A key to Apple's success: Products over Profit

[sjw]

I used to try to convince Objectivists that product not profit should be the main priority in business and caught a lot of flak from them over it. Who knows, maybe after the mainstream figures it out, they'll come around too.

http://blogs.hbr.org/cs/2011/10/steve_jobs_solved_the_innovato.html

Shayne

[Selene]

I used to try to convince Objectivists that product not profit should be the main priority in business and caught a lot of flak from them over it. Who knows, maybe after the mainstream figures it out, they'll come around too.

http://blogs.hbr.org...e_innovato.html

Shayne

This seems to follow the Rearden and Roark paradigms of achievement.

[syrakusos]

The professors at Organizations & Markets invest much effort in mining Hayek, Kirzner, Schumpeter and Mises for clues about what entrepreneurship really is. As the article noted, Microsoft finds untapped niches and then builds a product for them. That, too, is entrepreneurship: reducing inefficiencies; delivering the goods people want. Clearly, other practices also are entrepreneurial and also bring success. Apple's inventions of cool things points to that. However, the marketing of innovations is not a guarantee. For a sociology class where I sat through many complaints about "McDonaldization" and other evils of capitalism, I put together a list of famous market failures. Among them was vitamin water. First offered in the mid-1980s, it was hoisted by a marketing magazine as that year's dumbest idea. Toiday, of course, we have many options for "vitamin water," including Red Bull, Monster, and 5-Hour Energy.

For two better sociology classes taught by Ron Westrum - Complex Organizations; and Technology and Society - we studied the curves for profitability. Broadly, there are innovators, early adopters, trend setters and followers. Generally, the successful early adopter makes more money than the innovator because innovators fail, while the early adopters allow them to suffer those initial risks. Followers make the least profit, but at much lower risk - and risk is a cost of capital, so while gross incomes are lower, the margins are higher.

I think that we will agree that business schools generally fail to teach entrepreneurship because it cannot be taught. It can be learned, but not taught. There can be no curriculum because there is no formula. Business schools turn out managers who protect other people's resources. Apple lost markets to corporate executives who went with the PC because "you can't get fired for recommending IBM." Even if it fails, you cannot be blamed. Go with Apple, and you might not be able to defend yourself. And it is a game of defense.

On the other hand, an entrepreneur will invest all the resources available to realize a dream. But first, you need the dream.

[BaalChatzaf]

I used to try to convince Objectivists that product not profit should be the main priority in business and caught a lot of flak from them over it. Who knows, maybe after the mainstream figures it out, they'll come around too.

Shayne

If you build it, they will come.

Ba'al Chatzaf

[sjw]

I used to try to convince Objectivists that product not profit should be the main priority in business and caught a lot of flak from them over it. Who knows, maybe after the mainstream figures it out, they'll come around too.

http://blogs.hbr.org...e_innovato.html

Shayne

This seems to follow the Rearden and Roark paradigms of achievement.

Yeah, I tried pointing that out, to no avail.

It's not about a "profit motive"; it's about having a value-creation motive. Profit is a means to an end. I'm glad that with Apple I have at least one American company I can point to when I make this case from now on.

Shayne

[sjw]

If you build it, they will come.

Ba'al Chatzaf

“It isn’t the consumers’ job to know what they want.” --Steve Jobs

“Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”--Steve Jobs

Shayne

[merjet]

It's not about a "profit motive"; it's about having a value-creation motive. Profit is a means to an end. I'm glad that with Apple I have at least one American company I can point to when I make this case from now on.

There is obviously no strong correlation or dichotomy between products and profits. If you believe there is, the Apple Lisa and Apple III are counter-examples.

[sjw]

Another thing I used to argue with Objectivists about was whether Bill Gates should be seen as a hero. They also used to berate Jobs for his Eastern-style philosophy. You don't have to argue with them about these things anymore.

Shayne

[sjw]

It's not about a "profit motive"; it's about having a value-creation motive. Profit is a means to an end. I'm glad that with Apple I have at least one American company I can point to when I make this case from now on.

There is obviously no strong correlation or dichotomy between products and profits. If you believe there is, the Apple Lisa and Apple III are counter-examples.

And here we go. Thank you for joining the party and showing what I'm going on about. I never said there was a dichotomy. I said there was a priority.

Shayne

[merjet]

And here we go. Thank you for joining the party and showing what I'm going on about. I never said there was a dichotomy. I said there was a priority.

Okay, what's the priority? Which is the cause and which is the effect? My counter-examples remain just that.

[sjw]

Jobs had his faults of course, but his primary motives were heroic. One of his faults is what may have gotten him killed (as his biographer points out).

Jobs is the person that can be compared to Roark or Rearden. Not completely, but in a general way. But Gates -- the antithesis of Jobs -- is the one that Objectivists have historically most connected to business heroism.

Shayne

[sjw]

And here we go. Thank you for joining the party and showing what I'm going on about. I never said there was a dichotomy. I said there was a priority.

Okay, what's the priority? Which is the cause and which is the effect?

In a virtuous pursuit, profit is a means to an end. The end -- the creation of the value that is the product -- has priority.

You can't passionately serve two masters. Either what drives you is fiat money, or what drives you is to create something excellent.

Shayne

[merjet]

You can't passionately serve two masters. Either what drives you is fiat money, or what drives you is to create something excellent.

Is that a dichotomy? If yes, which one have you chosen?

[sjw]

You can't passionately serve two masters. Either what drives you is fiat money, or what drives you is to create something excellent.

Is that a dichotomy? If yes, which one have you chosen?

I don't understand why this is so difficult for you. A business should have as its primary purpose the creation of value -- and by that I mean the particular products and services it creates as opposed to fiat dollars. Profit is the means to that end, it's not the other way around. There is no dichotomy between profit and real value, but there is a difference between means and ends.

Shayne

[sjw]

http://thechart.blogs.cnn.com/2011/10/25/steve-jobs-a-difficult-patient/?hpt=hp_c2

It would be extremely naive not to think that Jobs' approach here did not reflect a wider irrationality that negatively affected Apple. And yet, he is arguably one of the best CEO's that we've have in our current era of the mixed economy. There is no contradiction here.

Shayne

[Brant Gaede]

Jobs had his faults of course, but his primary motives were heroic. One of his faults is what may have gotten him killed (as his biographer points out).

Jobs is the person that can be compared to Roark or Rearden. Not completely, but in a general way. But Gates -- the antithesis of Jobs -- is the one that Objectivists have historically most connected to business heroism.

Shayne

I agree with this. The reason is while Randian heroes are depicted as creative geniuses, the creativity of them (and Rand) is of a different order than that of a Steve Jobs, Mozart, or Frank Lloyd Wright. In the first instance it seems forced, even contrived as with Rearden, in the second it seems to flow. But if you look at any of these real life people closely, you'll find contradictions. Gates is a mixed bag and so is Jobs. It's just that Jobs is the better bag. And everybody builds on everybody else, even sometimes swiping things. An egregious example was William Shockley stealing untoward credit for the invention of the transistor. My family knew the Shockleys in the late 1930s--I've even got a photo of him paddling a canoe in upstate New York with my sister and his daughter--and my Mother kept in contact with the wives of the three inventors for a while, and it was common knowledge amongst them that the other two guys deserved most of the credit. Shockley made a core, albeit controversial, contribution and the other two made it work and then Shockley jumped into the situation like a publicity pig. Bell Labs made sure all three got credit and they shared the Nobel Prize, but the one who got the most credit overall historically deserved it the least. Still, because of him we ended up with the Intel Corporation and Moore's Law. Shockley started the predecessor company and drove away all the great talent he had assembled because of his personality. Even though his IQ was only in the low 130s he was a genius, although all the emphasis he later on put on IQ earning him notoriety in the late 60s and early 70s was thereby ironical in the extreme. He didn't announce his IQ to the world, but in the late 1930s his daughter and my sister went to the same intellectually hoity-toity pre-school in NYC and all the parents IQs were recorded and my Mom learned it that way. (No, the kids were not intellectually stimulated, they were "socialized" doing their own things while followed around by white-coated note takers.)

--Brant

[Brant Gaede]

Apple has peaked as a company, BTW. The market cap is extremely high even when you x-out the +50 billion in cash. It's not just the passing of Jobs, who is irreplaceable, it's the nature of the company always having to come out with great products with associated R and D expenses. How much R and D does Coke have to do? The capstone is the gigantic new building for the company they are going to build. It doesn't matter that they have the money to build several of them, it's a drain on management resources to even think about such crap. You need more space? Go rent an empty building and put in used furniture. Need a desk?--get an old door and put it up on two filing cabinets and get back to work, pronto. It's like all those huge skyscrapers built at the height of a company's economic power and dominance. The Sears Tower, the Chrysler Building if not the Empire State Building, the A T and T building by Phillip Johnson, that thing in Dubai, etc.

Apple will do very well for quite a few more years, especially with that brand name and cash hoard, which they cannot rationally let go as dividends, but it is now on a downward slope. Not Intel, not even Microsoft, yet.

--Brant

might buy a tablet

[Dennis Hardin]

It's not about a "profit motive"; it's about having a value-creation motive. Profit is a means to an end. I'm glad that with Apple I have at least one American company I can point to when I make this case from now on.

There is obviously no strong correlation or dichotomy between products and profits. If you believe there is, the Apple Lisa and Apple III are counter-examples.

Merlin is correct here: It is not “either-or” - Either you focus on creating great products or you focus on making money. The two goals are entirely compatible. Properly, a person’s focus should be on the general goal of productivity—using your mind to promote your long-term survival. Since you need to eat, obviously part of your focus has to be on creating something that others will find of value, which you can then exchange for other goods. That’s what it means to create wealth. But the choice of what to create should properly come from your personal value system—what specific creative activities bring you pleasure. If you enjoy your work, making good money is usually the result. The Objectivist view is that you should focus your productive, money-making energies in areas which also bring you enjoyment and satisfaction. That’s the sort of productive energy that creates the fantastic products offered by a company like Apple. But there is nothing whatsoever wrong in having a dual focus on maximizing profits. Quite the contrary.

Suggesting an artificial disconnect between the goals of creating good products and making profits is a manifestation of the mind-body dichotomy: the view that there is an inherent conflict between the mental and the physical, the moral and the practical. Hank Rearden in Atlas Shrugged was an embodiment of the mind-body split. Even though he loved his work just like he loved Dagny, he felt that both were entirely “materialistic” and somehow ignoble. That’s why he disdained the greatness of his own creative genius and saw himself as a “materialist.” It is Francisco who teaches Rearden that both his love for his work and his love for Dagny are highly spiritual—i.e., derive from his intellect and his values--and that wealth is the consequence of ingenuity and hard work, not the exclusive goal.

Your suggestion that Objectivists suffer from a lopsided focus on money to the detriment of great products reflects an inadequate grasp of one of the major themes of Atlas Shrugged (or, perhaps, the failure to read it at all). It reflects the filtering of Objectivism through the lens of the mind-body dichotomy, which Objectivism repudiates.

[sjw]

Dennis, you're dishonest. And you're an idiot. I suggested no such "artificial disconnect."

"I don't intend to build in order to have clients; I intend to have clients in order to build."--Howard Roark

Dennis clearly has never comprehended what Rand meant here.

Shayne

[Brant Gaede]

Dennis, there is a difference in working for sheer survival and having the luxury of economic surplus to work off. Economic surplus ended child labor and put children into school. Never mind child labor ending child starvation. If you have the luxury of doing the work you want why should you do what you think I want you to do? Steve Jobs never did consumer research.

--Brant

[sjw]

Brant, after seeing what some government licensed psychotherapists consider "work", I have to wonder whether Dennis even knows the meaning of work.

Who knows, maybe the idiot actually gives people good advice, but I doubt it.

Shayne

[sjw]

I agree with this. The reason is while Randian heroes are depicted as creative geniuses, the creativity of them (and Rand) is of a different order than that of a Steve Jobs, Mozart, or Frank Lloyd Wright. In the first instance it seems forced, even contrived as with Rearden, in the second it seems to flow.

The forced, contrived aspect you're perceiving might have come from her Russian background. The Communist work ethic is -- work, work, work! Maximize profits for the good of the State! The purpose of work is profit, and the purpose of profit is to enlarge the power of the State. (See "The Masks of Communism", http://www.amazon.com/masks-communism-Dan-N-Jacobs/dp/B0007E2FVG ).

A value-creator's purpose in work is much different. It is to create an object of love, to further human life, to strive for what one is capable of. It's not merely about profit maximization, although profit can certainly be instrumental to specific ends.

It is ironic that idiot Dennis accuses me of a "mind-body" dichotomy, because this "pursue maximal profits" philosophy that I am repudiating is precisely an example of the mind-body dichotomy. An individualist doesn't pursue maximum profit, he pursues maximum life value, and life consists of far more than just profits. In the case where it is of great value for you to create the best possible computer, obviously that requires a great deal of revenue in order to do that. But the goal is the computer, not the revenue. This was Jobs' very healthy motivation, not the "profit motive", but the human values motive.

Shayne

[anthony]

Brant, after seeing what some government licensed psychotherapists consider "work", I have to wonder whether Dennis even knows the meaning of work. Who knows, maybe the idiot actually gives people good advice, but I doubt it. Shayne

Shayne,

I often think of you as a Ferrari: 0 - 60 in 3.2 seconds.

Dennis is perceptibly no idiot, and I thought his post balanced out the good point that you have made.

Over all, I agree with you on creativity motive above profit motive - but not by too far! Survival matters.

I do believe there is an excess of admiration for the Trumps and Gates' of the world, in O'ist circles. The bigger the better, to fit the perceived Randian mode - but I wonder if she'd have had any respect for them.

I spare many thoughts for entrepeneurs who didn't make it big, through bad timing or ignorance of marketing, or whatever.

You and Dennis put forth good arguments, and I'm not even trying to be diplomatic.

(Does this make me half an idiot?)

Tony

[Brant Gaede]

Brant, after seeing what some government licensed psychotherapists consider "work", I have to wonder whether Dennis even knows the meaning of work.

Who knows, maybe the idiot actually gives people good advice, but I doubt it.

Shayne

Nothing he has posted I've read would give me a reason not to use him if I needed that kind of help, assuming he did not already Internet or otherwise know me. Having been through all that with Nathaniel Branden, I know a lot about effective therapy and understand ineffective and wasted and bad therapies. In any case, Dennis couldn't do someone like me any harm. Even 35 years ago I intuitively knew too much about this kind of thing and was much too tough. But I'm speaking for myself, not another type of potential client. The trick is fitting the client to the right therapist. A good therapist will decide if he can work with a prospective client or refer him to someone else. One type of ineffective therapy is telling the client what's wrong with him. You might tell him what you think might be wrong if he asks or to use as a bridge within an ongoing therapy, but it likely won't change anything and you'd probably be wrong regardless. Among other things good therapy would involve using altered states of consciousness and the client telling the therapist not the other way around what is what or what was what. As for the latest stuff, tapping, energy field therapy, or what not, I've no idea or experience with.

It is not proper on this forum and its context to impugn someone's professional qualifications and worth, especially in such an area. Dennis might be working with someone right now who reads this junk and her therapy ends up on the rocks consequently. All that is being demonstrated is that if you want to be a psychotherapist, you have a lot to learn. I'm sorry to sound so harsh, but harsh is the only right way for me to be about this and you owe him a retraction and an apology.

--Brant

"advice" is the core of what Ann Landers does, it is not at the core of psychotherapy

[Brant Gaede]

Brant, after seeing what some government licensed psychotherapists consider "work", I have to wonder whether . . .

Shayne

Unlike medicine, you can completely discount licensed credentials in psychotherapy save that they point out that some work has been done and it's not complete quackery.

--Brant

complete quackery doesn't have to be dangerous quackery in this area; you never know