Apple, IBM, Near-death Experiences, Cookies, Delight, and Kondratieff Waves

If I learned anything during my years at IBM it was the importance of managing your business. If I learned anything about Apple during my years at IBM it was the importance of delivering delight.

Rometty and Cook
Rometty and Cook – photo/ZDNet

Near-death-experiences have a way of sharpening your focus on survival and IBM’s NDE in the early 90’s did exactly that. With the surprising fortuitous arrival of the Web in their darkest days IBM focused on infrastructure, thinking it might be a long-term secular “big-play.” They were right. In Wall Street parlance, it turned out to be a Kondratieff Wave. The bespectacled vision of a few wise IBMers saved the company. To gain presence quickly, IBM began acquiring companies that played in the software infrastructure and security space for Web-enablement. Acquisitions forced us to evolve business management capabilities that facilitated taking on new organizations and customers. The principles of financial and resource management in the Theory Of The Firm were well-understood by the growing number of MBAs pouring into the company. Today over 100 acquisitions later, IBM is as much a business management platform as it is a tech-company. That aspect of IBM is not well-understood on the street.

Less than 5 years after IBM’s near-death, Apple suffered their own NDE. Not because they didn’t know how to manage their business but because they stopped delivering delight. Steve Jobs returned in 1996 with a starship full of delight and made Apple the most successful technology company on the planet by selling delightful hardware during the exact same years IBM abandoned its hardware business for software. But the irony didn’t begin there. Looking back, you can see that for 10 years (’86-’95) a soft-drink salesman from Pepsico managed Apple to near-death and over a like time frame (’93-’02) a cookie salesman from RJR-Nabisco managed IBM back to life—pure poetry given the crucial role cookies would come to play on the Web.

IBM’s mojo was its business management culture. Sure, we relied on various sales pipeline management tools, CRM, complex spreadsheet apps, SAP, you name it but culture was the key. Peer-standing and upward mobility was largely a function of how well you managed your business—department heads and individuals alike. Apple’s mojo was its delight culture. There’s no doubt they knew how to design, build, and sell hardware devices but their mojo was creating delight. Peer-standing and upward mobility was a function of your ability to deliver delight to customers. Just ask Jony Ive. Sir Jonathan Ive. He was 9 years old when the Apple I launched. Today he’s arguably the most powerful person at Apple. And all he ever did was deliver delight.

CEOs Ginni Rometty and Tim Cook recently announced a new strategic alliance between IBM and Apple. The details of the alliance are innocuous at first glance—IBM will create industry-specific iOS apps and connect them to their cloud service for business. Apple gets into the enterprise, IBM gets their cloud infrastructure into the iOS eco-system. IBM still thinks infrastructure is the big play. Apple still thinks delight will sell. Only a fool would sell them short.

Few in the tech-press or on the street know the history of these two companies: their near-death experiences, how they transformed themselves, or the vast intellectual capital they developed around business management and delight. The people writing about this alliance today are too young to remember. They don’t even know that Tim Cook is an old IBMer.

Nothing is ever as simple as it sounds and most stories write themselves. You couldn’t make this story up if your tried.




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