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12 Feb 2015

Taking a Share of Apple's Soaring High Profits

Apple Inc. has reported the largest quarterly profit ever made by a public company in the world.  Thanks to iPhone 6 huge success, people are now addicted to Apple's products. But as much as 75% of iPhone 6+ (a new product) customers are switching from other phones.  In other words, Apple is not only strong in customer retention but also great in customer acquisition.  And the customers that Apple acquired tend to stick for long.  

Apple's strategy is now studied by analysts and is comprised of 4 pillars:
  1. Offer a small number of products.  This reduces operations and supply chain complexity and gives Apple greater power when negotiating contracts with suppliers of materials and parts
  2. Focus on the High End. Premium products yield premium profits.  Apple focused on customers that are not price sensitive and are inelastic to demand; in short, people who can afford it and willing to pay the high price.  This is because Apple's customers are more interested in user experience, design, capability and branding
  3. Give Priority to Profits Over Market Share.  Apple sells much fewer phones than Samsung but make higher profit margins as its prices are higher.  
  4. Create a brand that makes people starve for it.  This dates back to Apple in 1978 when it first launched the Apple II (a desktop computer), and subsequently to other products like Macintosh, iPod, iMac, Macbook, iPad, Macbook Air and now iPhone 6. 
You too can apply Apple's 4 pillars above to your business and management.  In leadership and people management, I applied the above (in our 8-year old program How to Be a Better Manager course, starting on 6 April 2015 on 4 Mondays 2 to 5.30 pm) as follows:
  1. Offer a small number of ideas.  This reduces communication complexity and gives the management greater power when it handles staff demands.  A good management idea is "Add Value, Not Add Work"
  2. Focus on High Thoughts.  You can go high and think highly of people even when they're not capable, and such confidence in them will inspire and motivate them
  3. Give Priority to Staff Development Over Profits.  You will spend money to invest in staff training (with PIC 60% funding) as you know that a trained staff is a good investment
  4. Creates a continuous message that make people look forward to it.  You can have a weekly Monday morning inspiration message that makes people look forward to every Monday. 
By Andy Ng, related articles:

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