Apple 2.0

Covering the business that Steve Jobs built

Corporate antibodies: Why Apple is immune

August 24, 2011: 10:29 AM ET

Horace Dediu puts his finger on the difference between Steve Jobs and Léo Apotheker

Attacking a pathogen. Image: Henrik Jonsson via Science Daily

In a wide-ranging rumination that takes its starting point in 2001 -- when HP (HPQ) was courting Compaq and Apple (AAPL) was launching the iPod -- Horace Dediu's Critical Path podcast Tuesday touched on everything from Renaissance painting to the death of the HP TouchPad at the hands of CEO Léo Apotheker.

But for me the heart of the podcast is the five-minute segment that starts at the 31:35 point, when Dediu introduces the concept of corporate antibodies:

In the context of HP, I would point out that these gigantic companies that are built on existing business models could not absorb the changes that were happening. This is why we're seeing these abrupt, illogical, irrational, inexplicable reversals. HP saw the writing on the wall, they saw [the post-PC era] coming and they said OK, we'll spend $1 or $2 billion to get the assets necessary to survive this transition. But you can see how hard it is to internalize that. And you see how it immediately gets rejected.

There's a phrase I like to use: "the corporate antibodies."

These are things inside the company, as an organism, if you will. These are entities -- be they people or budgets or processes or rules in binders. These are things that are designed to eat up innovation. To eat up changes to the core business. Not because they are stupid. But they see this newcomer, this entrant, as a pathogen. As something that's damaging the organism. So they act, sometimes even collude, to destroy it.

And they're paid good money to do that. Their incentives are all very clear: "please do that." And they go to their boss every year and get a raise because they've done that. You have to understand that no matter how much the CEO has that vision, if the organization underneath has not been properly incentivized to absorb the change, it's almost impossible to build that kind of structure. It's schizophrenic to accept this intruder that's trying to take away your core business.

For an innovation as disruptive as the HP TouchPad to survive in such a culture, Dediu says, it must be isolated, surrounded by an impermeable wall and protected by a gatekeeper -- preferably the CEO -- who will shoot anyone who comes near. A perfect example is the original Mac, which was seen within Apple as a pathogen set to destroy the Apple II, the company's cash cow. Steve Jobs tried to isolate and protect the Mac, but the pitched battle that followed led to a boardroom showdown that Jobs lost.

A similar story unfolded at Nokia, where Dediu worked as an analyst. There a project to build a Linux-based smartphone was allowed to exist in the research labs, but was attacked from within as soon as it emerged as a commercial product. It finally surfaced in a half-hearted way as a tablet OS called MeeGo, before it finally got killed. It needed, Dediu said, someone with sufficient power to protect it.

[It needed] this kind of champion at the very highest levels, someone who could endure the gestation for a long period of time. And that type of person is so rare as a CEO. Which is part of the mystique and magic of Steve Jobs. He's the only one that we know of really that is able to do these types of schizophrenic things -- like maintain a sustaining business and its disruption within the same organization.

The full, 57-minute podcast is highly recommended. It's available through the 5by5 Network and on iTunes. You can follow Dediu's daily posts at Asymco.com.

Join the Conversation
About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

Email | @philiped | RSS
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.