A problem of riches - Apple
Apple's shareholder meeting was last week. In an era where shareholders are most worried about the survivability of the companies where they are invested, the biggest issue at Apple is what to do with all its cash! Reuters.com reported "Apple's Jobs says must think 'big' on cash hoard." In 2009, when most companies saw their market value decline, Apple's value doubled. Yet, it's cash is fully 1/5 (20%) of its current market capitalization! Clearly the company is generating cash faster than it has found investment opportunities. Even after launching the iPad with expectations of selling 2 to 5 million units in 2010!
We all should be so lucky, to have this problem of riches. Apple has enough cash that it could buy all the equity of Dell. Of course, why do that? It just goes to show that the company that built its market cap in the 1990s on Defend & Extend behavior - focusing on execution in a growing PC marketplace - has seen its valuation multiple shredded as buyers have shifted to other solutions. Meanwhile, Apple's value has skyrocketed because it entered new markets and created new solutions. Yet, it's cash flow has skyrocketed even faster!
It is possible for all companies to follow Apple's lead, increasing revenues and valuation. Last week I was interviewed by Zane Safrit for his radio program and highlights are on his blog, and the full interview is available for listening at the BlogTalkRadio site. In the interview Zane brings out how so many business leaders are stuck defending and extending broken Success Formulas that cannot produce better returns, and waiting for a "better economy" to "save" them. What Zane also cleverly brings out is how The Phoenix Principle can be applied to any business, with results that can be as stunning as Apple's. If leaders will start focusing on the future, obsessing about competitors, utillize Disruptions and White Space.
Of course, these are amplified in the "10 Ways to Stay Ahead of the Competition" I posted in yesterday's blog. I've received comments that the links to the deeper discussion on both the Business Insider web site and the IBM Open Forum weren't working, so I'm reproducing them here again.
All companies can grow like Apple. But it takes a different way of approaching management. I hope you can find time to listen to the interview and explore how your organization can become like a Phoenix, forever growing through constant rebirth.