What it is: By focusing on providing value, Apple products help people of all walks of life solve problems while making Apple one of the most profitable companies in history.
Like most companies, Apple is in business to make money. However, where most companies go wrong is that their sole goal is to make money at the expense of the customers, the quality of their products and services, and even their own workers. When companies focus only on the bottom line, they’ll try to build the cheapest products, use deception in their marketing, look at customer service as a liability instead of as a marketing tool, and ignore the needs of their own workers and customers.
What Apple does is focus on the customer. If you can satisfy your customer, then that customer will likely buy from you over and over again. In any business, it’s expensive to attract new customers but it’s far more profitable to sell to repeat customers. The easiest way to stay in business is to sell multiple products to repeat customers, but the only way you can get repeat customers is by making them happy.
What makes people happy isn’t necessarily the money they save buying a product since they’ll quickly forget that. What makes people happy is feeling they constantly get value from a product or service they bought no matter what the actual price might be.
Thomas Pynchon, the author of the novel Gravity’s Rainbow, once said that “If you can get people to ask the wrong questions, they’ll never find the right answer.” The wrong question to ask is how to make more money? The right question to ask is how to create more value to the customer.
If you compete on price or features, you’re playing a losing game since anyone can always undercut you in price or add a trivial feature like a slightly faster processor that fails to translate into improved customer experience.
However, if you’re like Apple, you compete on value because satisfying the customer is more than just worrying about the bottom line on an accounting spreadsheet or cramming a laundry list of technical specifications into a product and believe that’s innovation.
Creating value is about solving problems. Solve a small problem and you earn a small amount of money. The manager of a McDonald’s restaurant can’t take orders by him or herself. So the manager needs to hire cashiers. When you work as a cashier, you solve the manager’s problem of taking orders. Since running a cash register is a small problem, it earns only a small amount of money.
Solve a big problem and you earn a large amount of money. How much does a heart surgeon make? Obviously a lot more than a cashier at a fast food restaurant. That’s because a cashier solves a small problem, but a heart surgeon solves a large problem.
Solve a small problem for a lot of people and you can still earn a lot of money. Ray Kroc, the man who created the McDonald’s franchise, earned a huge amount of cash by solving the simple problem of providing fast food to people in a hurry. While a heart surgeon solves a huge problem for a handful of people, McDonald’s solves a small problem for a large number of people.
So with few exceptions (Ping, MobileMe, etc.), Apple just looks for ways to solve problems that typically focuses on eliminating the current, frustrating user experience with existing products.
The Macintosh makes computers easier to use than Windows PCs. The iPhone makes smartphones easier to use than Blackberry or Nokia smartphones. The iPad makes mobile computing simpler than lugging around an underpowered netbook. The iPod and iTunes makes finding and buying music far more convenient than visiting a music store and buying music stored on bulky CDs. Apple Stores make it easy to test products, learn about them, and get problems solved by an expert.
When you solve problems for others, customers will eagerly give you money. When you try to deceive, cheat, and frustrate customers, you’ll always drive away repeat customers and rely solely on price and deception to attract new customers.
Providing value indirectly earns more money. Pursuing money at the expense of value will always earn less money. Apple’s innovation isn’t in making fancier products but in making products and service that minimizes frustration and maximizes productivity. Apple products may not always be the cheapest, but they’re usually the best in terms of physical quality, user experience, and customer support.
As long as you focus on making more money, you’ll always struggle to make more money. As long as you focus on solving problems and reducing the frustration of others, you’ll always make more money as a result. The way to make more money isn’t to cut costs and cheat the customer. The way to make more money is to please the customer and that’s Apple’s greatest innovation that rivals have yet to copy.