Category Archives: Cargo Cult Worlds

Aymco is wrong: there are several Apple imitators

apple by A Guy Taking Pictures

Why doesn’t anybody copy Apple?
[Via asymco]

Apple’s products are the envy of the world. They have been spectacularly successful and are widely imitated, if not copied. The expectation that precedes a new Apple product launch is only matched by the expectation of the replication of those products by competitors.

This cycle of product mimicry was succinctly summarized by Marc Andreessen regarding a rumored Apple TV product:

And once the television launches, everyone will scramble to copy it. ”There’s a pattern in our industry, Apple crystallizes the product, and the minute Apple crystallizes it, then everyone knows how to compete.”

This idea that the basis of competition is set by Apple and then the race is on to climb the trajectory of improvement is so well understood that it’s axiomatic: “It’s just the way things are.” Apple releases a product that defines a category or disrupts an industry and it becomes obvious what needs to be built.

But what I wonder is why there isn’t a desire to copy Apple’s product creation process. Why isn’t the catalyst for a new category or disruption put forward by another company? More precisely, why isn’t there another company which consistently re-defines categories and repeatedly, predictably even, re-defines how technology is used.

Put another way: Why is it that everyone wants to copy Apple’s products but nobody wants to copy being Apple?

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I would submit that the question is wrong. There are several companies that have copied Apple – at least the Apple of Steve Jobs. Aysmco simply comes at the answer from the wrong view.

I say a few examples of those companies are Facebook, Google, Amazon and Tesla. “Why isn’t there another company which consistently re-defines categories and repeatedly, predictably even, re-defines how technology is used.” Asymco seems to miss the forest for the trees.

He even quotes Tim Cook who does have the answer:

Innovation is deeply embedded in Apple’s culture. The boldness, the ambition, the belief that there are no limits, the desire among our people to not just make good products [but to] make the very best products in the world. It’s in the values. It’s in the DNA of the company.

Read Increasing Returns and the New World of Business published in 1996 in the Harvard Business Review by W. Brian Arthur. You will see he described how to copy Apple while actually missing the changes Apple was making at the time. 

Even he did not see Apple coming, thinking it was MS that would lead. But he hit the nail on the head with how to recognize the leaders.

He says corporate leaders need to ask themselves 4 questions if they hope to lead the new economy:

  • 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? 

Now, there are many answers to these questions but I think there is a really easy rule that all these companies seem to exhibit – the feelings of Wall Street is only slightly material, if at all, to their plans.

Wall Street is useful for getting money to do what they want. But as for advice, well, Wall Street can pound sand for all they care.

The companies I mentioned all understand one thing – Wall Street is not a feedback. They know that their ecologies depend on empowering people, not making Wall Street richer. They generally create their own resources by their own creativity than by relying on Wall Street to provide the know how. And they know what games are coming next because they are creating them.

21st Century Companies, in contrast to normal ones, simply do not care very much about what Wall Street really thinks of them and are generally disdainful of Wall Street. Compare this to the normal CEO who seems tremendously cowed by Wall Street and worries every quarter of what to do to make them happy.

I think this is because these CEOs see their company as only a means to an end, as a way to cash out big time, not as a feeder for innovation.

In fact, the leaders of these Apple-imitating companies do not see cashing out Wall Street style as the next step – something most Wall Street types find confusing as they certainly would cash out if they could. Jobs, Musk, Bezos and others like them see their company as the end in itself and money as a means to that end. 

It is completely backwards from normal CEO worldviews. They have no exit strategy because they never expect to exit.

Apple under Jobs really cared little what Wall Street thought about  what it accomplished. It focussed on the feedback from its customers.

So it hoards billions of dollars and keeps little debt because that allows it to meet the feedback rapidly, even if Wall Street hates it and does not understand. And Wall Street gives Apple a very low PE ratio and Apple does not really care (we shall see how well Tim Cook really understands this lack of Wall Street feedback.)

Amazon barely has a profit and sells its tablets at a loss. In fact, Bezos seems to be quite happy barely making a profit while he increases the computing power of Amazon to eventually provide servers for all. Wall Street again fails to really understand, giving Amazon a PE ratio in the 1000s.

Facebook, while a public company, is still controlled by Zuckerberg not by any other investors. Yep, he took the company public yet still maintains a controlling interest. How in the world did that happen and why did Wall Street agree? I don’t know but Zuck can tell Wall Street to pound sand. He does not care and is free to do whatever he want.

In fact, I would say that the hallmark of a company that has successfully copied Apple is one that could really care less about what Wall Street says. They have created their own economy, their own ecology, that needs little feedback from Wall Street. They are successful in creating a sustainable company without being at the beck and call of Wall Street.

That is how you copy Apple.

To survive a shock to the system become an unplanned organization

water ripplesby robin_24

What Happens When We Shock A System? 
[Via Chaotic Ripple]

Have you ever noticed that some things in the world like to be disrupted?  Rogue militant groups set out to garner counter-attacks that distract their opponents while draining their resources.  Viruses encourage multi-cellular organisms to activate their immune systems in attempts to wipe them out.  Teenagers seek the disdain — and occasional wrath— of authority figures in their lives.

These seemingly counter intuitive behaviors are the centerpiece of Nassim Nicholas Taleb’s new book, Antifragile: Things that Gain from Disorder.  They are the “teachable moments” that enable us to truly understand the driving dynamics of systems that undergo shock.  Indeed, there are entire categories of systems that benefit from disruption.

As a first example, consider the wave of new startups that arise in the aftermath of economic collapse.  The entrepreneurs who have long awaited the opportunity to step out from under the constraints of a prior paradigm are free to explore and create anew.  We are seeing this all around us in the exploding field of social entrepreneurship today.  Those companies whose legacy has been to rape and pillage, laying waste to vast ecosystems of the natural and social worlds, held the attention of financiers for decades.  And now that many core institutions of the old world order — particularly the financial ones – have deteriorated to the point of ruin, those among us who strive to create business and have a moral conscience at the same time are able to step in and fill the void.

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As a biologist by training, so much of what Joe Brewer describes here is indicative to me of the messiness of biological systems — the ability to deal with fragility in a robust way, to bend without breaking, to deal with shocks in ways necessary to survive, etc. It reminds me of Margret Wheatley’s work on the Unplanned Organization.

I wrote a series about The Synthetic Company a few years ago that incorporate Margaret’s ideas. One aspect that I think is critical for any anti-fragile system is what she calls a leader-full organization.

I also want to emphasize that emergent organizations are leader-full, not leaderless. Leaders emerge and recede as needed. Leadership is a series of behaviors rather than a role for heroes.

Part of what allows these groups to deal with unforeseen shocks in a resilient way is that the appropriate leader can rise up to take control and then become a follower later on when the shock recedes and another type of leadership is needed.

We see this again and again throughout history, as well as in our most entrepreneurial companies: the person who is best suited for dealing with one sort of shock (war, raising capital) is seldom the best for dealing with another shock (peace, shareholders, etc.) Since we cannot know what shocks are in store, nor what is really fragile in an organization, a robust solution to a world of shocks is to create a group of diverse and somewhat redundant talents with leadership dispersed in a way to allow the right talent to rise up when a particular shock hits the system.

Full of leaders who can follow when needed. Full of followers who can lead when required.

And, not too surprisingly, this organizational hierarchy collapses into something that resembles not only the biochemical networks seen in living cells but also the computer networks seen on the Internet. It seems that almost all systems that need to deal with fragility, robustness and the shocks of a rapidly changing world begin to look alike in some ways.

Smallworldnetworks

I believe that this is a hallmark of the sorts of organizations that will thrive in the 21st century, that can deal with the shocks of rapid change in ways to advance and grow. 

Epistemic closure is a human condition

nixonby tonynetone

‘Epistemic Closure?’ Those Are Fighting Words for Conservatives 
[Via – NYTimes.com ]

It is hard to believe that a phrase as dry as “epistemic closure” could get anyone excited, but the term has sparked a heated argument among conservatives in recent weeks about their movement’s intellectual health.

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Epistemic closure is a human problem. As Feynman said, “The first principle is that you must not fool yourself–and you are the easiest person to fool.” Forty years ago it was the liberals who suffered most from epistemic closure. 

Just one example. Ted Kennedy wanted to have a single payer healthcare system using taxes to pay for it. Essentially Medicare for everyone. NIxon actually proposed a different solution – a market-based insurance plan requiring employers to buy health insurance for all their employees and provide subsidies for those who needed it. (Sound familiar? Obama actually hired NIxon’s health advisor to help him craft his plan).

Kennedy walked away from Nixon’s deal, living in a Cargo Cult World sure that he could get a better one after the next election. The same one that allowed him to think he could primary a sitting President. He was brutally wrong, watching for almost 40 years and dying before Nixon’s own ideas became a reality.

Conservatives have been discussing epistemic closure for two years  along with its impact on the GOP. Some were worried about the hermetically-sealed bubble that was forming around the Republican party. 

That bubble resulted in their canddidate for President being ‘shellshocked” that he lost. His own numbers guys were feeding him the information everyone wanted to see, not the information that matched reality. They listened to each other’s anecdotes rather than gathering accurate data. They developed software that they were so sure would be wonderful that they never actually stress-tested it until election day, when it failed spectacularly. He had supporters wo wrote that the data ‘nerds’ were wrong because lots of people had Romney yard signs. 

They had completely fooled themselves.

Efforts from two years ago to prevent such a bubble failed. This is not surprising. One of the hallmarks of epistemic closure is an almost impenetrable barrier  with true believers held inside and any apostates thrown outside. It becomes filled with all those who refuse all efforts to pierce the bubble.

It happens all the time with human beings and their social communities. People feel more comfortable around others who think like they do. Without positive support for alternative views, almost any community eventually becomes filled with monotonic views, supporting a Cargo Cult World which repels any conflicting information.

Since these Cargo Cult Worlds are only distorted reflections of reality, eventually they come crashing down, like some sort of funhouse mirror.

As I wrote around the same time this article came out, when the narrative is more important than facts, we get a Cargo Cult World.

The initial response of the liberals to the failure of  their ideas in the 70s was to retreat further into their own Cargo Cult Worlds. They failed to recognize the changing circumstances around them until the election of Reagan  hit them between the eyes like a two-by-four.,rendering their world view mostly irrelevant for over a generation, reducing them to a minority party. Even though Clinton was elected to two terms, in neither of them did he get a majority of Americans to vote for him.

Most of America did not like or endorse the ‘reality’ the Democrats inhabited.

It took a long time for most of the liberals to break out of the Cargo Cult Worlds they had created, to alter their views and listen more closely to the views of others. It was not perfect. Nothing human ever is. But something very unusual has just happened.

We all know that the Democrats – the original party of the Dixiecrats and Southern Segregation – put up an African-American as their candidate and that the US elected him twice.

Amazingly only 2 of the last 10 Presidents of either party have been elected to a second term after receiving the majority of the popular votes both times. One was Reagan and the other is Obama. The other 8 either failed to get re-elected or failed to win over 50% of the popular vote twice. This suggests something important has happened with the ability of the Democrats to connect with most Americans.

They finally accomplished something quite rare for them – getting most of America to vote for their Presidential candidate.

But even more amazing is that Obama becomes only the second Democrat since Andrew Jackson – the first President from the Democratic party – to get the majority of the votes in two elections. FDR was the other one.

Only two times in 180 years have Democrats succeeded in getting a majority of America to support their Presidential candidate twice. It is usually Republicans who accomplish this. 

For the first time in almost anybody’s memory, the Democrats have gotten most of America to elect their President candidate twice. That is, in my opinion, actually more amazing than the fact he is a minority. It suggests that for the first time iin a very long time they have moved outside their Cargo Cult Worlds  enough to embrace most of America, to actually listen to others.

To actually take the health insurance plan first proposed by a Republican, modify it with other ideas from other conservatives, and get it passed. Forty years after their Cargo Cult Worlds prevented them from doing it the first time.

Epistemic closure is a failing of the recent GOP and, just as the liberals did 40 years ago, they have two choices. Retreat further into their Cargo Cult Worlds, pulling epistemic closure tighter around them or create new paths that break up the lure of epistemic closure, reconnecting again with a majority of America.

I’m really hoping it does not take 40 years, that they break through the walls surrounding them. Because we have too many really hard problems to solve and we need their best ideas right now. It will take all our efforts, not just the ones represented by one party.

And because, it they retreat more, it simply allows the liberals to start creating new Cargo Cult Worlds – it is what humans do – allowing them to eventually ignore facts, one that will eventually fail to connect with reality and we begin the cycle again.


Tracking violence to track historical cycles

riotby NZ Defence Force

Can “cliodynamics” help historians predict future unrest? [Social Science]
[Via io9]

Unlike physicists and chemists, historians have been unable to formulate grand equations or immutable laws. The trends of history, it would seem, are outside the scope of reproducible science.

But a new discipline called “cliodynamics” is looking to change all that. After studying and mapping key indicators of history, University of Connecticut’s Peter Turchin believes that he’s detected consistent cycles in human history — cycles that he argues could actually help us predict the future.

Can “cliodynamics† help historians predict future unrest?

Turchin, a professor of population dynamics, named the new discipline after Clio, the ancient Greek muse of history. He, along with other colleagues, are working to apply scientific methods to history by analyzing broad social forces that impact and shape all human societies.

Writing in Nature, Laura Spinney describes how Turchin’s analysis relies on four main variables: population numbers, social structure, state strength, and political instability. She elaborates:[

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While I’d like to know more about the metrics here –how are violent episodes tracked, for example, it fits in quite well with one of my favorite books, The Fourth Turning. That book delineated a four generation cycle of 80-100 years that was needed to fully work our societal problems.

But it had as one of its principles that there were conflicts at each half generation. These conflicts often served to make the final conflict inevitable.

According to the Fourth Turning, written in the late 90s, we are in the middle of the final conflict for the latest cycle, the one that started after WW2 and saw its Second Turning conflict in the 60s.

We are seeing a large number of new conflicts today that are replaying the fights of the 60s – abortion, contraception, etc. I hope we make it through sometime in the next decade. That is about what these cycles would predict.

The ignorance of Congress simply mirrors our own ignorance

NewImageby o palsson

Willfull Ignorance about Statistics in Government
[Via Good Math, Bad Math]

Quick but important one here.

I’ve repeatedly ranted here about ignorant twits. Ignorance is a plague on society, and it’s at its worst when it’s willful ignorance – that is, when you have a person who knows nothing about a subject, and who refuses to be bothered with something as trivial and useless about learning about it before they open their stupid mouths.

We’ve got an amazing, truly amazing, example of this in the US congress right now.
There’s a “debate” going on about something called the American Community Survey, or the
ACS for short. The ACS is a regular survey performed by the Census administration, which
measures a wide range of statistics related to economics.

A group of Republicans are trying to eliminate the ACS. Why? well, let’s put that question aside. And let’s also leave aside, for the moment, whether the survey is important or not. You can, honestly, put together an argument that the ACS isn’t worth doing, that it doesn’t measure the right things, that the value of the information gathered doesn’t measure up to the cost, that it’s intrusive, that it violates the privacy of the survey targets. But let’s not even bother with any of that.

Members of congress are arguing that the survey should be eliminated, and they’re claiming that the reason why is because the survey is unscientific. According to Daniel Webster, a representative from the state of Florida:

We’re spending $70 per person to fill this out. That’s just not cost effective, especially since in the end this is not a scientific survey. It’s a random survey.

Note well the emphasized point there. That’s the important bit.

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No concept of statistics nor of science. As the post states:

Scientific sampling is always random.

So Mr. Webster’s statement could be rephrased more correctly as the following contradiction: “This is not a scientific survey, because this is a scientific survey”. But Mr. Webster doesn’t know that what he said is a stupid contradiction. Because he doesn’t care.

There can be points about cost although I think $70 is quite cost effective for the amount of information gained.

But the method of the survey is nothing to argue about. Statistics demonstrate that a random and scientific go together.

As this post discusses, most people do no make decisions based on rational thought. They use all sorts of easy rules of thumb – one being what others in their group think.

If you are a Republican, you follow what other Republicans state, especially the leaders.

President Obama comes out for gay marriage and the numbers of African-Americans who feel similar skyrockets.

Intuition and other non-rational approaches can work well but may break down in complex sittings.

People use System 1 to make quick decisions while they use System 2 to examine and reason.

System 2 is the one who believes that it’s making the decisions. But in reality, most of the time, System 1 is acting on its own, without your being aware of it. It’s System 1 that decides whether you like a person, which thoughts or associations come to mind, and what you feel about something. All of this happens automatically. You can’t help it, and yet you often base your decisions on it.

System 1 is always on. System 2 is hardly used because it requires effort and energy.

Most times System 1 works fine. Just as saying today’s weather will be just like yesterday’s.

But sometimes that hurricane comes along and all bets are off for System 1.

One of the hallmarks of willful ignorance is the purposeful effort to refuse to use System 2 approaches. Rational thought is not as important as simply going with the gut feelings.

System 1 allows Cargo Cult Worlds to be created and sustained.

Too many people simply refuse to allow System 2 approaches to enter into their thinking. And it gets worse the more complex the thinking needed, when System 2 thinking is most needed.

Will we ever have a period where System 2 thinking is used by our leaders in a meaningful and effective way?

If we hope to survive, there need to be some really good System 2 thinking applied. Rules of thumb too often lead to useless but willful ignorance.

And here is another example of how Apple is doing things differently – using thought leaders

leaderby Hamed Saber

★ Mountain Lion
[Via Daring Fireball]

“We’re starting to do some things differently,” Phil Schiller said to me.

We were sitting in a comfortable hotel suite in Manhattan just over a week ago. I’d been summoned a few days earlier by Apple PR with the offer of a private “product briefing”. I had no idea heading into the meeting what it was about. I had no idea how it would be conducted. This was new territory for me, and I think, for Apple.

I knew it wasn’t about the iPad 3 — that would get a full-force press event in California. Perhaps new retina display MacBooks, I thought. But that was just a wild guess, and it was wrong. It was about Mac OS X — or, as Apple now calls it almost everywhere, OS X. The meeting was structured and conducted very much like an Apple product announcement event. But instead of an auditorium with a stage and theater seating, it was simply with a couch, a chair, an iMac, and an Apple TV hooked up to a Sony HDTV. And instead of a room full of writers, journalists, and analysts, it was just me, Schiller, and two others from Apple — Brian Croll from product marketing and Bill Evans from PR. (From the outside, at least in my own experience, Apple’s product marketing and PR people are so well-coordinated that it’s hard to discern the difference between the two.)

Handshakes, a few pleasantries, good hot coffee, and then, well, then I got an Apple press event for one. Keynote slides that would have looked perfect had they been projected on stage at Moscone West or the Yerba Buena Center, but instead were shown on a big iMac on a coffee table in front of us. A presentation that started with the day’s focus (“We wanted you here today to talk about OS X”) and a review of the Mac’s success over the past few years (5.2 million Macs sold last quarter; 23 (soon to be 24) consecutive quarters of sales growth exceeding the overall PC industry; tremendous uptake among Mac users of the Mac App Store and the rapid adoption of Lion).

And then the reveal: Mac OS X — sorry, OS X — is going on an iOS-esque one-major-update-per-year development schedule. This year’s update is scheduled for release in the summer, and is ready now for a developer preview release. Its name is Mountain Lion.

[More]

Yep, Apple gave a complete event,  just like Jobs did for hundreds if not thousands via the web, but for just one person.

I really wonder how efficient this might be but it certainly offers something quite different for this sort of an announcement.

Because if done well, this sort of presentation can be tracked much better for identifying who gets the information out to the widest targeted groups. Apple chose Gruber because his site is very influential and followed.

Gruber is a thought leader and is listened to by many people. Thought leaders are those who move ideas from the edges to the mainstream. They are listened to by the vast majority of people in a community.

If you convince a thought leader of something, it becomes much, much easier to convince the group. This could be another instance of Apple’s genius.

Instead of hosting large events where many people may hear about the information but few are actually able to accomplish change, hold one-on-ones with well informed thought leaders and they will accomplish the change for you.

That, after all, is their role.

Wow. It will be interesting to see if that is what happens.

There is a reason techno-libertarians do not run everything yet

NewImageby jurvetson

How Technology Will Change Governments, Corporations, and the Rest of Our Stubborn Institutions
[Via American Times]

Can technology overcome and change institutions otherwise overcome by inertia and stagnation? Will technology help overcome tyrants and change the relationship between state and citizen in positive and hopeful ways, or will it enable dictators and make governments even more oppressive?

These were some of the questions posed at Techonomy this past November.

These aren’t merely political questions. The corporation as it has been conceived of for quite some time – that massive bureaucracy built upon a steep hierarchy – is also threatened by innovation and technological change. The old boss model may be facing its own near-extinction as the gig economy grows. Tech is changing everything.

The Techno-Futurists Are On to Something

In many ways, this is the same thinking behind Nick Gillespie and Matt Welch’s new book on libertarianism and its effects on stagnant institutions and mainstream culture. The free-wheeling nature of cultural libertarianism and economic freedom lead innovation and creative expression in ways that subvert and invariably alter the nature of the status quo.

[More]

Society is not defined by when the disruptive technologists adopt something – it is defined by when the majority – the doers – finally do.

In my opinion, Libertarianism actually works well for a very small percentage of people. For the rest of the population, it results in the tragedy of the commons, the rise of bandits and thieves and a society in which a few benefit while most struggle for existence.

We are a social animal and we survive because our societies survive. Cooperation is as important for our species as competition – sometimes more important. The most resilient, adaptive and sustainable societies have always been those that best found ways to balance those competing needs with new technologies that threatened to disrupt things.

Technologists love the disruptive effects of new things – they switch from new toy to toy like a bee. I say that as a disruptive technologist.

But a society built entirely upon that type of personality would rapidly fail – the constant disruption with new things would prevent much from being done. The endless wars – between Mac and PC, between Apple and Google, between LCD  and LED, between Star Trek and Star Wars– provide too much disruption.

Society is made up mostly of people who accept change slowly and carefully. And a good thing they do. It greatly reduces the chance we might chose some technology that rapidly destroys the underpinnings of the society and how we interact.

We thrive because we provide important social roles for both the disruptors and the doers. Too much of either type threatens to produce either a stagnant or a chaotic organization or society.

It is all well and good to wish we could make a trip back and redo things to create a Jetson’s future. but we did not at the time and Toffler explained why over 40 years ago.

We have now hit a plateau. It is similar to a change of state of a liquid to a gas. The temperature does not change at all as more energy is added until a certain point – then the liquid becomes a gas.

There is the same sort of dynamic taking hold now. A whole generation has grown up without the same sort of Future Shock previous generations were suffering from. Their doers are much better prepared to deal with the rapid change now found in many sectors of society. Society can now make the transition to a new state very rapidly.

I expect 2022 will be very different because that change in state is now ready to happen. On my optimistic days, it will be great to have a world were most of society is more adaptive and resilient than today, having found ways to sustain itself without being totally reliant on current resources.

But it could also be very bad, as the old dinosaurs trample the faster mammals before they finally die off.

We need a society that permits the disruptors to continue to experiment with new approaches. But society will also still adapt slower than they might want because not every experiment  deserves to spread throughout society.

Good thing too.

Jobs’ videos demonstrate how to run a 21st century organization

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.

How Acer’s decline demonstrates Apple’s strength and Microsoft’s future trajectory

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.

Apple’s positive ecology beats Samsung’s negative

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.