Adobe doing bits

Article summary

The Economist opened by suggesting that Adobe is a dull company by Silicon Valley standards. Despite this, it has adapted to cloud computing in perhaps a better fashion than the likes of Microsoft. Indeed, Satya Nadella is rumoured to see the Adobe boss, Shantanu Narayen as something of an idol - Narayen has increased the market capitalisation of Adobe ten times since taking over in 2007. Adobe is well-known for trailblazing in the realm of desktop publishing, particularly in regards to the PDF and Photoshop. Smart-phones threatened to disrupt their original offerings but the company saw the opportunity to re-invent themselves and have successfully used the cloud to improve their products. Since they now live in data centres, rather than hard drives, their software can be used by different devices and different people at the same time. Now the business offers three cloud platforms; Document, Creative and Experience. The Economist also notes the company’s data-driven operating model, offering fast feed-back loops to improve their products. Likewise, they have innovated in their management style, offering a hybrid between Apple’s top-down approach and Google’s bottom-up. The Economist notes that Narayen will be aware that Adobe’s ‘Creative’ and ‘Document’ clouds are a prime target for competitors, particularly startups like Figma. The article concludes by suggesting that investors have cooled on Adobe of late, with a drop in market value of $40bn since September - but that the company has shown many times over that it is capable of embracing change.

What I thought

The article was an interesting examination of how Adobe has managed innovation, successfully employing a Box 3 strategy of innovating on its original offerings in the face of disruption. It seems like Adobe will continue in this vein. Their cloud offerings now form a Box 1, with Box 3 adjusted towards the use of Artificial Intelligence to make their products more accessible to the creator economy. The article highlights an interesting feature of Adobe’s positioning when it suggests the company is dull by Silicon Valley standards. It may not grab headlines but Adobe products surround us daily: The Economist print edition probably used Photoshop, Illustrator or Adobe Fonts and most films use Adobe After Effects. Whilst not swashbuckling, that is pretty exciting. I think the article is perhaps overly critical in terms of its stock-market analysis. At the time of writing Adobe is up 31.03% year-to-date!