Intel and Apple are very different companies, yet both produced some recent news that suggests a possible comparison. Last week Intel had their industry analyst meeting, and this week Tim Cook announced what amounts to the second and third major change from Steve Jobs’ policy.
Contrasting the two companies isn’t to showcase competitive strengths or weaknesses against each other. The firms are simply too different from one another (and Apple is an Intel customer). Instead, the point is to showcase policies that on Intel’s side are strategic and Apple’s tactical.
Intel’s event showcased as it as a firm thinking about where they will be in 5 or more years while Apple appears increasingly focused on stock value in real time. It is the strategic vs. the tactical. And since I think far too many companies focus far too much on the tactical, I’d like to explore this topic this week.
Of the companies that exist in the technology space, IBM is by far the most strategic. They have been around for over a century and the firm was designed by two generations of Watsons to be eternal.
The company’s historic near failure was the result of a string of executives that increasingly focused on quarterly results in exchange for strategic positions. It first give up the firm’s successful, and prophetic, model of computing as a service (they initially had software free on hardware they leased). And eventually it lost the desktop, largely as a result of validating Microsoft and then crippling the PC Jr. in order to protect the margins of their higher end products.
Currently IBM’s major initiatives involve the concept of Smarter Planet and they encompass the world with no apparent end date. The planet can never be smart enough, and this is the epitome of strategic.
The Intel Industry Analyst meetings are confidential so I can share only my impressions, not the content. However, more than I can remember since Andy Grove ran the company, last week Intel delivered a strategic message.
They highlighted a policy that, like IBM’s, is focused on ensuring top executives have the breadth to run the company and are clearly anticipating Paul Otellini’s retirement, which is likely still around a half decade out. They showcased advertising creative that is reminiscent of the legendary work they did with the Intel Bunnymen, and I think you’ll enjoy seeing Intel’s return to advertising prominence later this year.
They also showcased a string of strategic investments in areas like security. This is likely where the future wars for processors will be fought. And the company once again emphasized strategic purchases like MacAfee, which are designed to assure that future.
Intel recognized that it is weak in tablets and smartphones and have shifted substantial resources to address these shortcomings. But over all of there was a growing sense of “better together,” where having Intel at all parts of a solution – from desktops and handhelds to networking and servers and services – that ensures that the future for Intel will be bright.
Finally, while they didn’t speak of this, surrounding the event were moves in the background by Intel’s media group. An organization focused on bringing Intel into the living room to create a new media service that could provide a bandwidth-optimized rich HD/3D home experience currently unmatched.
In short, at Intel, it was all about the long-term future and ensuring Intel’s would be bright. Paul Otellini is earning his salary and has emerged from the shadow of legendary CEO Andy Grove by doing what IBM’s Sam Palmisano did, and making sure he will leaving Intel far better than he found it.
This week Tim Cook announced two more changes from Steve Jobs’s policy. Apple will institute a stock buyback program and pay dividends. His prior change was to reinstitute Apple’s charitable giving program, something that Steve Jobs had killed when he came back. Jobs felt that if investors wanted to be philanthropic they would do so with their own money. They didn’t invest in firms like Apple to do that for them. Given Apple’s success it is hard to argue that Steve wasn’t right.
Stock programs tend to eliminate reserves in order to raise stock price. They have only an adverse impact on the firm’s future because they reduce liquid assets and have no impact on the company’s ability to compete. In contrast to Intel, Apple has a very weak executive pool to replace Cook and Cook wasn’t really trained to replace Steve Jobs, he was trained to supplement him.
Cook historically did the jobs that Steve didn’t want to do, so while he was the best of those inside the firm he wasn’t really groomed to replace Steve. And if Apple has a grooming program to replace Cook it isn’t being disclosed.
As a result Apple is increasingly looking tactical, largely living off Jobs’s legacy. But changes are tied to improving the firm’s image with things like philanthropy or increasing the perceived value of its stock -– not in investing in the company’s future.
In the end that may make the new Apple seem much more like the old Apple.
Corporations are designed to be eternal but few actually work to ensure this immortality. There are a handful of firms that were around when IBM reached its 50-year anniversary that were around at IBM’s birth. And 50 years later that handful has dropped to a few fingers.
That’s thousands of avoidable failures of companies and millions of jobs lost because executives couldn’t see beyond the tactical and build for the future. Intel is the only company in technology that has a top cultural anthropologist, Genevieve Bell, running a lab analyzing the future to ensure Intel can anticipate it.
They showcase that a younger firm can learn from an older one in order to survive. Apple’s star is burning brighter but at greater risk of burning out because it hasn’t learned this lesson yet. And the technology graveyard is full of Digitals, Compaqs, Osbornes, Commodores, Netscapes, Suns, Palms and other firms that simply couldn’t figure out that if you don’t make sure you are planning for tomorrow, you’ll likely not be around when tomorrow comes.