CEO Tim Cook sat down with Fast Com­pany to dis­cuss the overarching phi­los­o­phy be­hind Ap­ple’s ev­ere­volv­ing uni­verse and what unites its am­bi­tions and endeavors. What makes a good year for Ap­ple? Is it the new hit prod­ucts? The stock price? Stock price is a re­sult, not an achieve­ment by it­self. For me, it’s about prod­ucts and peo­ple. Did we make the best prod­uct, and did we en­rich peo­ple’s lives? If you’re do­ing both of those things—and ob­vi­ously those things are in­cred­i­bly con­nected be­cause one leads to the other—then you have a good year. Do you look back at some years and say, Oh, that was a good year, that year wasn’t as good? I’ve only had good years. No, se­ri­ously. Even when we were idling from a rev­enue point of view—it was like $6 bil­lion ev­ery year—those were some in­cred­i­bly good years be­cause you could be­gin to feel the pipe­line get­ting bet­ter, and you could see it in­ter­nally. Ex­ter­nally, peo­ple couldn’t see that.

With the ipod, be­fore it came out, we didn’t re­ally know that it would be­come as big. But it was clear it was chang­ing things in an in­cred­i­bly good way. Of course with the iphone it was clear that that was a huge change, a cat­e­gory de­finer, but who would’ve thought [it would have im­pact] to the de­gree that it [did].

We for­get that the iphone wasn’t im­me­di­ately em­braced by ev­ery­one. [Peo­ple said] it could never work be­cause it didn’t have a phys­i­cal key­board. With each of our prod­ucts there’s that kind of story. Over the long haul, you just have to have faith that the strat­egy it­self leads to [fi­nan­cial re­sults] and not get dis­tracted and fo­cus on them. Be­cause fo­cus­ing on them doesn’t re­ally do any­thing. It prob­a­bly makes the re­sults worse be­cause you take your eye off what re­ally mat­ters.

So what does mat­ter? It’s al­ways prod­ucts and peo­ple. The ques­tion at the end of ev­ery year, or ev­ery month or ev­ery week or ev­ery day, is, Did we make progress on that front?

Given the re­lent­less pace of change in the world, how do you pri­or­i­tize what Ap­ple is go­ing to spend its time on, which things de­serve at­ten­tion and which things are dis­trac­tions? There is more noise in the world than change. One of my roles is to try to block the noise from the peo­ple who are re­ally do­ing the work. That’s tougher and tougher in this en­vi­ron­ment. The pri­or­i­ties are about say­ing no to a bunch of great ideas. We can do more things than we used to do be­cause we’re a bit big­ger. But in the scheme of things ver­sus our rev­enue, we’re do­ing very few things. I mean, you could put ev­ery prod­uct we’re mak­ing on this ta­ble, to put it in per­spec­tive. I doubt any­body that is any­where near our rev­enue could say that.

You have to make sure that you’re focused on the thing that mat­ters. And we do that fairly well. I worked at a com­pany a while back, many years ago, where ev­ery hall­way you go in, you would see their stock price be­ing mon­i­tored. You will not find that here. And not be­cause you can get it on your iphone.

Do the in­vest­ment mar­kets make in­no­va­tion harder? Or does Wall Street mo­ti­vate change? The truth is, it has lit­tle to no ef­fect on us. But we are an out­lier. More gen­er­ally, if you look at Amer­ica, the 90-day clock [mea­sur­ing re­sults by each fis­cal quar­ter] is a neg­a­tive. Why would you ever mea­sure a busi­ness on 90 days when its in­vest­ments are long term? And the pay­off doesn’t nec­es­sar­ily hap­pen on that kind of cadence. No, of course not. If I were king for a day, that whole thing would change. But when I re­ally get down to it, here, it af­fects a few of us be­cause we have to do a quar­terly call and so forth, but does it af­fect the com­pany? No.

So what com­pels you to wow con­sumers year af­ter year with new prod­ucts? What drives us is mak­ing prod­ucts that give peo­ple the abil­ity to do things they couldn’t do be­fore. Take iphone X, the por­trait-light­ing fea­ture. This is some­thing that you had to be a pro­fes­sional pho­tog­ra­pher with a cer­tain setup to do in the past. Now, iphone X is not a cheap prod­uct, but a light­ing rig—th­ese things were tens of thou­sands, hun­dreds of thou­sands of dol­lars.

And an iphone X does more than just take pic­tures. There are so many parts. With ARKIT, we cre­ated some­thing that es­sen­tially took the heavy lift­ing with [aug­mented real­ity] and put it in the op­er­at­ing sys­tem, which em­pow­ers thou­sands of devel­op­ers even­tu­ally to be able to build AR into their apps. Some will be very pro­found, life chang­ing. There is no doubt about that in my mind.

Some­times Ap­ple takes the lead, in­tro­duc­ing unique fea­tures—face ID, for in­stance. Other times you’re okay to fol­low, as long as you de­liver what you feel With its em­pha­sis on sound qual­ity, the Homepod smart speaker am­pli­fies Ap­ple’s com­mit­ment to mu­sic. is bet­ter, like Homepod, which is not the first home speaker. How do you de­cide when it’s okay to fol­low? I wouldn’t say “fol­low.” I wouldn’t use that word be­cause that im­plies we waited for some­body to see what they were do­ing. That’s ac­tu­ally not what’s hap­pen­ing. What’s hap­pen­ing if you look un­der the sheets, which we prob­a­bly don’t let peo­ple do, is that we start projects years be­fore they come out. You could take ev­ery one of our prod­ucts—ipod, iphone, ipad, Ap­ple Watch—they weren’t the first, but they were the first mod­ern one, right?

In each case, if you look at when we started, I would guess that we started much be­fore other peo­ple did, but we took our time to get it right. Be­cause we don’t be­lieve in us­ing our cus­tomers as a lab­o­ra­tory. What we have that I think is unique is pa­tience. We have pa­tience to wait un­til some­thing is great be­fore we ship it.

So this dif­fer­en­ti­a­tion I’m try­ing to cre­ate be­tween Face ID on one end and Homepod on the other, you don’t see it that way. I think about things from a core tech­nol­ogy point of view. If you look at the core tech­nol­ogy in each of our prod­ucts, we had to start work­ing on it years be­fore the prod­uct shipped. With iphone X, for

ex­am­ple, if you look at the Bionic chip, we started work­ing on that many years be­fore it came out. Be­cause we [de­sign] our own sil­i­con, it puts a level of dis­ci­pline in our plan­ning process. Now it also gives us an in­cred­i­ble ad­van­tage from a prod­uct point of view, be­cause we can do things that oth­ers can’t.

In the mag­a­zine busi­ness, the is­sue doesn’t ship when we’re done with it, it ships when we have to print it. Some­times that en­forced dis­ci­pline is valu­able in push­ing peo­ple. On the one hand, you’re pa­tient, but on the other, you have to set dead­lines, to cre­ate a forc­ing func­tion some­how. You have to have a forc­ing func­tion. For us, on the prod­uct side, we have to come up with our sil­i­con re­quire­ments three, four-plus years in advance. So we’ve got things that we’re work­ing on now that are way out in the 2020s.

You also want to have the flex­i­bil­ity to go right up un­til the last minute so that you are con­tin­u­ing to ex­plore and use the prod­uct and dis­cover more things that you want to do. There has to be a bal­ance. If we try to al­low that kind of flex­i­bil­ity in the sil­i­con piece, we’d never ship a prod­uct.

[A prod­uct] is like a train—the train leaves the sta­tion, and if you have a great idea af­ter that, it’s go­ing on the next train. You’re not go­ing to call this one back to the sta­tion.

We have events, other things, that give us goals, ship­ping by a cer­tain time. But ul­ti­mately the ques­tion is, Is the prod­uct great? Is it ready? And if it’s not, we de­lay.

How do you fac­tor in out­sider opin­ions? Some peo­ple com­plain, “Oh, Ap­ple isn’t com­ing out with any­thing new,” and oth­ers will say, “Oh, there is so much new that we’ve reached Peak Ap­ple.” You’re grin­ning. We don’t have a tin ear. We def­i­nitely lis­ten. But be­cause we know what’s hap­pen­ing in­side the com­pany, we just have to find an­other chan­nel to lis­ten to and tune out the noise.

What about cri­tiques that you get from con­sumers? Cus­tomers are jew­els. Ev­ery day I read a fair num­ber of cus­tomer com­ments, and they vary widely. Some are writing pos­i­tive things about a store ex­pe­ri­ence, an em­ployee who did an in­cred­i­ble job for them. Some are say­ing, “Hey, I want a fea­ture that’s not in the prod­uct right now.” Some are say­ing this fea­ture should work this way, some are say­ing they had a life-chang­ing ex­pe­ri­ence with our prod­uct. I can no longer read all of them, but I read a bunch of them, be­cause it’s sort of like check­ing our blood pres­sure.

Is there some pat­tern you’re look­ing for? I tend to weight the ones that are most thought­ful. That doesn’t mean po­lite—i don’t mind peo­ple say­ing I’m ugly or what­ever. It’s just, what level of thought is it? I care deeply about what users think.

There’s a lot of talk right now at big tech com­pa­nies about the un­in­tended con­se­quences of tech­no­log­i­cal ad­vances. How do you keep your ear open to those po­ten­tial things with­out slow­ing down the ma­chin­ery of change? I’m very sen­si­tive to that. Our prod­ucts are all about the peo­ple who use them. What comes with that is try­ing to an­tic­i­pate not only the great things that peo­ple can use your prod­ucts for but those things that might not be so good, and try to get out in front of those.

We im­ple­mented some­thing in IOS 11 where it de­tects if you’re in a car and will shut off your mes­sages and no­ti­fi­ca­tions. That isn’t us play­ing Big Brother. That’s us giv­ing you a tool to help you do the right thing. You can over­ride it; you may be a pas­sen­ger in­stead of the driver, and that’s okay. But we would like to try as many of those as pos­si­ble so that we help peo­ple do the Clock­wise from top left: The Ap­ple Watch, iphone X, and Air­pods wowed con­sumers—and reviewers—in 2017. right thing. Back in the day, giv­ing peo­ple the abil­ity to buy mu­sic dig­i­tally. That was about do­ing the right thing in a sim­ple and straight­for­ward man­ner be­cause at that time ev­ery­body was rip­ping mu­sic off. Es­sen­tially, mu­sic was be­com­ing free. We re­ally try to think through th­ese things.

Mu­sic has al­ways been part of the Ap­ple brand. Ap­ple Mu­sic has had a lot of user growth, but stream­ing is not a ma­jor mon­ey­maker. Do you think about stream­ing as a po­ten­tial stand-alone profit area, or is it im­por­tant for other rea­sons? Mu­sic is in­ter­est­ing be­cause it in­spires peo­ple. It mo­ti­vates peo­ple. There is a deep emo­tional con­nec­tion. Ap­ple was serv­ing mu­si­cians with a Mac­in­tosh back in ’84–’85. So it’s some­thing that’s deep in our DNA.

Mu­sic is a ser­vice that we think our users want us to pro­vide. It’s a ser­vice that we worry about the hu­man­ity be­ing drained out of. We worry about it be­com­ing a bit­sand-bytes kind of world, in­stead of the art and craft.

You’re right, we’re not in it for the money. I think it’s (Con­tin­ued on page 104)

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