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.

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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 – 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 eat the time nd Toffler explained why over 40 years ago.

We have not 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.

How Autodesk Disrupted Itself with an App – Technology Review
[Via Technology Review]

When Chris Cheung and Thomas Heermann, two middle managers at the software company Autodesk, first showed off their new iPhone drawing app, they got some skeptical looks. Why would anyone want to doodle on that tiny screen? And what could a $2.99 app matter to a company with around $2 billion in annual revenue?

[More]

This is a great example of how the app economy changes things and how adaptive companies deal with that change,

Two middle managers, charged with working on one project, are able to see the possible impact of new technology on their products. The app economy allowed them to bootstrap themselves without much investment of time, resources, or even permission from the company.

The products their small group created were big hits. The managers hoped for 100,000 downloads in a year. They got one million in 50 days.

These sorts of numbers are disruptive and mind boggling to a company with revenues in the billions. In fact, their entire PC-driven business could disappear in a few years due to this sort of economy – one where new competitors can arise so fast.

But Autodesk essentially competed with itself, now knows what is needed and could expand rapidly into this new niche.

Heermann thinks the timing of the apps may prove critical because consumer-style products are beginning to gain popularity among the corporate workforce, a phenomenon known as consumerization. That shift could spell trouble for companies that are slow to adapt. Now that Autodesk is a top-ranked app seller, says Heerman, who is now the company’s director of consumer products, “it’s almost like having the company shape up and get ready for the future.”

Disruptive technologies always start small and in niche areas. #12 million is small potatoes to a billion dollar company. But that small amount can grow and is Autodesk is snot adaptive enough, could eventually destroy Autodesk”s value.

Now, however, the disruption is happening inside and Autodesk might be resilient enough to capitalize.

Because one thing that disruptive technologies do – they destroy business models.

What exactly has RIM actually been prepared for in the last five years? Remember this one, where they thought the iPhone was impossible after Steve Jobs unveiled it?

[More]

Check out the older article from Electronista. All the big competitors, like RIM, Microsoft and toerhs, thought Apple was outright lying about the iPhone. They had all convinced themselves that a large touch screen was impossible without destroying battery life. So none of the thought very deeply about it.

That explains why Google seems to have added touch to its Android OS as an afterthought. They suffered from all three of Clarke’s Laws.

A hallmark of an adaptive, resilient company, one that can survive in the 21st century is to be able to recognize Clarke’s laws and utilize them. Obviously RIM could not and looks to fail.

One of the things that really stands out using an iPhone is just how smooth it feels compared to using Android. Where as Android is laggy, with a measurable interim between when you touch the screen and when the OS responds, iOS almost seems to anticipate what you want to do before your finger touches the display.

How has Apple managed this incredible feat? A better question might be: “How has Google managed to screw up Android’s multitouch so much?” According to Andrew Munn — a software engineering student and ex-Google intern — Android is so messed up that Google might never be able to match an iPhone or iPad’s performance. Ouch!

Before we begin, here’s some background. In the past, it has been said that Android’s UI is laggy compared to iOS because the UI elements weren’t hardware accelerated until Honeycomb. In other words, every time you swipe the screen on an Android phone, the CPU needs to draw every single pixel over again, and that’s not something CPUs are very good at.

That argument makes sense, except if it were true, Android would have stopped measurably lagging in touch responsiveness compared to iOS when Android 3.0 Honeycomb was released. Except guess what? Android devices are still laggy even after Honeycomb is installed on them.

[More]

The problem arises from a fundamental choice the developers of Android made years before the idea of touch even occurred to them They developed the Android to be used with a keyboard or trackball, just as every other smartphone of the time did – no touch.

When using a keyboard or other input, normal priority for the keyboarding tasks could be used. We text so slow that other background processes could take place. No need to give input a higher priority.

But rendering touch well requires a lot of the device’s power, so Apple made sure that anytime you use touch, it gets the highest priority, stopping anything that might slow down the touch interface. As stated in the article:

In other words, every time you touch your finger to your iPhone’s display, the OS literally goes crazy: “Someone’s touching us! Someone’s touching us! Stop everything else you’re doing, someone’s touching us!”

So moving anything on an iPad gives it all the resources the iPad can provide, making sure the movements are smooth.

But Google did not do this because they had to rush their operating system out to compete with Apple. They apparently did not  – or could not – rewrite the system to give touch the highest priority. So now, it gets the same amount of attention from the device as any housekeeping or app driven process.

And it may well be too late to change this without every app already out there to be rendered obsolete.

This is an example of why the well-thought out reasoning of Apple results in a great user experience versus the jury rigged, rushed efforts of their competitors.

Fun story by Mike Swanson, on how he left his job as a developer evangelist at Microsoft to be a full-time iOS app developer.

[More]

A major part of the App economy is the ability to start small and grow into a full time job. Here is a great example of someone taking their avocation and making it their vocation.

This is a great example.

With one seventh as many employees as IBM, Apple generates 13 times more profit

In most recent quarter. Source: Google Finance, Apple Inc. Click to enlarge.

As of September, Apple (AAPL) had 60,400 full-time equivalent employees, according to the SEC Form 10-K it filed Wednesday, nearly 30% more than the 46,600 it reported in Q4 2010.

But those employees generate more profit per capita — by far — than any of Apple’s peers in the industry.

In the quarter that ended in September — not its best, mind you — the company generated sales of $28.3 billion and net income of $6.62 billion, or nearly $110,000 profit per employee.

[More]

Amazon generated about $1500 per employee, almost 10 times less than Apple. In fact, as Apple has gotten larger, its profit per employee has increased.

Since 2008, the profits per employee have gone up almost 3-fold.

How many companies make more money per employee even as they grow? Well, Amazon, Dell and HP make the same amount per employee today as they did in 2008. Microsoft shows a little increase – maybe 20%. Not the almost 300% that Apple has.

Only Google has shown anything close to Apple and it is only up 75% per employee since 2008.

Apple really is some different kind of company. It continues to demonstrate the increasing returns that accrue to 21st Century companies. It also indicates that Apple continues to answer the questions Arthur posed in his paper Increasing Returns  and the New World of Business.

I wonder when others will begin to answer them also.

How Siri Disrupts Search
[Via Daring Fireball]

Rich Mogull, at TidBITS:

Siri doesn’t replace search, but in many cases it circumvents it by directing users straight to integrated partner services. When you ask for the nearest Indian restaurant there’s still a search taking place, but it’s through Yelp, not a generic search engine that would include Yelp plus various other results.

By skipping the search engine and going straight to a designated source there is no place to insert advertising.

[More]

I wrote earlier about the apparent trend of Google to modify search in ways that actually make it less useful. This is a bad time for it to lose sight of its primary product.

Because Siri is about to change mobile search. 2/3rds of mobile search comes from iOS devices. But Siri reduces directed search that Google needs in order to get revenue.

In fact, Siri uses things like Yelp and thus supports their models while Google actually actively works to harm Yelp.

So Apple now has a method to reduce ad revenue that Google is used to getting and to also help Google’s competitors.

I’m thinking that Google shouldn’t aughta have ticked Steve off.

It used to be that you could make Google include terms in search results by placing the + symbol before them in queries. Not any more! Writing for Wired, Andy Baio covers Google’s increasing willingness to muck around with your search queries and how to work around it. [Wired]

[More]

It used to be that by adding the “+” forced that word to explicitly be on the page, not in some sort of meta part based on Google’s magic computers.

Now to do the same thing requires twice as much work – placing quotes around everything.

All so it can use the + symbol for Google+ like Twitter uses the hash (#).

The reason Google took over with search are many but one of the basic things was how it combined the words in the search. It allowed very simple control over a search, meaning that the often arcane commands many earlier search engines used became unnecessary.

But as time has gone on, they have meddled with this. I  often do searches where some of the words I use are not found on the page at all. It becomes a worthless search. Putting the “+” in front of a word helped make sure I would find it. Other’s have commented on this exact thing.

Now, to make it more convenient for their social service – which copies other services – they are harming their whole reason for existing.

Because it appears that the branding of “+”  for their social services is now more important than their core product. Companies fail when branding becomes such a core part of their business, especially when it overshadows core business units.

There are already beginning to appear competitors to Google search that may find a large niche here if Google continues to take it eyes off the prize.

I know I will be looking for a service that acts more like the original Google than this new bastard version.

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.

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.

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.

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.

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.

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.

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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.