Recently, Apple announced that it was investing $1 billion in Didi, China’s leading ride-sharing service, and I was pleasantly surprised. Not because I travel to China often, I don’t, but I was impressed to see such a well-established organization adopting a flexible and complementary approach to market growth.
As a late 20th century company, Apple matured during the business era of “he who has the most toys wins.” Expanding your reach meant owning the resources for expansion. Vertical integration was critical as it allowed organizations to control their product from conception through delivery. It was a successful analog model because innovation took years. Getting to the top was the challenge, staying there wasn’t. And, in Apple’s case, its reputation for breakthrough innovation and design created a level of brand loyalty that left competitors in the dust.
But ownership in the digital era is no longer a marker of success if it slows down your ability to respond to changes in the corporate landscape. Being the “best” means less if you’re not first to market. Apple, under Steve Jobs’ second tenure, was usually first to market with game-changing technology like iPods and iPhones and iPads. Recent endeavors haven’t been as successful, though, and Apple’s reputation as “the world’s most valuable company” took a brief hit as it saw sales drop for the first time in 13 years, including a steep drop in China and its surrounding areas.
In the past, as with many large organizations, Apple would buy a company that addressed a weakness and folded it in under the Apple umbrella, which is increasingly becoming a difficult model to sustain. As markets have become more and more international, with companies bringing their own culture, rules and traditions into the mix, buying a foreign entity could often require as much effort and resources into building an infrastructure that works across both cultures as it would to build something from scratch. But there is a third way that addresses the new digital realities.
As I’ve written about before when Lyft entered into a series of strategic partnerships, including one with Didi, ownership, which can be cumbersome in modern business where product development cycles are now measured in months or even weeks rather than years, is being replaced with partnerships whereby each partner shares each other’s unique knowledge, expertise and resources for their mutual benefit. What Salim Ismail of Singularity University calls“exponential thinking.”
Still, exponential thinking is seen as what “startups” do when they’re trying to build their brand in the marketplace. Conventional wisdom says it’s not necessary for established organizations, let alone market leaders. They’ve paid their dues, they’ve planted their flag, they’re at the top. The thinking goes that they don’t need to iterate or innovate as much to retain their share. Which is a deadly mindset to have in our new technology-based environment.
That’s why it was so exciting to see a market leader like Apple appreciate the value in sharing resources and expertise with Didi. Each company holds a key the other needs: Apple is interested in developing a stronger presence in China while Didi could use Apple’s greater understanding or state-of-the-art technology. On their own, the effort and resources needed to develop those keys would be time-consuming at best and insurmountable at worst.
Apple recognized that its investment, which was a small portion of its own valuation but a boon to Didi, brought with it the potential for a very high reward with very limited risk. Which is the beauty of exponential thinking, regardless of the size of your organization. Shared resources, when there is a solid strategic reason for companies to share, lowers overhead while accelerating efficiency. Each partner can benefit from the years the other put in to develop their brand, customer base, expertise, etc.
In the end, it’s about shifting to a more collaborative, “abundant” mindset, where sharing is highly valued, not just because it’s a sign of good manners, but because it’s a sign of smart strategic thinking. Sharing resources strategically, especially intellectual resources and expertise, doesn’t limit what you are able to extract from them. Business isn’t a zero sum game.
This article first appeared on Keith’s Linkedin blog. To get the latest from Keith, follow him on Facebook, Twitter, and YouTube.