What startups (and all of us) can learn from Apple now
From products to platforms to ecosystems (and it is not only about technology)
More and more articles, blogs and videos predict the end of Apple is near.
I even read a story comparing Apple to Nokia. And, we all now, that does not end well.
But all of these articles are missing an important point. They tend to look at Apple products in isolation: “iPhone sales go down” or the “The iMac loses its magic.”
Apple’s most successful decision, however, was its move from “being a tech company” to “being an ecosystem.” And ecosystems are extremely resilient and able to survive even the most dramatic change in the environment.
That is why I believe that the Apple ecosystem remains strong and will continue to play a key role in the future of tech, work and society.
We can all still learn from Apple.
I am writing this piece after I evaluated and assessed several startup investment proposals. The business plans focused on health, healthcare, and well-being.
It’s fascinating to see how emerging technologies are radically changing industries. For instance, blockchain startups propose solutions for the many inefficiencies, errors, and bureaucracy in the current healthcare systems. Think about improving the accessibility of patient records and tracking the production and distribution of drugs and medicines.
Other startups use “artificial intelligence” to improve medical diagnoses. The innovations in robot-assisted surgery are mind-blowing.
But most of the proposals see the future of healthcare in “platforms.”
The “platform idea” makes sense. The population is aging, and with it, we see an increase in elderly diseases and health complications. There is a need for technologies that create value by facilitating and coordinating smooth and direct connections between two or more groups of users. Think patients, caregivers, medical professionals, etc. The platforms also allow alerts to be created and data to be collected and analyzed for medical and health applications.
When will platforms be successful?
Most of the startup companies I see focus their proposals on the technology of the platforms. They explain why their algorithm, data, sensors are superior to the technology used by their competitors.
But the best startups don’t sell a platform. They recognize the benefits of building one or more ecosystems.
According to Wikipedia, an ecosystem is “a community of living organisms in conjunction with the nonliving components of their environment, interacting as a system.”
Having assessed the business plans, I can roughly distinguish between two ecosystems: (1) the Netflix ecosystem and (2) the Apple Ecosystem.
The Netflix ecosystem uses a “microservices” architecture to accelerate growth, be adaptable to change, and give more value to the end-users of the services. Think of these ecosystems as a collection of loosely coupled applications which are configured to interact through application programming interfaces (APIs).
The API approach provides flexibility and windows to new and other ecosystems. It also allows the ecosystem to attract innovative ideas from third-party developers.
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Apple is another prominently used and well-known example of an ecosystem. I am a fervent Apple user and can subscribe to the advantages of a “technology ecosystem” of connected, interoperable, and seamlessly interacting products/devices (iMac, iPad, Apple Watch, AirPods).
In the proposed healthcare ecosystems that I have reviewed, we can distinguish between two other important components: (1) the content (connecting, monitoring, analyzing, predicting) and (2) the community or communities of caregivers, patients, etc.
The 3 missing components
What usually strikes me is that the ecosystem proposals tend to become repetitive very quickly. Having explained the technology, content, and potential communities, the proposals often include more illustrations, explanations of the same.
This is surprising as both the Netflix and the Apple example show that there are (at least) three other components essential in the creation of a thriving and attractive ecosystem.
The first missing component is leadership. During Macworld 1997 in Boston (Steve Jobs having just returned to Apple), the focus wasn’t on the technology and content.
A change in leadership was necessary to build the Apple ecosystem:
“So, what are some beginning steps that we are gonna take? One of the first ones has to be to start at the top. Apple’s done a lot of change at the bottom and I think this change needs to start at the top, with the board of directors focusing on relevance.”
Leadership is about mission, vision, and creativity. The “leadership” has to identify and then “live by” a set of core values in all its decisions and operations. In late 1997, Apple adopted the slogan “Think Different” to re-launch the brand, go back to basics and focus on “what really matters.” Most of the business plans that I have reviewed don’t address leadership (including the role of advisors) or only mention it in passing.
The second missing (and related) component is the culture (of the ecosystem). We all know that a strong culture can lead to greater loyalty and a sense of community that attracts and helps retain talent, third-party developers, users, etc. A strong culture ensures that the ecosystem is unified and its stakeholders working together to achieve a common goal.
What is a strong culture?
Of course, the Netflix culture springs to mind where the company’s core values determine who gets “hired and fired.” Also, an ecosystem needs to offer an accessible, honest, and experience to stakeholders. Remember that if an ecosystem fails to behave in a responsible manner — in terms of how it handles privacy data, service providers or any platform stakeholder — then users will quickly migrate to an alternative ecosystem. As a result — given the dependence on the network effects that come from retaining users — that ecosystem will risk severe damage or even collapse.
Also, ecosystems must facilitate connections to a community of users that “matters” to them. They must “invite” genuine user creativity and engagement.
Apple communicated with the market through its popular and famous keynotes. The hype that Apple used to build up in anticipation of their events has proven to be an effective means of feeding excitement and interest in its ecosystem.
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Today social media and social media platforms play a crucial role. Yet, too many startup companies (particularly when they are university spin-outs) rely on scientific papers and other academic output to create new markets, generate interest, and build communities. They don’t realize that in the modern digital social and mobile world, every company is now in the media business.
To be successful, however, an ecosystem needs to gather feedback from the community and ensure that the interests and concerns of users get regularly integrated into its services and operations.
And, smart use of social media is doing just that.
Building ecosystems require innovative partners. In 1997, Steve Jobs framed it as follows:
“Now, I’d like to talk about meaningful partners. Apple lives in an ecosystem. And it means help from other partners; it means to help other partners.”
This statement is still relevant today. Partnering-for-innovation involves re-thinking the external boundaries of the ecosystem to include actors that can have a crucial bearing on decisions and actions.
Key partners now include research centers, universities, and other companies.
Traditionally, these partners have been conceptualized as being on the outside, or peripheral to an organization, but the need for inclusive partnering means that such metaphors are no longer appropriate.
The recent announcement of Apple’s partnership with the global investment bank Goldman Sachs shows the relevance of partnerships today. For Apple, it opens the door to enter the financial ecosystem or bring financial services to its existing ecosystem.
An ecosystem is alive
The last example reveals an important point; that ecosystems evolve.
Apple is an excellent illustration of this. In 1997, leadership, culture, and partnerships were important drivers behind Apple’s initial success. Over the years, the crucial role was taken over by technology, content, and community. Leadership, culture, and partnership weren’t neglected but were of minor importance. For instance, the Apple Keynote generates far less excitement than five years ago.
But this is about to change. With more and more users’ migrating to other ecosystems (at least in my environment), it is only to be expected that Apple will put more emphasis on Leadership and Culture in the future. The new partnership with Goldman Sachs and the offering of new financial services are just one of the signs of the transitions in Apple’s ecosystem.
And this is the final thing that is missing in most of the startup proposals.
Companies, platforms, and ecosystems now operate in hyper-competitive global markets against a background of exponential technological growth, fast-moving business developments and continuously evolving consumer demands. This new operating environment creates constant pressure on ecosystems. Simple “tweaks” to existing services is not going to be enough to survive in the medium-to-long term.
Indeed, if we look at any of the major ecosystems, we can see a constant expansion in technology, content, communities, leadership, culture, and partnerships.
And it is the resilience of a strong ecosystem — the capacity to adapt to even the most threatening transformation in the environment — that may be the most significant lesson to be learnt from Apple and their whole approach to organizing and operating a business.
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