Apple; System Boundaries LO16455

Tue, 6 Jan 1998 11:08:35 EST

Replying to LO16410 --

In message LO16410, dated 98-01-06 08:46:22 EST, AM de Lange writes:

> is Microsoft in the world of software companies a normal cell, or is it a
> cancerous cell which thrives to the detriment of normal cells?

(I have missed the rest of the discussion comparing MS/Apple, so what
follows may have been addressed already.)

A wonderful way to destroy an organizational system is to misunderstand
the boundaries of that system. Often managers do this by artificially
creating competitive profit centers within an organization. The profit
centers then seek to optimize the environment for their benefit. Profit
centers tend to neglect actions that may benefit the larger
organization/system if those actions are done at a short-term cost to the
profit center.

Apple acted as if its organizational boundaries were also the boundaries
of its system. Apple did not consider its role in the larger system of
which it was a part. It choose to function as a stand-alone profit center,
ignoring the health of the system to which it belongs. That system
includes customers, hardware makers, software developers. That system
includes Microsoft.

As reported in the Wall Street Journal in October 1994, Bill Gates wrote
to John Sculley in 1985, offering to help Apple turn the Mac into a de
facto standard through a cloning strategy. The Gates letter said, "The
perception of a significantly increased potential installed base will
bring the independent hardware, software and marketing support that the
Macintosh needs." At the time Windows existed in only rudimentary form
and Apple was enjoying record- breaking profit margins. Sculley turned
down Gates' offer, opting to continue optimizing Apple's profits at the
expense of the larger system.

While not the only reason for Apple's problems, misunderstanding the
boundaries of their system caused Apple's managers to make win-lose
decisions. In any system, win-lose is only a short-term outcome. In any
system win-lose eventually becomes lose-lose. Had Apple's management team
better appreciated a system, we might still be benefiting from Apple's
spirit and innovation.


Eric Budd Rochester, MI (248) 656-8617

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