Wednesday, October 26, 2011

Steve Jobs – The Real Lesson of Managing Growth


Much has been written about Steve Jobs; certainly, the release of his biography will have people talking for a long time about the person. Readers will want to catch a glimpse into Jobs’ inner qualities, looking for those transferable and teachable lessons of how he successfully led the world into a more modern digital age.

One aspect of the Apple success story and Steve Jobs is rooted in the category life cycle approach to product management. It is a simple lesson that can be followed by any company competing in the growth phase of a category lifecycle. Steve Jobs happened to be a master at the simple approach. image

The category life cycle is a Boston Consulting Group model that divides categories into stages (intro, growth, maturity, decline). The model gives guidance to how a business should build a participation strategy that can win in each stage. Apple competes in categories that are in the growth phase, of course, with the exception of its PC business which is in a mature phase.

Lessons of Winning in the Growth Phase

1. Continuous innovation to replace existing products. Competing in the growth phase of the category lifecycle demands distinct, ownable differentiation that makes its own or other products obsolete.

2. The leaders realize they do not continuously stay leaders. Competitors can be bigger and more innovative at times. Over time, leaders worry most about continued differentiation to gain share.

3. Price for long term profitability. Price to recover costs and make healthy profits  from the beginning. If the product does not warrant higher prices and strong margin, it does not get released.

4. Building a strong brand in the growth phase should focus on a single emotional tie to the consumer. Without emotional attachment, technology (or any type of physical differentiation) is quickly replaced.

imageSteve Jobs will be remembered as a founder of a great company, but his true business fame is illustrated on the accompanying chart. When Jobs reentered the Apple Company in 1997 after several years of “executive managers” at the helm, the stock was underperforming and the product pipeline was stuffed with weak offerings. Between 1997 and 2011, Apple’s stock rose 1400% and beat major stock indices.

Managing in the growth cycle isn’t easy.  It is a very tough game to play and win, long term. While the rules are simple and time tested, very few companies survive. Winning in the growth phase of the product life cycle is, in fact Steve Jobs’ greatest achievement.

1 comment:

Anonymous said...

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