George Colony isn't very popular with diehard fans of Apple Inc. (Nasdaq: AAPL) right now. Many in the electronics industry refuse to agree with Colony's long-term prognosis for the company, but you have to give the Forrester Research Inc. CEO credit for taking an unpopular stance on the world's most successful technology company.
In a blog posted on Forrester's home page on April 25, Colony laid out the business and sociological reasons why he believes Apple will "coast, and then decelerate" over the next "24 to 48 months." This rather negative opinion, published only one day after Apple announced record profits and sales, has sparked a lot of debate on the Web. On Tuesday, Apple reported a 94 percent increase in March-quarter net profit (to $11.6 billion from $6 billion) and revenue of $39.2 billion, compared with $24.7 billion in the year-ago quarter.
Just to be clear, I agree with Colony's conclusion. In fact, if there are any areas where I don't exactly see eye-to-eye with the Forrester boss, it would be that Jobs's death isn't the only trigger that I believe would result in slower growth for Apple eventually. Neither of us is saying Apple will decline or stop growing, but the current pace of expansion is not sustainable.
Apple's revenue more than doubled to $108 billion at the end of fiscal 2011 from $37.5 billion in fiscal 2008. The company's current growth rate, if maintained, will push Apple's annual revenue pass the $200 billion mark by fiscal 2013 or even earlier. Where will it go from here? I know many people in the industry believe Apple is infallible, but even if Jobs was alive, the company was bound to hit a wall eventually.
Forrester's Colony focused in his blog on how the departure of a charismatic leader often results in the slow decline of the organization. Jobs, the Forester analyst said, was at the core of almost everything that Apple had done in the last 10 years. Without him and the passion he ignited both within and outside the company, the enterprise was bound to slowly begin to lose momentum.
"In charismatic organizations, the magical leader must be succeeded by another charismatic -- the emotional connection of all employees and (in the case of Apple) customers demand it," Colony said.
He expanded further:
When Steve Jobs departed, he took three things with him: 1) singular charismatic leadership that bound the company together and elicited extraordinary performance from its people; 2) the ability to take big risks, and 3) an unparalleled ability to envision and design products. Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation.
Do you agree with Colony? If you take a look at the comments on Colony's post, there are some thoughtful, high-level, and interesting viewpoints. Joe Wilcox of Betanews also makes a compelling argument. I encourage you to share your own opinions on the message board below.
I do believe Apple will decelerate and become a normal company in few years if not in few months. COnsidering the great enrgy and creativity of steve jobs is no more available to apple we would see that APple might find it difficult to grow or bring out innovative products at the same rate.
I agree that Apple will decelerate. I think the 2-4 year range is about right. The company will continue to stay profitable, but this fast paced growth cannot continue. Apple needs a new leader to take them into the future. A leader that can help Apple innovate, instead of building off of existing products.
The contrary argument, though, is that Apple is just beginning to expand its offerings internationally and there are many consumers globally who want the iPhone, iPad and the iPod series. Plus, Apple keeps hinting at other products it will roll out over the next years. It's possible we are the ones that don't see the "magic" of Apple!
i am of the same opinion that such a growth pace is hard to maintain but 2-4 years is a short time. A lot will depend on the next innovative product that Apple will launch (iTV?). Apple's product have huge demand, no doubt about it and the premium prices will make sure that the company differential its product. And Bolaji, you are right that developing countries is still an uncharted territory for Apple. Apple's magic is bound to work here.
Any company which grows by virtue of the enigma of its charismatic leader has to trasnform itself into a professionally managed company someday to survive on long term basis.
With Steve Jobs departing , the time has come sooner for Apple to do that transformation and I am sure the second rung leadership which worked for so many years in the shadow of that big personality will find that it is capable of converting Apple from an autocratically ruled one to a mature and professional company while keeping that spirit of innovation inculcated by Steve Jobs , intact..
After reading your blog I went on reading Colony's post, as you suggested. He certainly presents a good argument from a valid point of view. I tend to agree with the concept of charismatic leader and charismatic company to define both Steve Jobs and Apple. There is no doubt that Apple became the company it is today thanks to the creative and innovative mind of Steve Jobs and the products resulting from that creativity and innovation, and not for any great business formula.
I have my doubts if Apple will continue to be the Apple we know today, or if it will evolve into a just another company. However, it is still way too soon to come to any conclusions after less than a year of Jobs' death and only two new products presented to the market after that.
I agree, however, that Apple needs another charismatic leader, preferably with the same creative and innovative mind. If Apple can find that magical person, it will be remain the same company.
Once I told, commenting on one of your previous blogs about Apple and Jobs, that Apple would do magic if it teaches Apple's employees and executives all about Jobs' life, work and thinking. I believe if Apple would ask Steve Jobs for advice now he could say: "Study my life. My life is my message", just as Gandhi also did, if I can make this comparison of two great minds that I admire.
I shook my head in amazement when I saw Apple's earnings. I also read the Forrester commentray, and it is a well-reasoned argument. As much as Jobs had achieved guru status, though, the company is still about products. The momentum has to abate at some point, but you still have to give the compnay credit for execution in the post-Jobs era.
Susan, i like your last paragraph. We can learn a lot by studying the life and struggle of great personality and how they become who they were. It is easy to follow what others did but difficut to achieve the same charisma and charm. Probably, tha's why we have no other Jobs or Gandhi.
Susan, i like your last paragraph. We can learn a lot by studying the life and struggle of great personality and how they become who they were. It is easy to follow what others did but difficut to achieve the same charisma and charm. Probably, tha's why we have no other Jobs or Gandhi.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
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Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
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