Inside Steve's Brain - Leander Kahney [67]
“The product people aren’t the ones that drive the company forward anymore,” Jobs said of Apple during that period. “It’s the marketing guys or the ones who expand the business into Latin America or whatever. Because what’s the point of focusing on making the product even better when the only company you can take business from is yourself?” Jobs said in situations like this, the people who built the company in the first place—the product-oriented staffers—tend to be replaced by those with a sales focus. “Who usually ends up running the show?” asked Jobs. “The sales guy.”12
Jobs cited as a good example Steve Ballmer at Microsoft, the company’s chief salesman, who took over from Bill Gates, the programmer. “Then one day, the monopoly expires for whatever reason,” Jobs continued. “But by then the best product people have left, or they’re no longer listened to. And so the company goes through this tumultuous time, and it either survives or it doesn’t.” Luckily for Apple, it survived.
Under Jobs, Apple has reclaimed its product-oriented culture. It is relentlessly focused on the products, and it’s the products that inform Apple’s innovation. For example, the iPhone’s multi-touch interface was first developed for a tablet PC—a large clipboard-like portable computer that resembles a laptop without a keyboard. Jobs realized that the technology was better suited to the iPod/cell phone Apple’s engineers were working on. So the multi-touch interface was adapted to make it appropriate for a small handheld computer that blended an entertainment-oriented iPod with a cell phone, a mobile browser, and Internet communications.
Pure Science vs. Applied Science
Money isn’t the key to innovation. Apple spends a lot less than other companies on R&D, yet appears to get a lot more bang for its buck. Microsoft in 2007 spent more than $7 billion on R&D and over $8 billion in 2008. Microsoft finances several large and well-funded research centers in Redmond, Silicon Valley, Cambridge in the UK, and China. There are some very impressive technologies being developed in Microsoft’s research labs. The company boasts that it is leading research in speech recognition and fast search of massive databases. Each year, Microsoft gives journalists a tour of its Redmond research facility, and it is a treat for those invited to see all the cool toys and clever technologies the researchers are developing. But it is unclear how much of Microsoft’s research is being directed toward its products. Except for speech recognition in Vista, which has been well received, there’s little evidence that the labs are leading major new product initiatives. “You know, our friends up north spent over $5 billion on R&D, but these days all they seem to be copying is Google and Apple,” Jobs said at Apple’s Worldwide Developers Conference in 2006. “Shows money doesn’t buy everything.”
In 2007, the management consultancy Booz Allen Hamilton released a study of worldwide corporate R&D spending and concluded that there’s little evidence that increased R&D investment is linked to better results. “It’s the process, not the pocketbook,” Booz Allen concluded. “Superior results seem to be a function of the quality of an organization’s innovation process—the bets it makes and how it pursues them—rather than either the absolute or relative magnitude of its innovation spending.”
Booz Allen cited Apple as one of the thriftiest R&D spenders in tech, but also one of the most successful. According to Booz Allen, Apple’s 2004 R&D-to-sales ratio was