Think Process

Posted 3 months, 2 weeks ago | Originally written on 8 Jul 2021

Process is more valuable than product. Here is why.

What is the true value of the world's best companies? Obviously it is not the products they sell since they relinquish them once they produce them in exchange for cash. Rather, it is total ownership over their production process that gives them the value that they have.

The reason that Apple is the most valuable company on planet Earth (over $2tn as of today) is that they have exclusive rights over the production process that produces Apple products. There are thousands of companies that produce technical consumer products yet none of them have as high a regard as Apple. Why is this? Well, it's quite simple. None of them have as good a production process as Apple's. Apple's production process does not just give it the position to produce highly desirable products but give it the agility to innovate so fast that its competitors are always playing catchup. When a company's production process is highly refined it can be a leader.

In a similar vein, Toyota owns the highly refined production process that produces it's precisely engineered vehicles. Continuous improvement (改善, カイゼン, kaizen) is a feature not a serendipitous outcome. It can outsource the manufacture of thousands of the components needed for its products, as it does in Japan, but it guards its control over the entire production process and keeps it as lean and clean as possible.

Arm takes this to its logical conclusion by owning the design process of its chips without ever manufacturing them. It spends inordinate hours refining the architecture to the degree that other company's are willing to spend considerable sums licensing these designs.

If there is anything a company should spend its days on is refining its process to give it every advantage to live on the cutting edge.

Think process.