The following is an excerpt from Navigant Healthcare’s Pulse Weekly. Click here for a complete copy of this week’s article.
Last Tuesday, Apple became the most valuable company in the world reaching a market capitalization of more than $711 billion– almost double the value of #2 Exxon ($385 billion). The Cupertino, California-based company, founded in 1976 by the iconic trio of Steve Jobs, Ronald Wayne and Steve Wozniak, is arguably the leader of the pack of new corporate powerhouses that are re-shaping commerce in the global economy.
When Tim Cook became its CEO in 2011, expectations were high: he followed Steve Jobs, a legendary innovator. The company, under his leadership, has strengthened its position in the digital music (iTunes) and mobile device industry (iPhones) and expanded its market share in Asia against skepticism the market was not ready for high-end technology.
Last week, Cook told the Goldman Sachs Technology and Internet Conference in San Francisco that the company was bullish on the Apple Watch to help people monitor their activity because “a lot of doctors believe sitting is the new cancer.” He said he’s excited about the company’s growth potential in China and announced its “biggest and boldest project ever,” First Solar, a $848 million, 1,300-acre solar farm in Monterey County, California, that will power its headquarters, data center in Newark, California, all Apple offices and 52 Apple stores in California.
Clearly, the healthcare industry is on Apple’s radar. Makes sense. Case in point: auto manufacturing. Cook announced Apple’s auto strategy 18 months ago. The goal of Project Titan: to build an affordable, electrically powered, technologically advanced car that will compete with Tesla, Nissan and GM. His actions are instructive: he assembled a 1,000 person team under Vice President Steve Zadesky and recruited Johann Jungwirth, President and Chief Executive Officer, Mercedes Benz Research and Development, to lead the effort. It’s a bold play.
Like auto manufacturing, healthcare is a capital intense, high profile, labor-force dependent industry that’s resistant to change. Do Tesla, Nissan and GM consider Apple a competitor? I’m guessing they’re watching closely.
From its actions and track record, the keys to Apple’s successes are clear: the willingness to think big and take risk, the ability to leverage technologies that transform how people live and work in different settings, a desire to expand beyond their core products and services, and a persistent appetite to innovate, even when facing criticism, skeptics or entrenched competitors. Healthcare could apply the same.
- We expand by doing more of the “core”: Apple operates in new industries and constantly re-defines its core.
- We’re prone to paralysis by analysis: Cook and Jobs discounted market data preferring insight and inspired team thinking.
- We hire leaders steeped in ‘healthcare experience’: Apple recruits from the outside seeking difference of opinion and competencies missing in its ranks.
- We avoid risk: Apple feeds on risk and is unafraid to fail.
- We focus on the direct competitors in our own sectors: Apple defines markets beyond the products it sells today.
- We talk about diagnosing and treating patients locally: Apple envisions consumers caring for themselves globally.
In 2013, 24 of the top 50 Fortune 500 companies were new entrants into healthcare. Of this group, seven were retailers and eight were technology and telecommunications companies. Both types arrived on the health scene boasting deep relationships with millions of customers and rich databases of information. Companies like Apple will compete formidably in the healthcare industry. They see the opportunity and are not intimidated by its sacred cows and complexity.
In San Francisco, Cook told his audience, “We’re not focused on the numbers. We’re focused on the things that produce the numbers. We don’t believe in laws like the law of large numbers. Steve ingrained in us that putting limits on your thinking is never good.”
Apple and others are certain to be major players in our healthcare system. How many of today’s most prominent incumbents will be around tomorrow? Time will tell, but it’s likely many will not.
P.S.: This was a busy week in healthcare—closing of the 2015 health exchange enrollment Sunday night, announcement of the new cancer care management model program, hospital mergers and more. See the Industry and Government Pulse sections in today’s Pulse Weekly to stay informed.
Sources: Daisuke Wakabayashi, Mike Ramsey, “Apple Secretly Gears up to Create Car” Wall Street Journal, February 14, 2015; Eric Platt, “Apple breaks global profit record,” Financial Times, January 28, 2015; Yoree Koh, “Twitter User Growth slows, but Revenue is promising,” Wall Street Journal, February 6, 2015; Jessica Guyan, ”Tim Cook’s reign hits new heights; Company grows richer even as it gets more eco-friendly,” USA Today, February 11, 2015; Reed Albergotti, “Facebook Net Keeps Climbing as Costs Soar,” Wall Street Journal, January 29, 2015; Melissa Korn, Lindsay Gellman, “Should Harvard Business School Hit Refresh? – Some Students, Faculty, and Alumni Say the Elite M.B.A. Program Has Been Slow to Teach Management for a Tech Era,” Wall Street Journal, February 5, 2015; Daisuke Wakabayashi, “Apple: $710 billion and counting,” Wall Street Journal, February 11, 2015; Larry Light, “How to Revive McDonald’s; With fourth-quarter earnings dropping 21% and global sales down, the company needs a back-to-basics turnaround,” Wall Street Journal, February 11, 2015; Vaughn Kauffman, Trine Tsouderos,“The Future of Health Is More, Better, Cheaper” Strategy & Business, February 2, 2015
The opinions expressed in this article are those of the author and do not necessarily represent the views of Navigant Consulting, Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Navigant undertakes no obligation to update any of the information contained in the article.
©2015 Navigant Consulting, Inc.