The Value Effect: How Steve Jobs Set Apple For Market and Industry Dominance

This concept of the Value Effect has serenaded my thoughts for a few days now. It kept coming back to me. I guess that is a message from the universe that I need to send it out. The Value Effect can be seen in almost everything we do. If you can’t explain what is happening, and how resources are moving, then you need to understand the Value Effect.

The Value Effect states that resources tend to move from a place of low perceived value and importance to a place of high perceived value and importance. The greatest impact and profit of a company will come from investing in what is perceived as high-value and important. The connection between what is high value and important to the company and what is important and high value to the customer is where success happens.

Companies go into bankruptcy when there is a misalignment between what is important and high value to the customer and what is high value and important to them. That was exactly what happened to Apple before Steve Jobs came back.

Important is driven by the impact or significant change it will bring to both the company and the customers. A project is high in important if it is very much in alignment with the company's visions, goals, and values. It should be the result or capability you want to produce for your clients. However, for it to produce the right expected outcomes, it has to align with what is important to the customer.

To produce the results you want, you have to make what is important and high value to your customers what is important and high value to you. The era of building it they will no longer subsist. You must first know what is important and high value to your customers, then give it to them.

Projects, tasks, activities, products, or services that are termed high value generate higher revenue, results, and profitability. Priority should be given to products, projects, tasks, and services where there is alignment of importance and perceived as high value by both the company and its customers.

How Steve Jobs Turned Around Apple

Apple had a plethora of products that were important to them but not necessarily high value. The company was bleeding cash and was expected to announce bankruptcy at any time. It has lost touch with what is important and of high value to itself first and then to its customers.

When Steve Jobs came back to Apple, his first major activity was to streamline Apple’s product to fit the Value Effect. He understood that if what the produce is perceived as important and high value by customers, then the customers’ resources will move towards the company. As long as the company keeps in touch and is in alignment with what is important and high value to its customers, it will never lack resources.

High value and importance mean you have avoided commoditization and competition. Steve Jobs reduced all Apple products into four categories of products that are deemed high value and important. Here is what he did:

Low Value/Low Importance – Avoid. It’s a waste

Low Value/High Importance – Distraction. Don’t invest in it.

High Value/Low Importance – Partner with someone it’s important to.

High Value/High Importance – Focus. Invest massively in this.

As a result of this strategy, by 2017, Fortune adjudged Apple the most profitable company in the world ($45.6 billion). And today, it's valued at trillions of dollars. All that Tim Cook has to do is to make what is high value and important to its customers what is high value and important to them.

This means that no one should jump into producing products for the sake of it like Google and Amazon does. It’s hard for a business to fail when it's built on high value and importance to the customers. Customers will always move their resources towards anything they perceive as high value and important to them.

How The Value Effect Impacts Startups

The Value Effect is a Blue Ocean Strategy. A lot of startups are failing because they are unable to understand what is high-value and important to their customers. The key to this understanding is empathy.

A startup should start by assessing what is high-value and important to the market they want to serve. Knowing this will help them understand where they should invest more of their time, effort, and money to get the highest returns. It will help them in making better business decisions.

If it’s high value but not important to your customers, they won’t buy. They will leave it for another time.

If it’s low value but important to your customers, they will likely buy it once.

If it’s low value and not important to your customers, they won’t buy at all.

However, if it's high value and high importance to them, they will buy in a frenzy.

Can a company create a perception of high value? This will be determined by the customer. However, a company can create a perception of importance once it is high value. Marketing is key to making a high-value product feel important. It’s the reason Apple invests more in marketing than in R&D. They understand what value means to their customers. So they create importance through marketing.

As a startup, your most important investment should be to understand what is high value to the customer. Then position it as something very important to the customer.

Always keep in mind that globally, resources flow from a region of low perceived value and importance to a region of high perceived value and importance. That is the Value Effect.