Best vs. Rest Explained
In my last article, I shared with you some of the key learnings from The Lost Interview with Steve Jobs. But there is so much gold in that 70 minute interview, that I wanted to highlight a different topic in this article.
If you read much SVPG content, you know that we’re all about the differences between how the best companies work, and the rest.
Yet in truth I have never had a good answer to the question of why there are still so many bad product companies?
Especially when the best are also the most valuable companies in the world.
Why wouldn’t more companies want those rewards?
My theory for this has mainly been that leaders at “the rest” have never worked at strong product companies, so they’ve never seen good.
But if you watched the full interview with Steve Jobs, you saw that he shared a different theory.
I think his theory is more likely the root cause of most of these problematic companies, and also more helpful and constructive than my own explanation.
Steve argues that for most established companies, innovation is simply not at the core of their DNA. He argues that once they have established their business, the focus of the company quickly moves to sales and marketing:
“I have my own theory about why the decline happens … The company does a great job … in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.”
Since growth is based on sales and marketing, it is the successful sales and marketing people that get recognized, rewarded and promoted, and soon enough, they are the ones running the company.
It’s worth noting that the old P&G model of brand manager as product manager fit well in that model because that role was famously about pricing, packaging, positioning and promotion.
In any case, engineers and designers can either accept their secondary role, or they can move to a company that believes its success is dependent on consistent innovation.
So is it any surprise that when Apple hired a former Pepsi executive as their CEO, that the company lost its ability to create great products?
When viewed through this lens, it is remarkable how many companies you can identify that lost their product mojo when they replaced their product-oriented founder with a so-called “professional” CEO, either coming from sales or marketing, or business development (when they think acquisitions are the key to growth), or finance (when they think managing costs is their key to growth).
The reason this explanation resonates so well with me is that I have known many of these CEO’s, and in most cases, it’s clear to me they are very smart people, but all too often they show so little interest, beyond lip service, in the machinery of consistent innovation.
Steve Jobs is essentially describing the natural selection that occurs at companies where growth is not viewed as a function of product innovation.
When combined with Marc Andreessen’s famous essay Why Software is Eating The World, it is easy to see why there are so many companies today that are ideal targets for disruption.
Does this mean that companies with CEOs that don’t come from product are doomed? It’s tough to say. Because transformation is so hard to do successfully even in the best of cases, many probably are. But if the CEO is willing to get serious about developing new muscles, they may still have a chance.