Jan 24, 2013

How much is enough?

Yesterday Apple posted some of the best numbers in their history: $54.5 billion in revenue and $13.1 billion in profit. That's more than 25% profit. They had a higher revenue in one quarter than the entire value of Chevron, the second largest oil company. Nevertheless, Apple's stock has been hammered on the stock exchange and has lost more than 12% of its value.

Why? Because analysts say they should have made more money, and sold more iPhones. 

Apple's numbers are healthy, by any stretch of the imagination. Yes, there is increased competition, so fewer people are buying iPhones. Furthermore, the lifecycle of Apple products is getting smaller and smaller every year. It used to be that an Apple product lasted 18 months before an upgrade. Now, we are down to nine months and it might become shorter still. Apple may, in fact, be cannibalizing itself so there is reason to question their strategy. But to shave more than $50 billion from one of the premier technology companies in the world? That may be premature.

Are analysts' expectations realistic? What are their metrics? How are they determining that Apple should have sold more phones? Would any other compnay have done as well or better than Apple in the current marketplace?

As an IT professional, I see that same behaviour often: Mangers feel that the programmers, for example, should be able to deliver a certain project, with a given scope, in a pre-determined time interval. Yet, as many researchers have found, in IT this rarely happens. Projects underdeliver, don't meet quality standards, or exceed budgets more often than not. In the meantime, programmers have burnt out, project managers have resigned, and the results are still not there.

This scenario is repeated over and over in large and small companies. We ask too much of people, because we want to "stretch" them. That's fine, and I believe stretch goals are important to avoid complacency. But in order for stretching to be successful, it must be progressive, and the person must be given time to adjust to his or her new condition. Otherwise, eventually they will rip at the seams.

Crowds may have loved this in Rome, when it happened to slaves being stretched by horses. But today, such a spectacle would be, rightfully, considered as barbaric.

Is it much different when we do it virtually?