But Steve Jobs Didn’t Invent Anything!
RYAN KRAUSE AND OWEN PARKER
In October of 2011, The New York Times published an obituary of Steve Jobs, heralding him as a “visionary who . . . helped usher in the era of personal computers and then led a cultural transformation in the way music, movies and mobile communications were experienced in the digital age.”
Others have lauded him as one of the greatest innovators and entrepreneurs of the late twentieth and early twenty-first centuries, on a par with Henry Ford, Alexander Graham Bell, and Thomas Edison. Almost as often, however, Jobs’s critics argue that his merits in these roles are overstated because his products (such as the Apple computer, the iPod, or the iPhone) were not new technologies when he introduced them, but were simply integrations of existing technologies.
Because of this—so these critics argue—the products that Jobs introduced and the company he built around them do not constitute a great achievement. Factually speaking, these critics are not wrong; in almost all cases Jobs’s products did not constitute never-before-seen technological advancements. Even within Apple, Jobs’s initial role was not uniquely technical, according to an early employee, Avi Solomon: “Between Woz [co-founder Steve Wozniak] and Jobs, Woz was the innovator, the inventor. Steve Jobs was the marketing person.”
But are Jobs’s critics right in their evaluation of this fact? Did Steve Jobs simply get rich off the ingenuity of others, and therefore not deserve the designation of great innovator and entrepreneur? Were his innovations not nearly as valuable as people think, and valuable to whom?
To answer these questions, we draw on novelist-philosopher Ayn Rand’s objective theory of value. Rand rejected what she called the intrinsic and subjective theories of value. The intrinsic theory of value “holds that the good is inherent in certain things or actions as such, regardless of their context and consequences, regardless of any benefit or injury they may cause to the actors and subjects involved”; the subjective theory of value “holds that the good bears no relation to the facts of reality, that it is the product of man’s consciousness” (“What Is Capitalism,” pp. 13–14). In contrast, Rand’s objective theory rejects both the intrinsic and subjective perspectives, and “holds that the good is neither an attribute of ‘things in themselves’ nor of man’s emotional states, but an evaluation of the facts of reality by man’s consciousness according to a rational standard of value.”
Rand defines value as “that which man acts to gain and/or keep”, and she argues that the concept “presupposes an answer to the question: of value to whom and for what” (“The Objectivist Ethics,” p. 15). According to the objective theory of economic value, therefore, a product or service is only said to be “valuable” in light of its meaningful and empirically verifiable utility for human life. Its value is not left up entirely to the opinion of whoever might attempt to evaluate it.
In order to determine a product or service’s value, individuals must assess the contribution a product or service makes to the furtherance of their own lives, because values “cannot exist (cannot be valued) outside the full context of a man’s life, needs, goals, and knowledge.” According to Rand, it’s through this process that the valuation of products and services can and must be objective, “determined by the nature of reality, but to be discovered by man’s mind.” At first glance, the intrinsic and subjective theories of value might seem like straw men arguments that Rand set up to be refuted by her own theory. These theories, however, underpin most of the criticism of Steve Jobs and entrepreneurs in his mold.
For instance, someone operating on an intrinsic theory of value might argue that technologies, once created, have a set value that is inherent to that technology, regardless of how—or whether—it is used. Many critics of Steve Jobs insist that he did not actually invent the technologies his company sold, but merely capitalized on their pre-existing value; he was simply good at being “in the right place at the right time.” Such critics insist that the value of a technology exists in the thing itself prior to any recognition—or recombination—of the technology. Recognition of value and recombination of technology comprise Jobs’s primary contribution to his products.
On the other side of the coin, someone operating on a subjective theory of value might argue that the value of a technology is entirely arbitrary, and thus by taking existing technologies and transforming them into high-end consumer products, Jobs artificially “created” the value that customers ascribe to his products, with subjective customer opinions constituting the entirety of a product’s market value. Subjective value theorists would likely insist that Jobs’s success is attributable not to the provision of objective value to his customers, but rather to his ability to trick his customers into paying more than needed for a given technology.
These competing criticisms both build on the same false dichotomy, according to Rand. Economic value is neither an inherent quality of reality nor a subjective whim. This does not mean, however, that Jobs’s critics are inventing a tension where none exists; they clearly perceive some difference between the activities of an inventor and a marketer, but their epistemological conclusions are off-base. Value—or entrepreneurial opportunities, depending on the focus of scholarship—is objective, in that individuals must use facts to assess a product or service’s utility in the context of their own lives. Moreover, the tension that most people recognize between the inventor and the marketer exists not between intrinsic and subjective value, but rather between two kinds of objective value: what Rand labeled “philosophically objective value” and “socially objective value.”
Philosophically objective value refers to “a value estimated from the standpoint of the best possible to man, i.e., by the criterion of the most rational mind possessing the greatest knowledge, in a given category, in a given period, and in a defined context.” As a point of comparison, we might argue that a number of personal computers on the market were technologically superior to the iMac when Apple introduced it in 1998; there were products with greater computing power, storage, memory, customizability, or other benefits. So it could reasonably be argued that the iMac was not the leading edge in terms of its ability to enhance human life in the abstract. In fact, it was priced reasonably low and even positioned, according to Paul Thurrott, as an “internet-age computer for the rest of us.”
Despite the fact that the iMac’s primary innovation was not in driving forward the frontier of human computing ability, but rather to “bring up the rear” through ease-of-use, sales of the iMac proved so robust that most observers today credit it with raising Apple out of the corporate ashes and enabling the later creation of the iPod, the iPhone, and the iPad. What explains this success in the absence of ground-breaking technological advancement? The answer lies in Rand’s concept of socially objective value, defined as “the sum of the individual judgments of all the men involved in trade at a given time, the sum of what they valued, each in the context of his own life” (“What Is Capitalism?”, p. 17).
In other words, an individual might objectively determine that a competing personal computer is more valuable to human life in the abstract than is the iMac, and simultaneously objectively determine that the iMac is more beneficial to him in the context of his own life, perhaps because he has no material use for the added functionality of the other device or because his degree of technological acumen requires a product that is easier to use. As Rand explains:
Just as the number of its adherents is not a proof of an idea’s truth or falsehood, of an art work’s merit or demerit, of a product’s efficacy or inefficacy—so the free-market value of goods or services does not necessarily represent their philosophically objective value, but only their socially objective value.
Thus, a manufacturer of lipstick may well make a greater fortune than a manufacturer of microscopes—even though it can be rationally demonstrated that microscopes are scientifically more valuable than lipstick. But—valuable to whom?
A microscope is of no value to a little stenographer struggling to make a living; a lipstick is; a lipstick, to her, may mean the difference between self-confidence and self-doubt, between glamour and drudgery. (“What Is Capitalism,” p. 17)
Rand hastens to point out that socially objective value is not subjective; individuals (for the most part) evaluate products and services by the real-world results the individuals expect from them. Nevertheless, real though these results are, they occur within the context of individual lives, and thus the value a particular individual derives from a product may differ significantly from its philosophically objective value.
The distinction between philosophically objective value and socially objective value forms the basis for what we see as one of the most fundamental epistemological processes inherent in entrepreneurial activity. The process consists of two basic steps. First, the entrepreneur must identify in a product or service sufficient philosophically objective value such that he or she could potentially profit from selling it. Such identification can occur through the entrepreneur’s invention and subsequent evaluation of a wholly new technology, through the determination of an existing technology’s value to human life, or through some mixture of the two.
Second, the entrepreneur must create socially objective value from the technology he or she has identified as having philosophically objective value. The entrepreneur can create such value through transforming the existing technology in a useful way, by demonstrating the technology’s value to potential customers, or by applying the technology in a more operationally effective fashion. According to Rand,
The majority learn by demonstration, the minority are free to demonstrate. The ‘philosophically objective’ value of a new product serves as the teacher for those who are willing to exercise their rational faculty, each to the extent of his ability. (“What Is Capitalism?”, p. 18)
When the epistemology of entrepreneurship is conceptualized in this way, it’s clear that inventing a new technology, while certainly not inconsistent with the process, is neither a necessary nor a sufficient condition of entrepreneurship. The role of the inventor is to create a product with philosophically objective value. While undeniably important, such scientific discovery and subsequent technological development does not constitute entrepreneurship, and does not guarantee that the technology will be widely adopted or achieve market success. Failure to fully transform a product with philosophically objective value into a product with socially objective value has proven the downfall of countless would-be entrepreneurs.
Steve Jobs understood the epistemology of entrepreneurship and executed it with precision and foresight. Steve Jobs did not invent the personal computer—if anyone associated with Apple could be considered to have played a role in inventing the personal computer, it would be Steve Wozniak—but Jobs saw a potential for socially objective value in its use that no one else in the technology industry could see.
Xerox’s PARC developed the technology for the mouse-driven graphical user interface, but it was Jobs who demonstrated the value of these inventions to the general public and thereby monetized them, first through the Lisa operating system and subsequently through the introduction of the Macintosh computer. The same can be said of mp3 player technology and smartphone technology; the former vis-à-vis the iPod, and both vis-à-vis the iPhone. In the field of innovation management, adopters of technology are categorized by Everett Rogers with respect to the timing of adoption: innovators, early adopters, early majority, late adopters, and laggards. Technologies achieve a critical mass of adoption when early adopters give way to the early majority. Steve Jobs’s influence can be seen in the creation of early majorities for almost every consumer electronic device developed in the last half century.
Contrary to the claims of the subjectivists and those who argue that entrepreneurial opportunities exist only in the mind of the entrepreneur, the market value that Steve Jobs was able to generate from his products derived from his ability to demonstrate their socially objective value. Jobs’s marketing skills did not amount to tricking people into buying his products out of momentary deviations from rationality. That type of sales tactic might sustain short-term sales of a fad product, but not the fierce, decades-long customer loyalty that Apple enjoyed under Jobs and continues to enjoy after his passing.
Rather, Jobs fashioned his innovations—yes, built using others’ technological inventions—according to what his independent judgment determined to be the most value to the early majority and late adopters. Attributes such as ease-of-use rarely factored into early technological designs of personal computers and smartphones, because the intended users—early adopters—possessed the technological acumen to use complicated devices. Jobs understood the socially objective value in providing easy-to-use products to the majority of uninitiated device users.
In an interview with Inc. magazine, which named him “Entrepreneur of the Decade” in 1989, Jobs emphasized the role of objectively assessing a technology’s value, both from an abstract as well as from a social standpoint, as opposed to catering to customers’ subjective whims. When asked where great products come from, he replied:
I think really great products come from melding two points of view—the technology point of view and the customer point of view. You need both. You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new . . .
. . . customers can’t anticipate what the technology can do. They won’t ask for things that they think are impossible. But the technology may be ahead of them. If you happen to mention something, they’ll say, “Of course, I’ll take that. Do you mean I can have that, too?” It sounds logical to ask customers what they want and then give it to them. But they rarely wind up getting what they really want that way . . .
You can get into just as much trouble by going into the technology lab and asking your engineers, “Okay, what can you do for me today?” That rarely leads to a product that customers want or to one that you’re very proud of building when you get done. You have to merge these points of view, and you have to do it in an interactive way over a period of time—which doesn’t mean a week. It takes a long time to pull out of customers what they really want, and it takes a long time to pull out of technology what it can really give. (Bo Burlingham and George Gendron, “The Entrepreneur of the Decade”)
Ayn Rand might as well have been writing about Steve Jobs when she observed that “the free market is not ruled by the intellectual criteria of the majority, which prevail only at and for any given moment; the free market is ruled by those who are able to see and plan long-range—and the better the mind, the longer the range” (“What Is Capitalism,” p. 19).
The workings of Steve Jobs’s mind epitomized the epistemology of entrepreneurship. He was able to understand the philosophically objective value of new technologies and to demonstrate the socially objective value of the products derived from those technologies better than anyone else in the industry (see Xerox’s management of PARC inventions). According to Rand, he therefore deserves not only the material wealth that sales of his products generated for him, but also, and perhaps more importantly, the praise and admiration of all of us who use and enjoy those products today. Whether or not the technology behind personal computers, mp3 players, and smartphones had ever been invented, we might not benefit from them as much or even at all were it not for the entrepreneurial epistemology of Steve Jobs.