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He sets up what was wrong with Apple before 1997.

“The total is less than the sum of the parts.” Things had to be restructured. The customer was being led to the altar of tech instead of the other way around. Great engineering, bad management. Focused on the tactics, not on the strategy. Technology did not sell things; what technology could do to help the user is what sold things.

Then he lays out what focussing really is – not saying yes but saying no. And you have to know how to deal with pissed off people.

What happens next is exceptional and simply amazing to see. We are used to almost sociopathic behavior from CEOs. Here we see what a true leader can accomplish, one who can engender the fanatical enthusiasm that Jobs can.

Jobs has a reputation for anger and for being a jerk. But all of us who have spoken in front of a large crowd have had worries about dealing with an angry questioner. Here we have the worst possible one: someone who seems to attack the speaker personally.

But Jobs demonstrates the straightforward approach that makes the Reality Distortion Field such a potent force.

He takes some time – a good 30 seconds before he had figured out his answer – collects his thoughts and pulls back from the exact question to give a much deeper and more important answer to the question.

He speaks extemporaneously for the next 4 minutes, doing many amazing things – putting people at ease, providing background and actually giving away the farm for what Apple will do over the next 15 years.

How many CEOs could have done what Steve demonstrates here? He accomplishes so much in those 4 minutes, all without any real missteps.

It is like a primer for 21st century leaders.

He recognizes the anger out there, recognizes that it is legitimate and wants the audience to recognize that he has not ignored this anger.

“People like this gentlemen are right.” Wow. Admitting that critics are right is one of the hardest things for anyone to acknowledge, much less admit in front of hundreds.

His approach not only defuses a lot of tension – you can almost hear the gasps from the audience when the question is asked – but he provides a huge amount of insight.

He is not ‘putting a bullet’ in these technologies for a whim or because they are bad. They simply do not fit into the strategy he brought to Apple.

They may be great tactics but not for the strategy that Apple will  use.

He shows humility, acknowledging that he has made mistakes in the past. But he does have a purpose, a strategy that guides his decisions.

And then the amazing thing, he tells the world what Apple will now do – something we recognize Apple actually did. He gives away Apple’s great strategic secret. Instead of hiding it like every other 20th century company, he gives it away for free! (at about 2:25).

You’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you are going to sell it.

What incredible benefits can we give to the customer? Where can we take the customer? Not starting with ‘Let’s sit down with the engineers and figure out what awesome technology we have and how are we going to market that’.

He knew then what the strategy would be. And he knew that no other company could execute this strategy, even if they knew what it was.

His strategy is what all 21st century companies have and why the copy cats can not win. They maintain focus on the customer’s needs, not the corporation’s.

Every thing Apple has done since 1997 has been a demonstration of this. Tech specs are not as important as keeping the customer delighted. 20th century organizations focus on tech first. Apple focused on the user.

Thus we had the iMac, the iPod, the Macbook Air, the iPhone, the iPad – each using technology to fulfill what the customer needed.

21st century organizations focus on making the customer’s life better, easier and more useful.

That is why most tablet makers are falling by the wayside. Or smart phone makers. Or laptop makers.

guard londonby Allan Henderson

People are biased against creative ideas, studies find
[Via Physorg]

The next time your great idea at work elicits silence or eye rolls, you might just pity those co-workers. Fresh research indicates they don’t even know what a creative idea looks like and that creativity, hailed as a positive change agent, actually makes people squirm.

“How is it that people say they want creativity but in reality often reject it?” said Jack Goncalo, ILR School assistant professor of organizational behavior and co-author of research to be published in an upcoming issue of the journal Psychological Science. The paper reports on two 2010 experiments at the University of Pennsylvania involving more than 200 people.

[More]

Stop Ignoring the Stalwart Worker
[Via HarvardBusiness.org]

There’s an unnoticed population of employees in business today. Strangely enough, they’re also the majority.

The diagram below illustrates the labels that organizations often use (knowingly or unknowingly) to classify their employees. The y-axis focuses on how a professional is measured on meeting the organizational performance criteria that fuel the business engine. The x-axis centers on how the professional fares on meeting the expectations of the human engine. In each of the four corners, we find the Stars, Sinners, Low Performers, and Saints. I’ll go into more detail on the four corners of the diagram in my next post, but for now, I want to bring to your attention those falling in the middle of the diagram — the Stalwarts.

DeLong grid 5-1.jpg

These solid citizens make up the majority of employees in most organizations. The odds are you may find yourself among the Stalwarts at some point in your career, no matter how high-revving your internal drive is. If so, you probably will find yourself questioning your significance.

That’s because, despite the number of Stalwarts in an organization, these good, solid citizens of the organization go largely unnoticed. Few leaders think about the motivation, inclusion, and explicit career management of the solid performers. One Fortune 500 leader said, “I thought that it couldn’t be true that so many workers are systematically ignored through no fault of their own (except for the fact that they may not be politically astute or they don’t draw attention to themselves). But the more I reflected on my own company, the more I realized that I spend all my time worrying about the high performers and assume that everything is OK with everyone else.”

These two things are connected. The stalwarts are what I call the doers – the middle of the bell curve that get things done but do not easily take to new ideas. Innovations are disruptive and these stalwarts hate disruption to their routines and processes.

It is hard to be stalwart – to making sure the important basic parts of an organization get accomplished –  if things are changing all the time. A stalwart is the slow moving but determined tortoise to the disruptive hare. In most cases, a company succeeds because its stalwarts make the ideas of the disruptors a reality.

But that does not mean they like it. As I mentioned, the stalwarts do not take to innovation rapidly. They need to be shown by someone they trust from the community – the thought leaders – that it is worthwhile to adopt a new technology or innovation.

A company of disruptors will not get anything done, because there are not enough stalwarts to realize the ideas. But a company of stalwarts will not be innovative, because there are not enough new ideas being presented.

Companies that are run by disruptors – usually many start-ups – do not understand that the stalwarts must be supported. And companies run by stalwarts – usually the more mature organizations –  do not understand that disruptors must be supported.

The two types often do a poor job communicating their needs. So the first article describes what happens with a company where the stalwarts are in charge – an organization resistant to new ideas.

And the second article discusses a problem when the disruptors tolally run things  – those that actually get things accomplished are ignored.

A truly successful, adaptive and resilient company knows how to support both types, has the right balance of each and has identified thought leaders respected by both groups.

These will be the 21st Century organizations that will succeed.

elephantby http2007

Acer suffers first-ever quarterly loss, predicts iPad ‘fever’ will recede
[Via AppleInsider]

Acer reported the first quarterly loss in company history on Wednesday, but the netbook maker’s chairman attempted to convince investors that consumer “fever” for tablets like the iPad will not last.

[More]

This is the elephant in the room – Apple has created a self-sustaining ecosystem that can not be attacked in just one area.

Losses are never a good thing, particularly when Apple is increasing market share. Perhaps this is another example of a company that is simply unable to compete in the ecological niche Apple has created?

The CEO of Acer seemed to keep talking about the iPad but I wonder just how much the Macbook Air has also eaten into earnings?

The number 1 maker of PCs – HP – just left the market. Now the number 2 is getting hit hard and will not be profitable this year.

Not a good sign.

Now Acer is floundering to find some sort of strategy using Android, just as HP floundered last year and bought the webOS for its own tablets. Could we see Acer calling it quits in a year?

These guys – HP, Samsung, Acer, Google, etc. – are all looking at the elephant that is the ecosystem Apple has created and only describing one part – like the leg or trunk –  as though that was all that made the elephant.

“If we make a copy of the trunk, we will be an elephant too.” “Make that look more like its ear and we can win.”

Not going to beat the positive returns Apple gets from its ecosystem.

They still do not get it. And they seem to ignore the fact that now Apple’s huge money flow permits Apple to enhance its ecosystem.

Apple can now bring manufacturers into its ecosystem, paying them hard cash for first use of new technology, for discounted use of technologies and for new facilities that others simply can not do. This is now a win-win for them both as Apple gets the use of technologies that enhance their ecosystem providing them with even more revenue to use.

And the others are brought into the ecosystem  where their business can be enhanced by Apple’s ecosystem. In fact, they can take greater risks because of the support from Apple’s money and actually create new technologies, thus more positive returns.

Positive returns that fall almost entirely to Apple’s bottom line, allowing them to increase the ecosystem. Every manufacturer must be clambering to get a deal with Apple. And if any one of them is unable to meet what Apple needs to support the ecosystem, Apple will find one that will.

So Apple’s positive ecosystem becomes even larger with positive feedbacks to enlarge and strengthen a system that others simply do not have.

According to Arthur’s model, it is now too late for anyone to beat Apple in this ecosystem. The only way to survive is to create a new niche.

The best example for this is Microsoft. At one time, they had the ecosystem and the positive returns that came from that. Apple could not compete and neither could anyone else.

Apple only succeeded by creating a niche that Microsoft simply could not compete with. And Microsoft is stupidly trying to compete in that niche as are all those other companies

It needs to create its own ecology. It has all the pieces.

Instead of trying to come up with a mobile version of Windows, in an ecology that will no longer bring the positive returns Microsoft used to get,  MS should instead look to creating an ecology elsewhere.

Combine its hardware – Xbox/Kinect – with software – games – and bring in easy development tools to move these games to mobile devices – smartphone and tablets . MS would have an ecology that supports positive returns.

I wrote about this back in January. In the Xbox, Microsoft has the ability to create an ecosystem that Apple can not enter right now – gaming hardware that can become almost anything in the future; Kinect that provides a novel input device no one else has; and software control of a captured App economy.

If Microsoft became the best place to make money for game developers, if MS created an App economy for its Xbox/Kinect, if it then leveraged that hardware into supporting the software, MS would create a similar positive return ecology that Apple has created.

Then if it made things so that development for its Xbox allowed developers to easily move games to its smartphones/tablets, MS would have an ecology almost as powerful as Apple, able to produce positive returns.

No other company is in a position to do this right now, although Google may in a few years.

And it might survive then in a post-PC world.

Because a post-PC world is not simply one that is beyond a PC. It represents the epitome of a positive returns ecology, one where every aspect helps support every other one.

Companies need to create entire elephants rather than just copy the trunk.

positiveby tibchris

Samsung Galaxy smartphones banned from sale in Europe in Apple suit
[Via AppleInsider]

A Netherlands judge ruled on Wednesday that Samsung’s Galaxy S, Galaxy S II and Ace smartphones are in violation of Apple patents, and ordered an injunction against sales of the devices across the European Union.

[More]

No Galaxy tablets in Germany and now no Galaxy smartphones in the Netherlands and perhaps all of Europe.

Copying Apple may not have been a good business strategy. Are people going to buy a tablet/smartphone that might be orphaned any time soon, much like the HP tablet was?

It demonstrates the important aspect of creating your own niche and gaining the increasing returns that derive from that. Apple’s lead, deriving from the novel ecology it created, continues to provide ways for it to not only protect that lead but increase it.

Samsung has no fundamental answer for the question of why it is selling a tablet. It is simply trying to draw away some of the success from Apple, gaining some money. There is simply no other compelling reason for the existence of its smartphones or tablets.

In a market based on positive feedbacks, this is a negative solution and will be doomed to longterm failure. Apple, in some ways, is playing a non-zero game with the ecosystem it has created while Samsung and others such as Google are still playing the Industrial Age zero sum games.

Apple’s ecology is self-sustaining. Sales of the iPhone drive use of the App store which drives sales of music which drive sales of the iPhone which drive sales of the iPad which drives sales of music from the App Store which drive sales of Apps which drive sales of the Macbook Air which drives sales of apps from the App store which drive sales of the iPhone and so on.

An ecology that is enhanced by positive feedback, each part supporting the enhanced use of each other. As each increases it bootstraps the increased use of all the other parts.

No other company has this ecology. None are trying to create one. They simply slavishly copy one part, looking to negatively impact only one art of the ecology. But that part of the ecology is positively supported by all the other ones so a negative impact is completely minimized.

Apple has created the most robust ecological system for its products perhaps in human history. This ecology permits it to continue to enhance the products in a set pf positive returns while everyone else is fighting in an ecology based on negative returns.

Arthur’s paper, written as Jobs took over Apple, has worked as a blueprint to describe just what Apple has become.

Other companies would have greater success if they followed the important principles discussed in that paper. Better than just copying Apple.

Computing on the Brink

What happens when the brightest technologists in the Puget Sound get together to talk, eat, drink and listen to each other?

Computing on the Brink will find out. RSVP.

Join us September 30 for Computing on the Brink – with a peak at Bio and Computing. Information exchange overlooking Elliott Bay.

Our area has a tremendous number of technologists working on a wide variety of projects involving computing. Meet them.

In both for-profit and non-profit settings they are exploring problems in  global health, personalized medicine, informatics and much more. Discuss their work.

Computing on the Brink will be an informal space for them to talk with peers and to hear presentations from this vast array of talent. Exchange knowledge.

Our invited guests will be Deepak Singh – Principal Product Manager, Amazon EC2 at Amazon Web Services , Sarah Killcoyne – Senior Software Engineer from the Institute of Systems Biology  and Jeff Paslay – President of Paslay Consulting.

Computing on the Brink will provide  a place where those who are working in the trenches can connect with others who are developing novel applications, running an Open Source project or perhaps supporting the information needs of others.They will be working at non-profit institutions or for-profit corporations. There might even be some interested laypeople in the mix.

The plan is to have an opportunity for networking with some good food and drink, along with a couple of short, informal (20 minute) presentations by exciting individuals from the region. These presentations will spark discussions on translating ideas into reality.

We will also discuss future topics.

EMC-Isilon has been kind enough to provide the space. Now we need you to provide the inspiration.

This should be an invigorating meeting in a wonderful location. If you would like to have some critical input, be sure to attend.

Hurry. Space is limited.

Computing on the Brink is part of the “… on the Brink” series presented by >SpreadingScience. These are events devoted to supporting the translation of exciting ideas into reality. SpreadingScience also hosts BioScience on the Brink – the next meeting is planned for October – and is in the planning stages for Emerging Science on the Brink.

Supporting Partners

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Founding Sponsors

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dinosaurby jurvetson

HP’s Decade-Long Departure
[Via HarvardBusiness.org]

HP’s sudden departure from a business model that has sustained the company since inception is symptomatic of the passing of an era. Yesterday HP announced that it would exit the PC and tablet computer business, focusing on higher-margin “strategic priorities of cloud, solutions and software with an emphasis on enterprise, commercial and government markets.” In other words, HP is fleeing upmarket, away from a core that it will abandon to device makers.

HP management conceded that the disruptive impact of the iPad forced their hand but that hand was already quite weak from a decade of over-serving the market. The last decade offered plenty of opportunities for incumbent PC companies to adjust to the realities of mobility. However only one computer maker made the transition.

Why is that?

Consider how HP and Apple faced the changes in the PC market almost exactly a decade ago.

•On September 3, 2001, HP announced that they would acquire Compaq.
•On October 23, 2001, Apple announced the iPod.

The rest, as they say, is history.

[More]

In his classic 1996 paper, Increasing Returns and the New World of Business, – published the same year Apple bought NeXt and started its drive to success – Arthur discussed the difference between decreasing returns seen in 20th Century companies and the increasing returns seen for the newer companies. I’ll talk more about this paper later but here we have a perfect example of a company living by diminishing returns and one living by increasing returns.

He ends the paper with a series of  questions for managers. Think about how Apple answered these questions versus how HP answered them and you will get an idea of why Apple succeeded and HP failed based on where they were 10 years ago.

Do I understand the feedbacks in my market? Which ecologies am I in? Do I have the resources to play? What games are coming next?

HP failed at properly answering each of these questions, believing it was operating as a 20th Century company in a 21st century Market. HP never really presented a compelling case for why its technology was better than a competitor’s. They provided commodities for people to buy.

Apple created the iMac, an all-in-one computer like no others that provided integration of new technologies like no other –  it got rid of the floopy drive and added USB, something HP, or any other PC maker, would not do for years.

Apple created the iPod, an MP3 player like no others that provided integration of new technologies like no other – it created an ecosystem of a computer and Apple’s iTunes, something HP, or any other high tech company, have been able to recreate.

Apple created the iPhone, a smartphone like no others that provided integration of new technologies like no other – it created an ecosystem of a computer, Apple’s iTunes and the App store, something HP, or any other high tech company, have been able to recreate.

Apple created the iPad, a tablet like no others that provided integration of new technologies like no other – it created an ecosystem of a computer, Apple’s iTunes and the App store combined with a novel used design, something HP, or any other high tech company, have been able to recreate.

Apple took 5 years before the first real product of its strategy arrived. HP canned its ‘strategy’ after a year.

Apple works to provide the best experience for its customers and will take years to really get it right. Everyone else just seems to push out stuff and hope. Thus why HP is throwing in the towel and Samsung is seeing its products given away.

Microsoft and Google both look for hardware makers to create their own ecosystems of mobile devices and software.

See a pattern here. Apple deeply understood the feedbacks; it not only knew which ecology it was in, it went so far as to create new ones; it hoarded its resources until it had enough strength to play; and it has been on top of what is coming next, riding the bleeding edge of high tech as it focusses on what the market wants.

The rest of each industry – HP, Samsung, Google, Microsoft, HTC, etc. – have been reacting to Apple. They have not been driving their own vision of the future. They have failed to answer the critical questions.

They do not understand how much things have changed. The asteroid has his the planet but the dinosaurs do not realize yet that they are doomed.



The Post-PC era will be a multi-platform era
[Via asymco]

Windows Phone Marketplace has reached 25,000 apps. That’s an impressive figure given that so few devices have actually been sold. Compared with Android which is activating half a million devices per day, Windows Phone seems like a rounding error. According to Gartner, 3.6 million smartphones using a Microsoft mobile OS were sold in the first quarter of 2011, of which 1.6 million were Windows Phone 7. That implies a daily activation rate of 17,500 per day or one WP device for every 28 Android devices.

And yet the number of apps on Windows Phone is more than 10% of the number of Android apps and Android Apps are about half of iPhone apps. As far as Windows Phone is concerned, apps are being added faster than users. Why is this?

If we take the point of view that mobile platforms behave like the computing platforms of years gone by (i.e. Windows vs. Mac) then this is inexplicable. Developers should not be bothering with a distant third. This would be like betting on the Amiga in the era of Windows.

But we’re not in the PC era any more. That era had very high software development costs. It had very difficult software distribution channels (retail box sales typically) and very few categories of software with high price points. It was also dominated by institutional buyers which did not give quarter to small vendors. It was also a time when there were orders of magnitude fewer users and even fewer buyers.

[More]

The barriers to entry are now extremely low and those groups that can organize a rapid development cycle – months not years – will be in position to become very successful. There will be a need for fewer blockbusters to sustain development as costs will be lower.

And we will see the same sort of economics invade almost every place where creativity and innovation are the driving motors of an industry. Music, video, film, and even health and medicine. Instead of large hierarchical companies creating what we need, we will see flat, highly networked incubators of creativity.

NYT Article Asks Whether It’s a Good Idea for Investors to Pump Tens of Millions of Dollars Into Startups With Half-Baked Poorly-Conceived Ideas
[Via Daring Fireball]

Claire Cain Miller, writing for the NYT:

Two of Color’s photo-sharing competitors, Instagram and PicPlz, exemplify the lean start-up ethos. They started with $500,000 and $350,000, respectively, and teams of just a few people. As they have introduced successful products and attracted users, they have slowly raised more money and hired engineers.

Color, meanwhile, spent $350,000 to buy the Web address color.com, and an additional $75,000 to buy colour.com. It rents a cavernous office in downtown Palo Alto, where 38 employees work in a space with room for 160, amid beanbag chairs, tents for napping and a hand-built half-pipe skateboard ramp.

The difference between Instagram/PicPlz and Color isn’t just how much money they needed to get going. It’s that Instagram and PicPlz are easily understood, clearly appealing concepts. It’s easy to see what they do, and why one might want to use them. Color is just a mess. That they raised a ludicrous sum of money proves only that fools and their money are soon parted.

[More]

A 20th Century company gets lots of venture capital, hires lots of people and creates, usually by committee, its vision tof a product, hoping that the market place will like it. It has little clue whether its vision is appropriate or even useful. They spend months if not years working to reach their vision, costing investors millions. Their vision must be almost complete before the world sees it, right or wrong. Their development cycle is too long for any other course to really work.

A 21st Century bootstraps itself with just a few people who have internalized their vision and who work to get a working prototype of that vision out, and then work to adapt that product to what the market wants/needs. They spend weeks but never more than months to create and market its vision. Then, based on feedback from the marketplace, they recreate their rapid development cycle to move closer to perfection.

Color has raised $41 millon for a product no one really seems to like. They have grand visions but their first attempt is simply not making it in the marketplace. How in the world can they ever recoup that $41 million?

Instagram started with $500,000 and got its vision in the marketplace quickly. It had over 1 million users in just 10 weeks. There are now over 3.75 million. Millions of people who would be ready to download updates or  the next new thing. They plan to monetize by providing fun add-ons but are also looking to the community they are creating.

The numbers are probably much larger now but think about how the investors might easily get back 10 times what they invested versus Color and their investors.

Instagram, due to the lean structure a 21st Century company can attain and to the rapid development cycle it can use, is the clear winner here. By the time Color has finally come out with something that others might use, Instagram will have adapted and be onto the next new vision.

curbby fizhbowl

Are you a thought catalyst? (And what to do about it.)
[Via Creativity Central]

A few years ago, Kevin Murnane, Adjunct Professor and lecturer at Northwestern University and a good and thoughtful friend — sent me article with the provocative title of Thought Catalysts: Prima Donnas or Prime Movers.

Written by Cathy Higgins and Dave Kreischer in their excellent “The Straight Talk Coach” Series, it deftly explores the personality of the Thought Catalyst — an individual who can add creative fuel to an organization while burning everyone else out.

So here’s your personality test:

Are you a creative thinker who advocates unique solutions to every problem?

Do you thrive on competitive brainstorming?

Are you frequently frustrated by others’ resistance to your ideas?

Do you excel at clarifying strategic options?

Is being distinctive one of your most prized attributes?

Have you found it difficult t fit the mold at most places you have worked?

If you answered yes to at least four of the above questions, you are probably a thought catalyst.  I got an A+.

[More]

The article is available online. In many ways the thought catalyst fits what I call a disruptor. They love bringing in new ideas to a community, often disrupting the ability of the majority to get work done.

And the way most companies are organized, the role of the disruptor is frustrating to both sides. No one listens to the thought catalyst.

A 21st century organization, on the other hand, knows how to harness disruptors so that their catalytic thoughts can propel the organization forward.

Because that is where real innovation often comes from – properly using those with catalytic ideas and perspectives.

Most organizations simply toss the thought leaders to the curb because of their disruptions.