Apple announced this week record-breaking financial results for the fourth quarter of 2019. "We are thrilled to report Apple's highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables," said Tim Cook, Apple's CEO. But will the party last forever? Yes, if Apple continues its balancing act of change and continuity.
When reporters asked Tim Cook in 2015 if he planned to distance himself in any way from the legacy of Steve Jobs, he answered simply: 'The values in the core remain the same as they were in '98, as they were in '05, as they were in '10. I don't think the values should change. But everything else can change.'[i]
This comment perfectly summarise the survival strategy that a company like Apple – or any other company, for that matter – always needs. Companies must be able to deal with a very fundamental dilemma: on the one hand, remaining faithful to your core values, your deepest DNA; on the other hand, adapting to change and making compromises, even if, at first sight, this seems to go against those values. If companies fail to respond in an effective manner to this seeming paradox, conflicts can easily arise, both internally and with the outside world. And when this happens, your stability is in danger.
As I demonstrate in my book ‘The Survival Paradox’, this means in essence that it is necessary for companies to find a balance between the four functions of the AGIL-paradigm, where the 'A' and 'G' functions facilitate change and the 'I' and 'L' functions facilitate stability, continuity and coherence. All four functions are crucial to a company's survival, but they do not operate autonomously. They are in constant interaction with each other. If the balance between the functions is correct, this will generate a fly-wheel effect, in which the sum of the whole produces a greater effect than the four functions can make individually. But if the functions are not in balance – if, for example, one of the four dominates the other three – this can have a paralysing or even a destructive effect. This makes the likelihood of conflict situations much greater.
In their well-known Built to Last, Jim Collins and Jerry Porras compared a company's core identity and its progress with the yin and yang of Chinese philosophy. Each element activates, completes and strengthens the other. Collins and Porras argue that visionary companies not only search for a balance between core identity and progress, but at the same time also seek to give expression to both elements in a pronounced way, by combining a deeply embedded and strong identity with a highly progressive mindset. Identity provides a strong basis on which a company can evolve, experiment and change. The desire for change will strengthen the identity, because without continuous change the company will move backwards instead of forwards and will perhaps even cease to exist.
The history of Apple illustrates this point. During its most successful periods, it was able to manage the four dimensions like a symphony orchestra. The synergy within the company strengthened each function individually. During the less successful periods, the opposite happened: the functions got out of balance.
Perhaps it is not so surprising that this sometimes happens. Maintaining the right balance is no easy matter. The rapidly changing environment in the modern business world means that the exercise needs to be repeated time after time. For this reason, I refer in my book to the need for a 'moving equilibrium'. Moving in the sense that the equilibrium becomes disturbed from the very moment it is reached. This implies that the perfect equilibrium– which is both necessary and desirable – can never be achieved. Or more dangerous still: can create complacency, arrogance or inertia.
In the 1980s and the 1990s, the Apple management struggled to find the right moving equilibrium, leading to numerous conflicts as a result. Since the return of Jobs and certainly with Tim Cook in charge, the company has been able to deal with that equilibrium in a productive manner, bearing in mind that the search to achieve it never stops.