A Comparison

Three well-known high-tech companies illustrate the dynamics of Keeley's tripod model with their varied strengths and weaknesses: Novell, Microsoft, and Apple.

A lack of customer loyalty is what typically brings a company to its knees over the long term, despite the strength of any market need it fulfills. Novell is an excellent example of this. In the early 1990s, the only practical way to network your office's desktop computers together was with Novell NetWare. NetWare the product passed the capability test, and Novell the company passed the viability test. The need for local area networks (LANs) was enormous, and no other vendor had been able to satisfy it. Some companies, such as Banyan and Corvus, had also solved the technical problem; they, too, met the capability test, but they failed the viability test their business structures failed. None of these companies made a desirable product, so although Novell prospered, only those customers driven by a powerful immediate need installed a NetWare LAN, and it remained an unloved dancing bear.

Novell grew fat and happy, but NetWare was egregiously designed, and installing, changing, and maintaining it required an expensive, trained specialist. What's more, the network behaved rudely and inappropriately, frustrating users. Novell failed to realize this, probably because millions bought NetWare, but its customer base was motivated by need, not by desire.

In the early 1990s, Microsoft, 3Com Corporation, and even Apple began to ship LAN products that were as capable as NetWare but that didn't force customers to depend so heavily on third-party experts for installation and especially maintenance. Novell watched in mute horror while its leadership position evaporated. As soon as there was competition, Novell's customers' lack of loyalty told. Novell's business today consists largely of maintaining those customers who were already technologically committed to the company. New customers went elsewhere.

Novell was a company that was viable and extremely capable. It had powerful technology and adequate business, but suffered from a complete lack of design.

Microsoft's story is easy to tell. Its products are technically competent but rarely innovative. Microsoft prefers to follow in the R & D footsteps of others.^[1] But Bill Gates is arguably the most talented businessman of his generation, if not of the twentieth century. He has a remarkable ability to extract success from nearly every venture he makes, despite the obstacles.

^[1] An old industry joke says that Microsoft's R & D department is in Cupertino, referring to the Silicon Valley location of Apple's Advanced Technology Group.

Microsoft does little or no design, and its products are famous for making people feel stupid. They are also famous for giving people good value with a robust feature set.

Many businesses and professionals are committed to using Microsoft products, but most of them are driven to that point by economic imperatives and the lack of alternatives. Few other companies can provide a full solution, as Microsoft can. However, don't confuse economic necessity with customer loyalty. Few users are loyal to Microsoft.

Microsoft is a company that is somewhat capable but astonishingly viable. Microsoft has adequate technology and superb business, which makes up for its lack of design in the short term.

Customer loyalty can be an asset of fabulous value to a shrewd company, and Apple is justly famous for its inclusion of design at all levels of the company. Every aspect of Apple's corporate identity, products, and marketing is infused with a remarkable sense of design. The awards and honors that have been heaped on Apple are far too numerous to count, but one look at its software, hardware, packaging, documentation, or just the parties the company throws at MacWorld, and you can see that design is close to its heart.

Devotion to design and attention to the details of interaction have created for Apple a customer loyalty that borders on and frequently transgresses into fanaticism. Macintosh users are the most loyal product owners in the entire world of software-based products. No other product or manufacturer inspires personal loyalty to the degree that Apple does. Consumers drive around with Apple bumper stickers and Apple license-plate frames on their cars, wear Apple T-shirts, and sport Apple attitudes everywhere. They extol the virtues of Macs to anyone who will listen. Even though in most situations a Wintel computer will satisfy the person's every need better, more cheaply, and faster than a Mac, the Macintosh always seems to be the one chosen. At a recent design conference, the only speaker who used a Wintel box instead of a Mac apologized profusely to the audience for her disloyalty, as though she had sold out the one true computer of anyone with the slightest sense of design.

Apple's technological prowess is good but not great. From a capability point of view, Apple is no better than Microsoft in innovation.

It took Apple a dozen years to lose the market leadership that Novell lost in one. Few of Apple's problems were attacks from outside. Instead, it suffered from a staggering variety of self-imposed problems. For example, in the mid-1980s, Steve Jobs, the company's founder and visionary, was ousted and replaced by a non-computer-using soft-drink executive who made an unending series of bad business decisions. Products were overpriced and badly marketed. Third-party software vendors were viciously snubbed, and the Mac was kept a closed system a strategy widely blamed for the dethroning of other market-leading platforms, such as VMS, MVS, and OS/2.

All of these blunders would easily kill any normal company, but Apple's use of design to make the Macintosh desirable earned it unheard-of customer loyalty. The Mac fulfilled the user's needs only as well as Windows ever did, and in many cases less well, but the fulfilling of needs isn't the vital ingredient in market success.

After continued management thrashing, after spectacular financial losses, after creating lackluster products, after squandering billions of dollars on wasted R & D, after losing two-thirds of its market share, the company still has the most fanatically loyal customer base of any computer company. This bestows many formidable business advantages on Apple. Many of these advantages are difficult to quantify, and none of them is tallied on the company's financial statements, but they are as real and as valuable to stockholders as a dividend check.

Apple's design-inspired customer loyalty drives Mac fans to shut their eyes to the many advantages available from other manufacturers. This reluctance to leap to other vendors gives Apple time to react to the competition's innovations. Customer loyalty gives Apple the support to weather surprises brought about by advances in technology. Novell's slide began the moment a competitor Microsoft offered a viable networking product. Novell's huge market share utterly failed to insulate it against the market forces. On the other hand, Apple which never owned more than 15% of the computer market has steadfastly resisted the onslaught of numerous powerful and cheap competing computers.

Apple is a company whose products are desirable. Its commitment to design has allowed it to overcome lackluster technology and survive calamitously self-destructive behavior.

Had Novell added design to its mix, it could have overcome its weak business moves. If Microsoft ever awakens to the value of interaction design, the competition might as well hang up its gloves and go home. Apple was as self-destructive as a grunge-rock star, but if it can continue to clean up its act, it might become viable again.

Business students at Harvard and Stanford are not usually taught the value of design in their case studies. Although design is essential to the success even of industrial-age products, its application is easier. Also, those industrial-age products are older, and their problems and solutions are well known. In the information age in the age of rapid innovation and extreme cognitive friction design is a primary necessity.