Inside Steve's Brain - Leander Kahney [64]
Bill Gates never made these kinds of mistakes. Windows was built on top of Microsoft-DOS, and Office was built on top of Windows. Every version of Windows has been compatible with the preceding version. It’s been slow, steady progress—and money in the bank.
Product vs. Business Innovation: Apple Does Both
Until recently, Jobs did not have much of a reputation for follow-through. For most of its history, Apple was seen as creative, but companies like Microsoft and Dell were the ones that executed. Pundits distinguished between companies like Apple, which are good at product innovation, and companies like Dell, which practice “business innovation.” In the history of business, the most successful companies aren’t product innovators, but those that develop innovative business models. Business innovators take the breakthroughs of others and build on them by figuring out new ways to manufacture, distribute, or market them. Henry Ford didn’t invent the motorcar, but he did perfect mass production. Dell doesn’t develop new kinds of computers, but it did create a very efficient direct-to-consumer distribution system.
But Jobs’s reputation as a product genius without the ability to execute is unfair. The second time around at Apple, he’s proven to be a master of execution. Since Jobs’s return, Apple has been distinguished by superb execution on all fronts: products, sales, marketing, and support.
For example, when Jobs took over in 1997, Apple was sitting on more than seventy days’ worth of product inventory piled up in warehouses. In November 1997, Jobs launched an online store linked behind the scenes to a Dell-like, build-to-order manufacturing operation. “With our new products and our new store and our new build-to-order, we’re coming after you, buddy,” Jobs warned Michael Dell.
Within a year, Apple’s inventory had been reduced from seventy days to one month. He recruited Tim Cook from Compaq to be Apple’s new chief operating officer, and charged Cook with simplifying Apple’s complex parts pipeline. At the time, Apple bought parts from more than one hundred different suppliers. Cook offshored most of Apple’s manufacturing to contractors in Ireland, Singapore, and China. Most of Apple’s portable products—the MacBooks, iPod, and iPhone—are now assembled by contractors based in mainland China. Cook dramatically reduced the number of basic component suppliers to about twenty-four companies.7 He also persuaded parts suppliers to locate their factories and warehouses close to Apple’s assembly plants, enabling an extremely efficient just-in-time manufacturing operation. In two years, Cook reduced inventory to six or seven days, where it remains today.
Apple these days runs the tightest ship in the computer industry. In 2007, AMR Research, a market research company, named Apple the number-two company in the world for supply chain management and performance, after Nokia. AMR measured several metrics related to execution, including revenue growth and inventory turns. “Apple’s unparalleled demand-shaping capability lets its supply chain record spectacular results without sweating costs like everyone else,” AMR said. Apple beat Toyota, Wal-Mart, Cisco, and Coca-Cola.8 Dell didn’t even make AMR’s list.
Jobs loves to boast that Apple runs a tighter ship than Dell. “We beat Dell on operational metrics every quarter,” he told Rolling Stone. “We are absolutely as good of a manufacturer as Dell. Our logistics are as good as Dell