Trying to Be Like Apple Can Harm Your Business

Many businesses worldwide are trying to emulate Apple Inc. (Nasdaq: AAPL), the world's most successful consumer electronics company. They will most likely fail. Thousands of CEOs and other senior executives will read -- or have already read -- Walter Isaacson's biography of Steve Jobs in an effort to be more like the late Apple co-founder. They'll probably fail, too. No company is like Apple, and no CEO will ever be like Jobs.

It won't stop the Apple and Jobs wannabes from trying, failing, and trying again with -- sorry to say -- devastating consequences for their businesses, according to a new report titled "The Perils of Best Practice: Should You Emulate Apple?" from McKinsey & Co. The authors argued in the paper that Apple's overwhelming success and its continued dominance of its segments has resulted in a cult following that's led competitors and many companies in other economic industries to pursue a utopian world of market domination while disengaging themselves from the realities of their industry segments. They said further:

Managers tempted to distill universal insights from what are in fact exceptional companies put their own businesses at risk for strategic or operational missteps. Yet the desire to emulate is often stronger than mere rationality, even in the face of repeated evidence that most companies won't achieve the anticipated outcomes and that some will suffer a hard fall. Research by our colleagues, for instance, has shown that lockstep benchmarking may lead to "herding" effects that, over time, diminish emulators' margins.

While the McKinsey report used Apple as the perfect example of a company that businesses would like to emulate, its central premise is focused actually on the concept of best-practices and how enterprises, researchers, and consultants have elevated this to the apex of management operations. By learning about and seeking to replicate what others have done -- so the concept goes -- executives can avoid pitfalls and build successful enterprises. This idea omits one critical caveat, though, and that is the reality that what worked for one company and corporate executive may not work for others, even if they operate in the same business segment.

"Tried-and-true approaches often seem preferable to starting from scratch, whether for developing new products or running efficient supply chains," noted the McKinsey report. "However, perils abound when truly exceptional companies morph into ever more ubiquitous examples. Observers and management theorists alike, blinded by star power, eventually assume that everything these companies do should be regarded as best practice -- often without examining the context in which they derive their success or without parsing the true nature of their accomplishments."

Of course, it's hard not to want to be like Apple or as crazily successful as Jobs. First, the company's more recent financial results and capitalization are simply extraordinary. Its sales for fiscal 2012 ending September is forecast to jump to $156 billion from $108 billion in fiscal 2011 and more than double the $65 billion it reported only two years ago. Net profits, too, are seen surging to $44.27 per share this fiscal year, from $27.68 in fiscal 2011. At its current net income run rate, Apple is probably the world's most profitable company. This is reflected in the company's market valuation, which now stands at about $658 billion, greater than that of any other publicly traded enterprise and more than the combined capitalization of Google ($238 billion), Microsoft ($260 billion), Hewlett-Packard ($36 billion), Cisco ($101 billion), and Dell ($18 billion).

Why shouldn't other enterprises strive to emulate such an exemplary company to similarly climb to the top of their industry segments? I have two answers. First, few people know the secret sauce behind Apple's success, despite the more than 40 books and thousands of articles that have been written about the company since Jobs died one year ago. Second, just having Apple's formula is not enough to recreate its success elsewhere. Too many other factors must come together nicely, including the right business environment, attractive products, innovative spirit, and coordinated management.

A better answer to the question above came from the McKinsey study. The authors Marla Capozzi, Ari Kellen, and Sven Smit argued that while it is alright to learn best-practices from leading companies and even attempt to emulate them, narrowly focusing on creating another enterprise's success without paying close attention to how these would be applicable considering your company's peculiar characteristics could be disastrous.

They concluded as follows:

We don't mean to say that companies should never emulate Apple or other truly exceptional businesses. Many companies can draw new insights from Apple's achievements in design, brand loyalty, and retailing, to name a few things. Rather, our analysis is a cautionary tale suggesting that executives take a clear-eyed view of the companies they want to emulate, as well as the returns and outcomes they expect from doing so.

My personal conclusion is this: Your company is not Apple, and your CEO is not Steve Jobs or Tim Cook. There are no ways to emulate Apple to be as successful as the company is today, and while you can learn from its best-practices, some of the knowledge gained won't be applicable to your situation. Plus, can anybody really vouch that they know Apple's true best-practices? Find a way to create an experience and success that is unique for your enterprise.