Apple reveals core values in patent trial

It’s going to be a tough week for nine Californians. Barring a last-minute out-of-court settlement, these nine jury members – including a social worker, an electrical engineer and an unemployed videogame enthusiast – will begin deliberation on what The Wall Street Journal is already calling The Patent Trial of the Century.

Apple versus Samsung is about to reach its conclusion.

Apple is demanding that Samsung pays $2.5bn (£1.58bn) and withdraws several of its most successful smartphones and tablets from US distribution after accusing the South Korean company of “ripping off” its technology. Samsung is counter-suing and demanding $399m (£253m) from Apple for allegedly using its proprietary technology in both the iPhone and iPad. At some point in the next seven days, we are likely to get a verdict.

But who cares? The real excitement took place over the past three weeks as Apple’s senior executives were asked to answer questions under oath about their strategies and approach to product development. For the first time in a decade, we have just had a really accurate, and in-depth peek inside the world’s most valuable company. And this is what we learned.

Secrecy

Apple really is paranoid about everything. Perhaps this does not come as any big surprise but here were the juicy, operational details of how such secrecy was maintained for so long, and so well. No external agencies of any kind are used. Internal teams are recruited without being told what they will be working on and with the only instructions being that they will be expected to “give up nights and weekends for a couple years”.

When work started on the iPhone, it took place within a special super-secure section at Apple’s Cupertino HQ called the Purple Dorm. This section was so secret that it was never openly mentioned to other employees and even the door to ‘the dorm’ did not mention where it led. Aside from the cameras and the card swipe entry, the only clue that this area was special were the words “Fight Club” printed on the entry door in the Purple Dorm. And as everybody knows, the first rule of Fight Club is…

Misdirection

In a 2010 earnings call, Apple chief executive Steve Jobs cited a raft of reasons why a seven-inch version of the iPad would be “dead on arrival” and concluded that it would never launch one. Internal documents presented during the trial, however, revealed that Jobs was actually “very receptive” to the idea at that time. So why say one thing in public, and think another in private? The real question is: why would you ever reveal anything about what you actually think to the outside world?

While most bog-standard, egotistical CEOs feel entirely comfortable standing up in front of management conferences or the national media and boasting about their achievements, their strategies and future objectives, Jobs displayed a far craftier and more strategic use for public announcements – to throw competitors off the scent. The only time Apple isn’t secret is when its executives are setting up a smoke screen.

Innovation

Teaching companies and managers how to be more innovative has blossomed into a massive area for consulting and management education. But court documents confirm that the world’s most innovative company does not have any fixed formula or approaches for developing new products.

Instead, the ingredients for success are as simple as they are elusive. First, hire really talented creative people with “maniacal” tendencies. Second, get 15 of them to sit round a kitchen table. Third, give them a job to do like designing a new button for the iPad. Fourth, leave them to get on with it. Apple veteran Chris Stringer testified that these teams would then just “sit there with sketch books and trade ideas”. It’s a common prescription for creativity that I have also seen exhibited in leading luxury brands and it suggests that talent and a context for interaction are the real ingredients for creative success.

Teaching average managers to be “more innovative” is like teaching elephants to tap dance. Possible, but the results will be disappointing and certainly not worth the effort.

Research

They bloody well do it! Jobs (presumably again engaging in misdirection) consistently claimed that Apple eschewed research because “it isn’t the consumer’s job to know what they want”. But again court documents reveal that survey research often played a key role in decision making at Apple.

Chief marketing officer Philip Schiller presented several examples of global market research in which consumer attitudes to Apple, its products and its competitors were constantly measured. Schiller testified that these surveys were crucial to Apple’s evolution because without them it was impossible to assess how their competitors’ customers were thinking. But in another parallel with the luxury goods industry, the research was only used “downstream” to review consumer perceptions about Apple and its competitors. Upstream, the product development and design teams were not allowed to review the research in an attempt to maintain innovation and cutting edge design. Jobs’ claim that Apple did no market research turns out to be only half true. It was used to guide strategy but not to design products.

Whatever the eventual outcome, the “trial of the century” has already delivered by revealing many of the secret internal practices of Apple. That almost imperceptible sound of swishing you can hear is the noise of the late, great Steve Jobs turning (elegantly and without any obvious joins) in his grave.