On Thursday last week, Apple became the first trillion dollar company in market capitalisation.
I was not even sure what a trillion is.
A ‘Trillion’ is different in the US count to the British system which we in Australia follow.
In the US system a trillion is one thousand times one billion.
In the British system, a trillion is one million times one billion.
Apple when it passed the US Trillion mark on Thursday at a stock price of $207.04 per share, was a company worth 1 with 12 zeros following it. $1,000,000,000,000.
Long way to go to be a British trillion, but nevertheless, a heap of money. (pity they pay so little tax on Australian revenues). Just for a little context, the US Federal budget in 2015 was $3.8 Trillion, and was 21% of the US GDP. Therefore, Apples market valuation is now roughly 25% of the US federal budget.
So, what can a simple local SME, the businesses I work with, learn from this astonishing performance? Broke to a trillion in 20 years.
Yes, Apple was as good as broke in 1997 when Apple brought back Steve Jobs by buying his NeXT business to get their hands on the operating system, because windows was killing the MacOS as it was at the time.
The Apple board terminated then CEO Gil Amelio and put Jobs back in charge, and he changed everything.
So, to the question, what can the local SME’s learn from this?
A lot it seems to me.
Strategy.
You have to be able to take a ‘helicopter’ view of the market you are in, its adjacencies, and likely future influencers. Jobs did this several times, seeing the potential impact of MP3 players, then teaming that device up with software iTunes, then moving again with the iPhone and iPad. Each time he saw what was potentially possible, and made it happen. As a local business, this helicopter view is just as valuable to you as it was to Jobs in 1997, and subsequently.
Timing is everything.
Jobs was able to see what was becoming possible before anyone else, and leverage the change. He was not the first in any of the individual technologies, but he put them together in a different way to leverage the multiplier effects. However, each wave was enabled by the one before, so timing was crucial.
Control of your value chain.
Customers are not looking for components, they are looking for the best solutions to their problems. Apple controls its value chain with an iron hand, delivering to their customers a unique experience in a ‘must-have’ package. They do not manufacture any of the core components, they just arrange for it to be all put together. In the evolving commercial world we are all facing, one of the most important words will be ‘Control’. Apple has proven to be a master of control, and has benefited accordingly.
Great design sells.
Dell, and HP, and all the rest could have done what Apple did, but they failed to do so. They designed and sold solid, reliable commodities, that all looked, performed and felt the same, Apple designed something different that delivered an experience. The evidence is clear. Apple has roughly 15% unit market share of smartphone units sold, but holds 85% of smartphone profitability. This astonishing performance is the result of great design and branding over a long time, and the control exercised over the supply chain and tech eco system.
Dream.
It is usually just fluff to talk about ‘dreaming big’, creating your own BEHAG, (Big Hairy Audacious Goal) but occasionally, someone does it. Dreaming is a key part of the process, but dreaming by itself does not get anything done.
As an aside, one of the members of my local tennis club is a long term Apple employee in Australia, who has Apple shares as a part of his salary package. He has been issued shares progressively over the years, all of which have been sold to pay for the expenses of living, mortgages, school fees, all the stuff we all face along the way. The first shares he was issued were at forty cents each. A very long way from the $208 closure on Thursday, and yes, he was crying!
When you need help thinking about all this stuff, even if you do not aspire to be the next Apple, call me.
