10 Ways to Think Different – Inside Apple’s Cult-Like Culture

1. Empower employees to make a difference. When I asked one source why Apple employees always seem so empowered, he replied, “It sounds corny, but it’s Steve’s reality distortion field. He says they can make a difference, and in a cult-like way, they believe it.” Changing the world is grandiose and far-fetched. But for Jobs and company, “make a dent in the universe” is somehow an entirely realistic goal.

2. Value what’s important, not minutiae. According to one associate, “It’s a really fun place to work with loose rules. Employees mostly come and go as they please as long as they accomplish, not 100 percent of their goals, but 110 percent.” Freedom and flexibility, just get the job done. What a concept. I attended one meeting where an Apple manager showed up barefoot. Nobody cared or even noticed

3. Love and cherish the innovators. According to a BNETreport, the way Apple “reliably churns out the industrial equivalents of da Vinci paintings … stems from the meticulous care and feeding provided to a specific group: the creatives.Apple’s segmented, stratified organizational structure – which coddles its most valuable, productive employees – is one of the company’s most formidable assets.”

4. Do everything important internally. It’s a throwback to the old days of vertically-integrated computer companies, but it’s a good thing that Apple never bought into the whole disaggregation thing. Everything important is under one roof: industrial design, operating system, hardware design, even the sales channel. Apple manages to do that by focusing on far fewer products than conventional consumer electronics companies.

5. Get marketing. Marketing is the one great weakness of the technology industry. For some reason, high-tech CEOs don’t get it, understand it, or value it as they should. Apple spends a great deal of effort divining the next big thing – figuring out what people want – even when they don’t know it themselves. They don’t use focus groups or research. They’re their own focus group.

6. Control the message. Few companies truly get communications and PR the way Apple does. A big part of its formula for creating a buzz like no other company is its famous secretiveness. Considering the sheer number of people, companies, and news outlets that would give anything for a tip, virtually nothing leaks until Apple’s ready to spill it – the occasional iPhone prototype left on a bar-stool notwithstanding.

7. Little things make a big difference. According to theConfessions of an Apple Store Employee, “During the iPhone 4 launch, they brought us food – and good food! Somebody told me that the 5th Avenue store in New York had a masseuse during one launch, and that another store had a kiddie pool full of goldfish as, like, a Zen thing.” And one of my sources says the main cafeteria is serious gourmet quality.

8. Don’t make people do things, make them better at doing things. In an interview, Steve Jobs revealed, “My job is to not be easy on people. My job is to make them better. My job is to … take these great people we have and to push them and make them even better, coming up with more aggressive visions of how it could be.” Apple employees I’ve known are either operating at the top of their game, or think they are. Either way, it works.

9. When you find something that works, keep doing it. The way Apple operates today is not some grand design by Jobs or his management team. They found their way one step at a time. The difference is that, the way Apple’s organized, it can rapidly adapt to a new idea or process that works. After decades of single-digit market share, the iPod / iTunes breakthrough provided a winning formula that Apple’s replicated with the iPhone and iPad.

10. Think different. Apple doesn’t do anything according to anyone else’s timetable. Its product launches and company events – like today’s iPad 2 announcement – happen when it suits Apple. It even shuns the venerable Consumer Electronics Show. Apple follows the beat of its own drum. How things should be done or are done elsewhere don’t count. Apple finds its own way. As Jobs said in a Stanford Universitycommencement speech, “Don’t let the noise of others’ opinions drown out your own inner voice.”

That’s exactly what Trader Joe’s has done with the retail grocery store business. Even Whole Foods and its quirky CEO, John Mackey, seem remarkably undifferentiated, by comparison. So, from the Fortune story and my own observations, here’s an analysis of this unique company’s more or less counterintuitive approach to a mature industry, and insight into how its strategies may apply to other businesses.

1. Consumers want fewer choices? Contrary to long-standing grocery store dogma, TJ’s stores are smaller and the choices are fewer but consumers are happier. On average, TJ’s sells less than one tenth the number of SKUs, but achieves twice the revenue per square foot versus Whole Foods. I mean, who needs 40 varieties of peanut butter to choose from, anyway?

2. Economies of scale: Low prices for high-quality products.Amazingly, TJ’s offers high-quality products at rock bottom prices. How does it do that? Scale. Since it carries fewer products, its volumes are higher, giving it bargaining power when negotiating with its coveted suppliers. Everybody wins. It’s nothing new in business operations, but it’s very new in the grocery business.

3. The death of branding? Not at Trader Joe’s. 80 percent of Trader Joe’s stock bears the company’s brand. Customers trust the brand, which is one of the ways the company gets away with having fewer choices.Secrecy. Some think TJ’s secretiveness comes from Germany’sAlbrecht family which owns the chain, but that’s not the case. TJ’s is secretive because it doesn’t want anyone to know who’s making its products. It’s a competitive advantage. And in many cases, suppliers feel the same way, since they cut TJ’s a better deal on the same product than they do other customers.

4. Take care of employees. Store managers can make in the low six figures while full-time employees start out at about half that; not bad for retail. Plus TJ’s contributes 15.4% of employee’s salary to tax-deferred retirement accounts. No wonder the employees always seem so happy.

5. An in-store experience that hails to an earlier, happier time. Every employee knows the whole store and, instead of telling you where an item is, will literally guide you there. They’ll offer you a basket or a cart if they think you need one and even tell you what they think of a product you’re about to buy.

6. Don’t follow trends, start them. TJ’s was offering healthy foods before most consumers even knew what organic meant. They had the largest offering of California wines before anyone – and I mean anyone – thought they were worth a damn. Same goes for microbrewed beers. If you want to see what grocery stores will be selling tomorrow, go to TJ’s today.

7. Know your customer and put your stores where they are. TJ’s isn’t all things to all people; it knows its customer and it maintains a laser-like focus on predicting and meeting their ever-changing needs. That includes knowing where to locate stores by paying attention to demographics like education and food and cooking magazine subscriptions

8. Keep logistics simple. Fewer items means simplified distribution, stocking, everything. And TJ’s always seeks to cut out the middleman by buying directly from manufacturers and shipping directly to its distribution centers. It even sells fresh produce by unit instead of weight to simplify the checkout process.

9. If it isn’t broke, don’t fix it. Founder Joe Coulombe sold the 43 year-old chain to Theo Albrecht in 1979, but the Albrechts stay completely out of the business, only visiting once a year to check out the family “investment.” Trader Joe’s has always run itself. Moreover, TJ’s is entirely self funded with no debt.

Industry observers wonder if Trader Joe’s can maintain its mom and pop image as it continues to expand. The obvious analogy is Starbucks, which sacrificed its specialty coffee image in favor of expansion. While it’s natural to think of this in terms of maintaining a balance, I think the bigger issue will be TJ’s ability to maintain its value proposition – its differentiation – as existing competitors seek to be more Trader Joe’s-like and new competitors enter the market. To me, that’s the challenge.

My sort of big, broad takeaway on the TJ’s story is this: Even in seemingly mature markets, innovation will always occur because “one thing leads to another.” In other words, one thing changes – like the internet, mass customization, or the advent of foodies – and that leaves gaping holes of opportunity for the business leaders of tomorrow to jump through.