I recall speculating with academic colleagues, in the 1980s, about what would be the characteristics of enterprises in the next century. Everyone knew then that the industrial-based enterprises of the first 75 years of the twentieth century had run out of gas. But even though most of us were using Macintoshes at the time, none of us knew that Apple would be one of the leaders ushering in an historic and revolutionary business approach, some 25 years later.
While Apple may be the subject of the world’s headlines, I want to focus on Apple as an enterprise. Because Apple has not only designed insanely great products, its leaders have also designed an insanely great enterprise. Much like business giants Carnegie, Ford, Edison, and Sloan did for the 20th Century, Steve Jobs and others have forged a new operating model fit for the 21st Century. At present, Apple leads this group. Apple will not only be given a place in the history books for its products but also for pioneering a new approach to business.
We call enterprises that use this new approach, Elastic Enterprises. We use the term elastic because it has precedent in the study of markets, prices, customer preferences and micro-economic structures. We mean elastic in the sense that enterprises like Apple, have demonstrated new ways to deal with scale, new ways to expand their boundaries, new ways to dynamically reconfigure their supply chain, new ways to incorporate and include talent, and new ways to bring value to the customer in the large (across diverse global micro-markets) and on a one-to-one basis with each and every customer.
Apple has executed this new model without peer. I want to focus on one aspect of The Elastic Enterprise operating model, its foundational pillars. In future blogs I will focus on other aspects such as radical adjacency and the real options portfolio.
Apple and all elastic enterprises have critical foundational pillars. Apple has all five pillars in operation: business platforms, universal connectors, The Cloud, business ecosystems, and sapient leadership. Many companies have one or two of these structures in place, however only a rarer group, have all five operating together as a new foundation. And the combination is definitely more than the sum of the parts. Apple illustrates this poetry in motion. iTunes together with Apple’s supply chain and App Store, forms a loosely, but highly-integrated collaborative platform that supports a rich and dynamic global business ecosystem. Partners of all sizes and capabilities co-exist and are supported by this business platform – business ecosystem combination. The business platform establishes rules of engagement and the means for successful collaboration that in turn leads to mutual financial gain for all partners, large or small.
The business platform together with its universal connectors enables Apple to utilize the growing network of Cloud services and technologies to augment its systems, services and products. It also gives Apple, like other firms that use The Cloud, the ability to expand and contract capacity as needed.
Apple also aptly demonstrates Sapient Leadership. Steve Jobs is the quintessential sapient leader. As we discuss in our book, the sapient leader must lead in new ways. The multiple demands of a vibrant business ecosystem cannot be commanded or controlled. The sapient leader must influence, orchestrate, and yes command too – but in different ways. Jobs ability to captivate, inspire and influence is legendary. Some like Bud Tribble and Andy Hertzfield refers to it as Jobs “reality distortion field.” In reality it is the ability of Steve Jobs and other Sapient Leaders to reframe their thinking and the thinking of others so that they can articulate and express a vision that others want to follow. Jobs famous statement to John Sculley in 1983 illustrates this reframing capacity: “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” — as he persuaded Sculley to leave Pepsi-Cola and join Apple.
Another trait of the sapient leader is the ability to learn and change. Jobs has changed his management style over time and has altered his plans based on input from his partners and customers. Biographers have also noted that Jobs leadership style has grown and matured through Apple, NeXT, Pixar, and back to Apple. Finally, most sapient leaders have diverse interests and general backgrounds. Steve Jobs recounted at his commencement speech at Stanford University in 2005, about “connecting the dots,” when he dropped out of Reed College and “stumbled into” a typography course that gave him a strong appreciation for beautiful typography that was later distinctively incorporated into the Macintosh.
So Apple is a thoroughbred, a leader’s leader, an elastic enterprise—and a formidable competitor. But the story is not over. We are just at the beginning of understanding what can be done with the elastic enterprise. And let’s also be clear. This is no way accords Apple with unending growth or with immortality. Apple too will face its challenges as it strives to join truly long-lived enterprises like P&G, Cargill, GE, JP Morgan, Lloyds, The UK Royal Mint, Beretta, Oxford University Press, Sumitomo, Saint-Gobain, State Street, or the Hudson Bay Company (see one list of Oldest Companies). But that’s another story.