Chance Favors the Prepared Mind (Company)

Steve Jobs had a prepared mind which allowed him to see and take advantage of opportunities. Jobs also prepared Apple and its executive team to see and take advantage of opportunities. Apple's vertical integration is a form of preparation which allows the company to opportunistically follow the river. Following the river refers to a company's ability to intuitively adapt to the natural evolution/flow of products and technologies, such as the way music went from CD's to downloads to streaming, or the way television is moving away from cable toward over-the-top broadband options like Apple TV, Netflix, and HBO Now. Vertical integration gives Apple the flexibility and in-house capabilities needed to follow the river. Integration, intuition, and jobs-to-be-done thinking allow Apple to create new product categories and meaningful product improvements in response to the natural evolution of products and technologiesSee post titled Focus, Functional Toys, Tradeoffs, and Following the River.

Apple prepares for new product categories and meaningful product improvements by hiring the best people and by developing/acquiring and integrating the key product technologies (fingerprint technology resources/processes, mobile chip technology resources/processes, and so on). Apple also applies follow the river learning from prior products to help it develop new product categories. iTunes learning leads to the iPod, iPod learning and Apple's computing capability lead to the iPhone, and iPhone learning leads to the Apple Watch.

When an integrated company like Apple follows the river, relying on capabilities and learning from prior products to develop a new product category, it can be difficult for companies that haven't followed the same river to compete. Feature phone makers couldn't compete with the original iPhone because they didn't follow Apple's river -- companies like Nokia and Motorola never developed products like iTunes, the iPod, and the PC, so they lacked the capabilities and learning needed to develop a small, handheld computer that also functioned as a phone and music player. Traditional luxury watch makers are facing the same problem in trying to compete with the Apple Watch.

The author owns stock shares of Apple.