Last updated: April 4, 2014 5:39 pm

Apple’s ‘holy war’ was a feud that made the Valley fertile

Rivalry may stem from vanity but it is often extremely effective. Jobs was a master

A year before he died in 2011, Steve Jobs wrote a blunt description of Apple’s agenda. “Holy war with Google” was the first point in his presentation to the company’s top 100 executives.

Like other Silicon Valley founders such as Larry Ellison of Oracle, Jobs relished a feud. When his anger was provoked by an old rival such as Bill Gates of Microsoft, or a company he deemed to be getting in Apple’s way unfairly, such as Adobe, he let loose. Some competition was more than a business matter – it was personal.

Mr Ellison often quotes a dictum he ascribes to Genghis Khan, the 13th-century Mongol emperor and warlord: “It is not enough that I succeed. Everyone else must fail.” His fights with rivals such as SAP, the German software company, are driven as much by pride as by corporate interest. “I’ll admit to it. Mea culpa. An awful lot of it is personal vanity,” he once told the television interviewer Charlie Rose.

At least one of Jobs’s fights endures after his death. His email emerged this week in a prolonged court battle between Apple and Samsung over whether the latter had infringed Apple’s patent rights in its use of Android software. For Jobs, Google’s promotion of Android to compete with his iOS software was an infuriating betrayal.

Rivalry may stem from vanity in the boardroom but it is often extremely effective – as Apple and Oracle show. The urge to beat the old foe has spurred on competitors such as Coca-Cola and PepsiCo, Adidas and Puma, and Ford and General Motors, over decades. Like a sports derby between two teams from one city, it produces an emotional high. “Rivalries can be very productive because they push companies to raise their game and consumers benefit. They often promote innovation,” says Julian Birkinshaw of London Business School. “Jobs was the master of hyperbole and was good at stoking emotional excitement among employees.”

A famous example of corporate rivalry is between the Italian sports car makers Ferrari and Lamborghini. Ferrucio Lamborghini was a tractor maker who complained to Enzo Ferrari about the clutch on his car. Ferrari is said to have responded that if he could do better, he should try – which Lamborghini then did.

The fact that face-to-face competition boosts performance is well known in sport. A study in the American Journal of Psychology in 1898 found that cyclists went faster when racing against each other than when they tried to beat the clock alone. The author attributed it to “the power and lasting effect of the competitive stimulus”.

Gavin Kilduff, a professor at the Stern School of Business in New York who studies corporate rivalry, has found that it flourishes in similar conditions to sporting contests – when companies are close to each other geographically, are well-matched, and compete repeatedly. Like sports teams, they form a relationship.

Silicon Valley companies meet these conditions, which may account for the proliferation of spectacular rivalries. They also tend to be founded and run by entrepreneurs such as Jobs or Mr Ellison, who do not divide the personal from the corporate.

Rivalries can also have a dark side. In one study, Prof Kilduff found that contests between rivals in Serie A, the Italian football league, produced more foul play, as measured by the number of red and yellow cards. Players became less law-abiding in the face of an old enemy.

In another experiment, Prof Kilduff and others “primed” people for rivalry by asking them to imagine an old competitor. It made them likely to agree with statements that were “synonymous with amoral action, sharp dealing, hidden agendas and unethical excess.”

Prof Kilduff argues that we have a fundamental need to compare ourselves with others who we see as similar. “It may lead to a preoccupation that goes beyond what is strictly rational,” he says. “It can promote scandalous and unethical behaviour, the kind of thing that blows up.”

One of the most notorious cases of rivalry blowing up was the “dirty tricks” campaign waged by British Airways against its rival Virgin Atlantic.

In a 1993 libel case, BA executives admitted to stealing Virgin’s confidential data, calling its customers to tell them their flights had been cancelled and circulating rumours about the health of Richard Branson, Virgin’s boss.

That kind of behaviour can be disastrous but even at a more mundane level, rivalry may lead executives astray. A company that is relentlessly focused on an old rival may compete with it very efficiently but ignore the fact that a new one is sneaking up. It can become blinkered to the true threat by its obsession with the past.

Indeed, the astute boss switches rivals when necessary, forgetting about the competitor that used to obsess him and turning his ire on another. Jobs was a master of this. “Apple was almost founded against the evil enemy being IBM, then it migrated to Microsoft and then it became Google,” says Prof Birkinshaw.

The point of his “holy war” presentation was to identify a new enemy for Apple’s elite – one of its former friends. Eric Schmidt, Google chief executive, sat on Apple’s board until 2009, when Google’s adoption of Android turned it into a competitor. Jobs promptly turned this betrayal, as he saw it, into a grudge match.

Behind the lurid language and the emotional outbursts lay an entirely rational calculation. His company was likely to perform best if it had an enemy to fight. Its senior executives would work harder, its engineers and designers would be more inventive. The trick was not to be too fussy about who that enemy was.

john.gapper@ft.com
Twitter: @johngapper

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