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How Adobe Became Silicon Valley's Quiet Reinventor - The Economist
How Adobe Became Silicon Valley's Quiet Reinventor - The Economist
How Adobe Became Silicon Valley's Quiet Reinventor - The Economist
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Another innovation was its management structure. Some tech firms, such as
Apple, espouse top-down micromanagement. Alphabet, Google’s parent
company, is almost anarchic in its bottom-upness. Adobe is a healthy mix. Mr
Narayen sets out the destination, and the managers of the three clouds chart the
exact course. To make ddom and the Experience cloud work, for instance, he set
a goal that was both precise and exacting: Adobe’s data platform must be able to
serve up content in less than one-tenth of a second. How that objective was
reached was then up to the engineers.
Adobe’s three clouds, operating model and management style help explain why
it offers, in the words of Mark Moerdler of Bernstein, a broker, an “unusual
investment combination in software”: high margins and good growth. Its latest
quarterly results are emblematic. Revenues rose by 22% year on year, to $3.9bn,
while the operating margin edged up to 46%, according to Bernstein.
sideways if “you do not invest in the right opportunities”. The Creative and
Document clouds, which together generate 73% of Adobe’s revenues and 80% of
its gross profit, are a ripe target for competitors. Startups such as Figma, a
website for designers of online services which is fully cloud-based, are betting
even more than Adobe on online collaboration. With 14 years under his belt as
boss, talk of succession is in the air. It would be as big a transition as the
handover from Steve Jobs to Tim Cook at Apple, says Brent Thill of Jefferies, an
investment bank. It is anyone’s guess whether it could be as successful.
Investors have indeed cooled a bit on Adobe of late. Its market value is down by
$40bn from a peak in September, a steeper decline than at most other tech
giants. Yet the company has proved time and again that it can prosper by
embracing change rather than fighting it. That has made Mr Narayen the darling
of investors and analysts, as well as a role model for tech bosses such as Mr
Nadella. Nothing dull about that. 7
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This article appeared in the Business section of the print edition under the headline "Silicon Valley’s quiet
reinventor"
MONEY TALKS
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Chinese business
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24/10/2021 13:10 How Adobe became Silicon Valley’s quiet reinventor | The Economist
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