What is the value of people engagement?
In terms of dollars and cents, what does it return?
Those questions have long bedeviled organizations of all kinds and their leaders. We got the answer a couple of weeks ago, when Apple Inc. announced its quarterly results. Apple, as you know, is a company with deep people engagement.
The answer is staggering. It is far, far more than any of us — including yours truly — had ever imagined. Far more.
Imagine being able to raise your prices and then sell many more, a great many more, of whatever you're bringing to the marketplace. That's exactly what Apple is doing.
It boosted the price of its iPhones by 10 percent — keep in mind, they were never cheap — and then proceeded to sell more than 61 million units in three months, for an increase of 40 percent from the year-earlier period.
I hope you own some Apple stock. This torrid rate of sales is enabling Apple to boost its dividend by 11 percent and its stock buyback by $50 billion, from $90 billion to $140 billion. You read correctly. Such an incredible feat is possible because Apple is sitting on $193 billion in reserves.
Now, pay attention. We're talking about illions with a B. We're not just talking about measly millions. Billions. Hundreds of billions of dollars of net income in the bank.
You want to know how much $193 billion is? I'll tell you how much it is. According to the World Bank, the United States accounts for 27 percent of the world's economy, or about $17 trillion of goods and services per year.
Our gross domestic product thus works out to roughly $50 billion per day. So the amount of Apple's cash on hand is almost equal to the total GDP of the United States, arguably the wealthiest country in the history of civilization, for four consecutive days.
Or you can size it up another way. You can notice that only about a dozen companies on the S&P 500 boast total market capitalization (the price of a share of common stock times the number of shares outstanding) of more than $193 billion. Needless to say, Apple is the 700 billion dollar gorilla.
Apple's hoard is all the more impressive for three reasons. First, the company was nearly broke just twenty years ago. Second, its phenomenal earnings pace has only increased since the 2011 death of Steve Jobs, whom everyone was crediting with Apple's turnaround. Third, its success represents the triumph of organic growth and its engine, people engagement.
Every business has two potential avenues of growth: inorganic and organic. Most companies pursue the former, inorganic growth, because they don't understand anything else. But the real magic happens in the latter, organic growth.
Inorganic growth is merely a matter of buying something — a patent, a factory, an algorithm, a customer list, a whole company — and grafting it onto your own organization. It's usually expensive and dicey, unless you're very selective and very disciplined.
Organic growth is altogether different. It is growth from within: your own people, your own processes, and your own products, all coming together to innovate. It holds far greater potential for extraordinary success. Look at Apple. From its brilliantly lit stores to its trailblazing iPad to its MacBook Pro to iPods with 10,000 songs to the creation of an entire app industry to its phenomenal customer service, that is what Apple has done so magnificently.
The difference is enough to drop jaws. Last year, in a perfect illustration of inorganic growth, Facebook bought upstart and potential rival WhatsApp for $19 billion, a sum that few observers could grasp. Yet it was only a dime on the dollar of Apple's bank account.
Not to be too facile, but I cannot think of a better reason to go organic.
Now here's the crux: Organic growth is the product of people engagement. Properly understood, the engagement of employees is not so much a matter of morale, or of loyalty, or of satisfaction on the job, or even of alignment. It is rather a function of intense focus, deep curiosity, no-holds passion, and the relentless courage to innovate and change. That is what Apple is. You build that culture of engagement, and you will generate organic growth.
I cannot promise that you will be sitting on $193 billion in twenty years. But I can promise that you will have something that will make you very, very proud.