All posts by Richard Gayle

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.

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

emcisilon

10 years ago, HP began its descent as Apple began its ascent

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.



A great analysis of what the post-PC era really means

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.

A basic difference between a 20th Century company and a 21st Century one

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.

Be innovative. Nurture a thought catalyst.

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.

Why adaptation is just a critical as innovation

adaptby szeke

Why Apple blinked
[Via Brainstorm Tech: Technology blogs, news and analysis from Fortune Magazine » Apple 2.0]

An analyst offers three reasons Apple relaxed its rules for App Store subscriptions

Scott Forestall demoing iOS 5’s Newsstand. Source: Apple Inc.

RBC’s Mike Abramsky was the first analyst out of the gate Friday to comment on Apple’s (AAPL) decision to make it easier for publishers and other content partners to offer in-app subscriptions.

[More]

This is not a case of blinking. It is not a game of chicken when a 21st century company is involved.

Companies of the industrial age play a zero sum game. Companies of the 21st play a win-win scenario.

Apple presented a policy that it felt was fair and beneficial to its customers. Which it was.

But the policy also hampered the collaborators that Apple depended on to make the subscription policy work, and to increase the reach of the App store.

Apple usually puts it customers first, something quite unusual these days, but does recognize more and more the importance of its collaborators.

Here, it listened to its collaborators and found a way to adapt its policy to create a win-win for everyone.

Too many analysts still try and describe Apple as if it was a company of the last century. They fail to see the real shape of the future here.

Apple strives to find the sweet spots of win-win. 21st Century companies adapt to create non-zero sum results.

You can also see this with their general business approach. All other hardware manufacturers play zero sum games – they have to gain market share and can only do that by taking it away from someone else. Profits seem to disappear in this setting though.

Apple plays a non-zero sum game – they are happy to have a falling part of a growing market, as long as they keep getting more profits.

Thus, Apple may only have a very small percentage of the cell phone market (4%) but they hold the majority of all the profits.

Which is more sustainable in the end? That is what a 21st century company can accomplish.

The flexibility of Apple

O’Brien: Apple’s path to the app store wasn’t a straight road – San Jose Mercury News
[Via MercuryNews.com]

The unveiling of the iPhone almost four years ago stands as a pivotal moment in computing history. The elegant design not only ushered in the mobile computing revolution, it also ignited an entire billion-dollar business based on mobile apps.

And, it is widely believed, this was all part of a master plan designed by Steve Jobs and Apple (AAPL).

But in a recent conversation with former Apple insider Bob Borchers, a very different picture emerged, one that hasn’t been reported until now. What he told me is that the mobile app ecosystem developed far differently from what Apple originally envisioned.

And it happened because Apple did two things: It listened to users. And it adapted.

[More]

An important aspect of 21st Century is adaptation – they do not get it right the first time. Apple did not have a grand plan in mind. It was just trying to create the best, most stable smartphone it could.

But, because of the iPhone’s cutting edge nature, it allowed the possibility of outside change. Originally, Apple did not envision the app store.

It listened though and adapted. And in doing so, created an ecosystem much more powerful than just the iPhone itself.

The success of the App Store, though, was dependent on Apple having so many of the pieces already in place – iOS was based on OS X, meaning that  a large number of developers could jump on the new system rapidly; iTunes already had the infrastructure to support all the needs of an App store; the hardware of the iPhone could support so much more than web apps.

The success of the App store helped lead to the success of the iPad – Apple made sure that it could run not only iPhone apps but its own.

Apple would not be in the position today if it had clamped down on the development of apps for the iPhone.

Exciting BioScience on the Brink on Tuesday

We had a wonderful group of people meeting for the first BioScience on the Brink meeting at the Eastlake Bar and Grill.

About 25 people attended, enjoying the hamburgers, potato skins, beer and the SUN! Yep, that big yellow ball came out and actually warmed us all up.

Yet Chris Fox’s presentation on adjuvant research at the Infectious Disease Research Institute was able to pull almost everyone inside to listen.

We had some wonderful conversations, with a pretty overwhelming desire to continue these events. I am already working on the next one to be held in around September.

Below are some pictures from the meeting. Hope to see you there next time.

Some quick photos before the event got started.

BoB outside

BoB inside

Chris Fox and adjuvants

BoB fox

And his rapt audience

BoB audience

Describing a 21st century company

Codifying asymmetry: How Apple became Jobsian
[Via asymco]

Any student of organizational theory must struggle with the question of how to assign weight to the influence of the leadership of a company. In the case of Apple, the question is:

Is Jobs is the embodiment of Apple or is Apple already Jobsian, imbued with his ethos?

John Gruber summed up the “Apple is Jobsian” argument by saying that Apple is Steve Jobs’ greatest creation and that he has been working on crafting the company as much as he has been crafting products. The result being that it’s well designed for sustainable longevity.

[More]

Apple seems to be taking positive steps to understand why it works the way it does. As I have written several times, it is one of the first 21st century companies. I worked at another – Immunex.

The hallmark of these companies is the ability to do more with less. Their efficiencies mean they stay focussed on what really works, Much of the management of Apple has internalized these values. The simple, not the complex. Admit mistakes and move on. Deep collaboration and cross pollination.

One other – something Immunex also did well – is to focus on what NOT to do. Figuring out rapidly what does not work, examining the project to see what not to do, provides opportunity savings that can be critical with small groups. Failing quickly and successfully is a key. This is something much larger companies can not do.

Pixar does many of the same things. I wrote more in depth in my series about the Synthetic Company. (1, 2, 3)

Margaret Wheatley said it best in her essay  on The Unplanned 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.

That is why Apple will do fine without Jobs, just as Pixar will do fine and why any 21st century organizations will succeed – the community is the leader. They can adapt to things that come at them and are resilient to changes.

20th Century companies often lived or died by their CEO. Not so for 21st Century companies. They live or die by the community that has been created.

We will see more of these as time goes on because they will be the successful organizations dealing with the complexities of this century.