Apple’s survival plan to get through the COVID-19 crisis is both insanely complex and incredibly simple: Stay focused, keep investing, stay optimistic and take care.
Keep your eyes on the road
Speaking to company employees in a meeting that was almost immediately leaked, CEO Tim Cook stressed the simplicity of the company’s plan to keep its eyes on the road and its hands upon the wheel.
He warned that the company isn’t immune to the economic calamity of the pandemic, but stressed its advantages as this new journey begins, most particularly its “robust balance sheet."
Then he shared the plan:
To keep investing in R&D and the development of future products and services.
This isn’t a new plan. This has been Apple’s approach since Steve Jobs returned to the company he started when it was a few weeks away from financial collapse. It was the approach Apple took during the dotcom bust, which is when its resurgence really began and soon after which the iPod took the world by storm.
Apple used this tried and tested road map once again in 2008 when we entered the last global recession as banks somehow managed to siphon money away from the entire planet. Even during that crisis, Apple’s iPhone transformed the mobile industry and spawned a new connected age.
What would Steve do?
Speaking at that time, Steve Jobs said:
"We've had one of these before, when the dot-com bubble burst. What I told our company was that we were just going to invest our way through the downturn, that we weren't going to lay off people, that we'd taken a tremendous amount of effort to get them into Apple in the first place -- the last thing we were going to do is lay them off. And we were going to keep funding. In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that's exactly what we did. And it worked. And that's exactly what we'll do this time."
In other words, Apple has a track record when it comes to innovating its way through recession.
Watch the R&D spending
Most of the forecasts I’ve seen predict the economic and social damage of COVID-19 will exceed the damage done by the 2008 near collapse of the global financial system.
In part, this could be because (despite warnings from many emergency preparedness teams) many government seemed blindly unprepared for a class of calamity regularly experienced across the entirety of human history. Humans have met such crises before.
Apple’s approach to crisis is to focus on its business.
That’s going to mean more investment in research and development as the company strives to find answers to the new questions we face post-pandemic.
What questions might it ask?
Here are a few questions it could be asking:
- Can an Apple Watch provide any warning of infection? Researchers are already exploring how wearables can be used to provide early warning of some disease symptoms.
- Is it possible to develop machine vision intelligence solutions that use a smartphone camera to accurately read body temperature? Think Flir.
- Can anonymized personal location data be aggregated into a data stack and analyzed against public health information to identify disease outbreaks, provide early warning of potential infection, and empower authorities to lock down small areas to protect against wider regional outbreaks? (Short answer: Yes).
How to measure company health
Solving big questions takes time, of course, and given we’ll likely face economic and social upheaval in the short term, the barometer of Apple’s future is going to be its research and development spending in the coming few quarters.
This is going to be a far more effective measure for future success than sales data can be in a depressed market, at least in the short term.
Serious Apple investors will already understand the company’s long game is based on delivering solutions that reflect the zeitgeist. The other measure in the new world we're entering is going to be partnership.
That’s why Apple’s work with Google on COVID-19 data matters, as both movement and contact tracing data have huge potential to fight diseases of any kind, not just this one – though it is appropriate to remain concerned on the impact on privacy.
Will it work?
How can we know what will work?
This very much depends on what kind of history we begin to build once we reach the post-pandemic beginning. That future remains to be discovered.
"If we stay focused on doing what we do best, if we keep investing, if we manage the business wisely and make decisions collaboratively, if we take care of our teams, if our teams take care of their work, I don’t see any reason to be anything but optimistic," Cook said during the call.
My feeling is that, despite the problems we face, staying focused on building something better has got to be worth a shot.
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