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Apple's Basic Philosophy

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Steve Jobs, from an article in Fortune a few years ago:

“We don’t think in terms of power,” says Jobs. “We think about creating new innovative products that will surprise and delight our customers. Happy and loyal customers are what give Apple its ‘power.’ At the heart of it, though, we simply try to make great products that we want for ourselves, and hope that customers will love them as much as we do. And I think after all these years we’ve gotten pretty decent at it.”

This is another example of the importance of beliefs in an organization. It is yet another illustration (with the results that follow) of what Jim Collins and Jerry Porras found in Built to Last:

…truly great organizations think of themselves in a fundamentally different way than mediocre enterprises. They have a guiding philosophy or a spirit about them, a reason for being that goes far beyond the mundane or the mercenary.

And while we’re at it, here’s another example from A.G. Lafley of Procter & Gamble, in Harvard Business Review:

I learned many things from Peter [Drucker] over the years, but far and away the most important were the simplest: “The purpose of a company is to create a customer” and “A business…is defined by the want the customer satisfies when he or she buys a product or a service. To satisfy the customer is the mission and purpose of every business.”

At P&G we keep Peter’s words in mind with every decision. We declared that the consumer — not the CEO — is boss, and made it our purpose to touch more consumes and improve more of each consumer’s life. When we look at the business from the perspective of the consumer, we can see the need to win at two moments of truth: First, when she buys a P&G brand or product in a store, and second, when she or another family member uses that product in the home….By putting customers first, we’ve nearly doubled the number served, from 2 billion to 3.8 billion; doubled sales; and tripled P&G profits in the first nine years of the twenty-first century.

Drucker: The Essence of a Company is Making a Difference

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Here is a very good summary of Peter Drucker’s thinking on “the essence of a company,” by Oscar Motomura in a recent issue of Harvard Business Review:

When I first met Peter Drucker, 15 years ago, he shared with me ideas that have deeply influenced my work ever since. Chief among them was that beyond just making a profit or creating wealth for stakeholders, the essence of a company is making a difference, being really useful, and creating something the world truly needs.

That higher purpose, Drucker pointed out, has to be something grand — like General Electric’s ambition to be, as he put it, “the leader in making science work for humanity” — and not superficial, like so many of the mission statements that companies have nowadays.

Why is such a creed so important? Because without a compelling raison d’etre, a company can’t hope to tap the full potential of its employees. “The number of people who are really motivated by money is very small,” Drucker told me. “Most people need to feel that they are here for a purpose, and unless an organization can connect to this need to leave something behind that makes this a better world, or at least a different one, it won’t be successful over time.”

The Strictness Error

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There is a class I know of (elementary school) where the teacher gives out hardly any top grades (it’s a complex system–it’s not just a matter of As, Bs, etc., or even just 1, 2, 3). The thinking, it is said, is that no one is perfect, and there always needs to be room to improve.

I’m sure there is more to the rationale, but is this a good idea? No. This is called the strictness error and it is demotivating. Managers can hold to the same error when it comes to performance reviews. Hence, the problems of the strictness error for both contexts is well explained by these comments in the book Management Skills:

The strictness error is the flip side of leniency. You rate everyone very strictly. While it is acceptable to maintain high standards, performance appraisals should be an accurate reflection of performance. Appraisals that are too strict will de-motivate employees and frustrate them. They will begin to think that no matter what they do, it will never enable them to achieve the rewards that they value. [I would restate the last part of the sentence, because it sounds too extrinsically motivated, but you get the point.]

The strictness error, as mentioned, is the opposite of the leniency error. You don’t want to error on that side, either, whether in education or management. The lenience error

provides employees with high performance appraisal ratings for mediocre or marginal performance. This marginal performer is then ‘rewarded’ in organizational terms. This will increase the likelihood that his or her marginal performance will continue–because they have no incentive to improve.

Of course, the one other issue raised here for the arena of management is whether the traditional concept of a performance appraisal is a good idea at all. It is, and should, seem a bit odd that I am able to make a comparison between how we treat elementary students and how we treat adults on the job.

It is critical that people receive feedback on results and are held accountable for meeting the defined outcomes they are responsible to produce, and that this be done through a regular routine of meetings and conversations. But whether this should include or be wrapped in with a detailed performance appraisal that effectively ranks or grades people is an open question, in my view.

Government Health Care and Project Management

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In a recent column on health care, Thomas Sowell writes:

It is not uncommon for patients in those countries to have to wait for months before getting operations that Americans get within weeks, or even days, after being diagnosed with a condition that requires surgery. You can always “bring down the cost of medical care” by having a lower level of quality or availability.

That last sentence is very illuminating. You will notice the same pattern that I blogged on in regard to project management a few weeks ago. In that post, I noted that there are three constraints on anything — cost, quality, and time — and you can have two but not all three. If you need something cheap, then you will either have lower quality or a longer schedule. If you want something fast, you will either have lower quality or higher cost. And so forth.

This reality exists in health care as well as project management; it exists anywhere that you have to utilize resources. So, in regard to health care, Sowell notes that many schemes to “bring down the cost of medical care” do so by decreasing quality or increasing the time it takes to get scheduled for important surgery and care. Yet, these schemes often talk as if there is no trade off.

We ought not talk about these things as though we are operating in an unconstrained world, as though having the government step in will magically result in cheaper health care, with the same standard of quality and the same speediness of implementation.

Now, I do think it is possible for health care to get cheaper while preserving excellent quality and timeliness. We have seen this happen, for example, with computers (and technology in general) — costs have gone down, while quality and performance has gone up, and you don’t have to wait in a breadline to get one.

But how did that happen? Through innovation. The cost of health care can come down — while preserving quality and timeliness — through innovation. The question then becomes: what environment is most conducive to motivating the innovation necessary to do this?

It doesn’t come from the government. Notice, again, the tech industry — it is not governmental controls that led to the creative and risk-taking entrepreneurship behind the creation of Apple, Google, and the thousands of other companies (even Microsoft) that have transformed our lives through technological improvements. Rather, it was the opposite — letting them be free to create, pursue, fail, regroup, and make things happen.

I don’t know why it is so hard to learn this lesson. We see it every day, and now the Internet itself is one of the best examples of it — it is through decentralization that society advances, not centralization of government power over an industry.

The greatest irony is that many of the people who get this when it comes to the tech industry, the Internet, and entrepreneurship fail to see the connection when it comes to every other area — such as taxation and, the main issue here, health care.

ESV on iPhone Now Available

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From the Crossway blog:

For the first time, read the ESV Bible on your iPhone or iPod Touch, with or without an internet connection — for free. Record your own notes, highlight verses, save favorites, and share with friends. Please take a look at the ESV App and tell us what you think.

How Magazines Will be Transformed

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Wired has a very good video showing how their magazine will operate on the iPad. This finally seems to provide an electronic experience that is overall better and easier than reading the printed version:

Josh Sowin rightly observes: “This is really exciting from a design & reading standpoint. It will be the experience of reading a magazine, but with the interactivity of the web. It’s going to be a really fun decade.”

(HT: Josh Sowin)

5 Reasons Companies Should Not Block Access to Social Networks

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A good, brief article in Advertising Age that argues that “collaboration can increase productivity and resistance is futile.” The five points are:

  1. Resistance is futile
  2. Don’t assume people won’t find other ways to waste time
  3. Social networks can actually make workers more productive
  4. You’ll miss great ideas
  5. Employees are much more trustworthy than companies think

Point five is absolutely critical  — employees can be trusted. And trusting employees leads to higher performance. She adds: “If you can’t trust your employees, you have one of two problems: You are hiring the wrong people or you are not properly training the people you hire.”

Also, I think that point five overcomes point two — if you hire good people, they won’t waste time. Or, perhaps better, they will only waste time when doing so will lead to greater productivity overall.

Why Acknowledging Mistakes Increases Trust

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From What Would Google Do?:

We are ashamed to make mistakes — as well we should be, yes? It’s our job to get things right, right? So when we make mistakes our instinct is to shrink into a ball and wish them away. Correcting errors, though necessary, is embarrassing.

But the truth about truth itself is counterintuitive: Corrections do not diminish credibility. Corrections enhance credibility. Standing up and admitting your errors makes you more believable; it gives your audience faith that you will right your future wrongs.

When companies apologize for bad performance — as JetBlue did after keeping passengers on tarmacs for hours — that tells us that they know their performance wasn’t up to their standard, and we have a better idea of the standard we should expect.

Also: “Being willing to be wrong is key to innovation.”