Great companies still make mistakes. They just know the way back
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
Apple has just changed CEO.
After fifteen years as CEO, Tim Cook has handed over. Many people immediately started discussing whether Apple will change under the new CEO, whether it will become more innovative again, whether it can catch up in AI, and what the next generation of products will be.
But I think that rather than guessing where the new CEO will take Apple, it's more useful to look back at what Tim Cook actually did over the past fifteen years.
When Steve Jobs handed Apple to Tim Cook, there was a lot of doubt. Steve Jobs was the classic product visionary. With the Mac, iPod, iPhone and iPad, he often didn't just make a product better; he redefined a whole category. Tim Cook was nothing like that. He was best known for operations, supply chain and execution. So many people asked at the time: without Steve Jobs, would Apple still be Apple?
Fifteen years later, Apple's market value has gone from about US$350 billion when Cook took over to a US$4 trillion-class company today, and revenue from about US$100 billion to more than US$400 billion. On business results alone, Tim Cook was of course extremely successful.
Apple was never a company that didn't make mistakes
But what I find more interesting is that Apple also got plenty of things wrong over these fifteen years.
Around 2018 and 2019, Apple went through a big slump. iPhone growth slowed, and the market kept questioning whether Apple still had any creativity.
The MacBook got a Touch Bar, which I still think was a strange design, and it was later removed. Many ports were taken away in the name of minimalism, and later MagSafe, HDMI and the SD card slot came back.
Apple Car ran for nearly ten years, with so many people and so many resources, and in the end the whole project was cut.
Vision Pro is technically impressive, but at least so far it can't be called a successful mass-market product.
And Siri, needless to say: after so many years, the generative AI boom has made Apple look even further behind in AI.
So if you look carefully, Apple was never a company that didn't make mistakes.
That's why I recently thought of something Duan Yongping once said about Apple, which I find very interesting. Roughly:
A great company isn't one that never makes mistakes, but one that, after making them, slowly finds its way back to the right path.
That's really worth thinking about for founders.
When people talk about company culture, they talk about vision, mission and values, all printed on the wall. But real culture isn't what's written on the wall. It's what the company actually uses to judge when it faces a hard decision.
Apple's "right path", in a way, is product and user value.
That doesn't mean they always know what users want; of course they get it wrong. But when they discover something hasn't created enough user value in the end, they're capable of turning back.
Apple Car and Apple Silicon
I think Apple Car is a great example.
A project nearly ten years in, with that much money spent: for a normal company, it's extremely hard to stop at that point. Management easily falls into sunk cost: we've spent so much, worked on it for so many years, come this far, so let's just launch it.
Very often, a company sticks with a project not because users still need it, but because nobody is willing to admit they misjudged in the first place.
But if Apple got to the end and found it could at best build a decent electric car without creating enough incremental user value, it would rather not do it.
Money already spent is spent.
Past money shouldn't be the reason to keep spending future money.
Conversely, when they find the truly right direction, they double down with great patience.
M1 is a good example. In 2020 Apple launched its own M1 chip, and for the first time many people clearly felt the advantages of Apple Silicon: performance, battery life and thermal efficiency all improved together.
But M1 wasn't suddenly dreamed up in 2020. Apple started designing its own chips long before, from the iPhone's A-series, steadily building up CPU, GPU, Neural Engine, and hardware and software integration over many years, until it compounded into today's Apple Silicon.
Putting Apple Car and Apple Silicon side by side is very interesting.
Both were long-term investments.
One ran for years and was finally cut. One ran for years and was finally doubled down on.
What should decide their fate isn't how much we've already invested, but:
From today on, can continuing still create more value for users?
From one man's thinking to a company's operating system
Looking back at Tim Cook now, I think what was truly impressive may not just be growing Apple's revenue and market value and building a world-class supply chain.
Many of Steve Jobs's greatest strengths originally lived in Steve Jobs the person: his taste, his judgement, his obsession with product.
But the biggest problem with founders is that if these things only live in the founder, the company may slowly fade once the founder leaves.
Tim Cook's greatest achievement over these fifteen years may be proving that part of the philosophy Steve Jobs left behind could really move from one man's thinking into a company's operating system.
That's actually very hard.
Because the bigger a company gets, the more bureaucratic it becomes; the more successful, the more it protects the past. Departments multiply, every project has interests behind it, and every senior manager wants to prove their past decisions were right. In the end, a company's biggest enemy is often not competitors but ego, internal politics and sunk cost.
Of course, I don't think Apple is problem-free today. AI in particular is, I think, its biggest test right now.
When the Touch Bar was a mistake, the next generation just removed it. When a port was a mistake, the next generation added it back. When Apple Car was a mistake, the whole project was cut and the company carried on.
But if AI really changes the whole computer interface, that's different.
If in future people don't open one app after another but talk directly to agents; if they don't operate software step by step but tell the AI what they want and let it complete the whole task, then what changes may not be a feature, but the entire computing paradigm.
If Apple is slow this time, it may not just miss one product. It may fall behind by a whole generation.
So I'm not that pessimistic about how the new CEO, John Ternus, will do. Not because I think he's bound to be a second Steve Jobs, but because if what makes Apple truly great is a culture rather than one CEO's personal ability, then changing CEO shouldn't immediately change it.
"I don't consider the bloody ROI"
This reminds me of a classic Tim Cook story from many years ago.
At Apple's 2014 shareholder meeting, a shareholder representative questioned Apple's spending on things like the environment. Essentially: do these things bring returns to shareholders, and if there's no clear ROI, why is the company doing them?
Tim Cook was visibly angry, and gave a very simple example.
He said:
"When we work on making our devices accessible by the blind, I don't consider the bloody ROI."
Apple spends a lot of resources on accessibility, so that blind people can use its products too.
How big is that market? How many more iPhones does it sell? What's the ROI?
Tim Cook's point was blunt: some things the company does not because of how much money they make, but because it believes they're right.
He even told the shareholder that if he only wanted Apple to do things with a clear ROI, he should sell his Apple shares.
That exchange actually helped me understand better what a "north star" really is.
Being user-oriented isn't saying "customer first" in every meeting, or being a bit nicer to users when it doesn't affect profit.
Real company culture is which side you stand on when short-term ROI conflicts with what you believe is right.
A company's most important ability may really not be getting it right every time.
We will definitely misread markets, build the wrong products, hire the wrong people and invest in the wrong projects.
What really matters is whether, after getting it wrong, there's something inside the company that can slowly pull everyone back.
A great company isn't one that never makes mistakes. It's one that, after making them, still knows where its true path is.