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by Denise Harrison

Strategic Planning Expert

Early in the PC era Apple was clearly a leader in innovation.  But in 1996 Apple lost over $800 million dollars.  Apple was originally known for breakthrough ideas for personal computers, but others were more profitable and had significantly more market share.  What was wrong?

What was Apple’s Real Strategic Competency?

Yes, we all know that Steve Jobs, even with the management changes (Steve Jobs helps found the company,  Steve Jobs leaves the company, Steve Jobs returns) was key to its current success, but let’s dig deeper to see if it is bigger than a single individual.  Everyone’s vision of Apple was a company that made easy-to-use computers.  But as long as the team at Apple thought its strategic competency was tied to PCs, it was in a rut, banging heads with tougher competition.  But was the PC hardware/software combination really their competency?  How could they know? Only by taking a deep look at the answers to the following questions could Apple rethink its true competitive advantage.

  • Does it provide high value to the customer? Well, the computer itself, not so much, but the intuitive human interface was breakthrough in its day.  Competitors like Microsoft took the user friendly interface (GUI)  idea and ran with it.
  • Does it differentiate you from the competition? Well, not during 1996; but how could the team use their “intuitive” understanding of human/machine interface to differentiate itself? The barrier to adoption of digital devices still remained “ease-of-use”.
  • Is it difficult to copy? Well, yes, folks did copy the Apple designs, but no one was able to innovate the way Apple can.

So what is Apple’s Strategic Competency?

Apple realized that it was good at making digital devices easy to use – not just PCs.  It was able to take hardware and combine it with software that produced a device that even the digitally-challenged are capable of using.  Yes, often the first release of any Apple product was plagued with bugs, but ultimately the products worked, allowing customers to interface with technology in ways they had never envisioned.  Apple’s breakthrough products have included:

  • Macintosh
  • iTunes, iPod
  • iPhone
  • iPad
  • MacBook Air

Once the senior management team realized that the strategic competency wasn’t just about the PC, product development moved to solve different problems that could be resolved by using digital solutions and solving the “ease of use” problem.  As soon as these devices were recognized as easy-to-use, markets expanded.  However, in order to harness their intellectual capital fully, the team had to understand that the strategic competency was not about the PC, it was about the combination of hardware plus software plus “ease of use” know-how that really set them apart in the market place.  Apple’s subsequent growth and success is now well-documented.

Evaluating Your Strategic Competency

In order to truly understand your growth opportunities, be sure that you truly understand what sets your company apart from the competition.  Often teams look at just the traditional differentiators. Instead, you need to look at what is really setting you apart in the eyes of both your customers and competitors.  Look at your major victories for the past several years. What made these achievements successful?  Dig deep: break your triumphs down into the skills, processes and knowledge that allowed you to be successful–what did it take to get these projects to the goal line? A strategic competency will not simply be one strength, but rather, a combination of strengths (a combination of skills, processes and knowledge). Once you do this, re-evaluate your strategic competency; you may find it is different from what you originally thought it was, and like Apple you will be able to re-think your growth strategy.

© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.

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