Category Archives: 21st Century Company

Moving Adobe into the Special category

Adobe’s Record Revenue Proves Successful Business Transformation Is Possible
[Via Daring Fireball]

Ron Miller, writing for TechCrunch:

As we watch organizations like IBM, HP and EMC struggle to transform, Adobe is an interesting contrasting case. It went from selling boxed software to a cloud subscription model in shorter order, and judging from its financial report that came out last week, it’s done quite well making that leap.

First, let’s have a look at the numbers. Adobe reported a record $1.31 billion in revenue for the quarter, a 22 percent year over year increase. It disclosed record annual revenue of $4.8 billion. Mind you these are significant, but the big number to me is that recurring revenue from subscriptions now represents 74 percent of Adobe’s business. What’s more, just under $3 billion in revenue in 2015 came from digital media-related annual recurring revenue (ARR).

Adobe is making this switch to subscription pricing look easy. It’s not.


Apple has been a great example of a 21st century company, transitioning from a mass producer of  millions of things to a personal producer of things for millions of people.

This is the key transition to the new economy being created. It requires a changing balance between the hierarchical authority so useful in the Age of Mass Production and the distributed democracy driving the Age of Personal Production.

Adobe no longer sells millions of boxes of the same thing to people for them to consume. It has a personal connection to millions of subscribers who use the offerings of Adobe.

This is not easy today but I expect that more will appear over the next decade,

It is all personal.

Image: Valerie Everett


Disagreement, Yes. Disrespect, No.

Amazon Is Right That Disagreement Results in Better Decisions
[Via Harvard Business Review]

When I worked in the federal government, I was amazed at the large numbers of factual errors in widely-read stories, even in the best newspapers. As a colleague of mine, a staunch Democrat, observed in 2009, “I now think that at least half of the things I most disliked about the Bush Administration . . . never happened.”

I tell this little tale because the lengthy New York Times story, detailing some apparently brutal features of the culture at Amazon, should be taken with many grains of salt. But even if the story is full of inaccuracies, and if we put the company’s alleged harshness to one side, Amazon’s approach offers indispensable guidance for companies both large and small when they are deciding how to make group decisions.


Disagreement does not mean disrespect. Finding the right balance will help companies become successful and wise.

The disagreement must be based on and argued using logical rhetoric. Allowing logucal fallacies to be raised in a disagreement will result in a failed process and little wisdom.

As Brook’s law suggests, projects cannot be made successful by spending more time or throwing more people at them. What can make the projects successful is effective information flow, lowering the friction for important information to traverse the group. 

One way that works to do this is to have open discussions, including open disagreement. These prevents groupthink will enhancng the inflow of novel information.

But, logical fallacies or lawyerly tactics (ie belittling, bullying, anger, intimidation) will destroy the benefits of this process and eventually cause the company to fail.

Because the dissenters, the disruptors who disagree, will either leave for better pastures or be forced out. Leaving the company full of easy going, hard working drones who simply follow the easiest path rather than the wise one.

Image: Carsten Tolkmit

Whole Foods does not realize the supermarket is dying

Whole Foods’ Misguided Play for Millennials

The news that Whole Foods will open a separate chain of stores designed to appeal to millennials stopped me mid-aisle. According to Whole Foods co-CEO Walter Robb, these future stores will feature “modern, streamlined design, innovative technology, and a curated selection” of lower-priced organic and natural foods.

As millennials would write—facepalm.

My dismay is not about the concept. After all, who wouldn’t love to shop for lower-priced, organic, and natural foods in a store that boasts a clean and modern design?  My dismay is about how this new chain is being communicated to the public and designed to win in the marketplace.

By describing this new concept as “geared toward millennial shoppers,” Whole Foods is essentially saying one (or both) of the following:

  1. Gen X and Baby Boomer shoppers are fine with or even prefer old, cluttered stores that sell a confusing array of stuff at high prices.
  2. We (Whole Foods) need to create new stores because our current ones are old and cluttered and sell all sorts of poorly organized stuff at high prices.


Supermarkets as we know them are going to disappear.We will not need one stop shopping for all our staples and other food products.

At least not one we traverse ourselves in person. When we do go out, it will be to smaller, more personal stores.

How do I know? I’ve been using Amazon Fresh for the last few months. It is a well stocked grocery store that can deliver my goods to the front door almost anytime I want.

Like before I wake up.

It remembers previous purchases, so I can easily select the things I want. Delivery is free with at least $50 purchase. Instead of making one large trip to the supermarket each week, I can order a couple of times a week from Amazon Fresh.

All while I am at home and can see just what I need. And the prices are the same or cheaper on almost every thing I checked. The selection is good and getting better.

I find I really only need to go to the supermarket occasionally to get fresh produce – Amazon Fresh has them but I still like picking out my own. And fresh meats.

I’ve tried ordering things like chicken breasts from Amazon Fresh but when it comes to something like this, I;d rather see the entire selection and make my choice.

So really all I need is a good farmers market and a good butcher.

What happens to Whole Foods’ great idea when Amazon simply includes the wonderful organic foods at Amazon Fresh?

Amazon Fresh is not everywhere yet. But I expect Amazon is working on that.

And Amazon has made some missteps with membership pricing that may hamper its acceptance.

But someone will get this right. Or supermarkets themselves will get into the act.

I expect that the major way people will get their groceries in a few years will be home delivery. Large boutique stores would seem to a relic.

Especially if the home delivery service can also access the same organic markets.

Give me access to a good butcher or fresh produce and I would not need a supermarket.

Image: Sean Gregor

It’s all personal

Personal. And easy to see.

Ask ten people who runs Apple or Tesla. You will get a large number who get the answer correct. Then ask them who runs GM or Boeing. Only rarely to you get a correct answer.

21st century companies create a personal connection with everyone, including their customers. This signals a very different way of organizing their efforts, one that indicates an underlying understanding that moving information around rapidly is critical.

One of the emerging aspects of corporations making the transition to new structures that allow them to rapidly adapt to change is a personal connection – with their employees, suppliers and customers.

Companies of the last century were faceless multinationals who had users and consumers, not customers. They employed hierarchical structures to control the flow of information to allow them to mass produce identical items for sale.

They were barely above the Henry Ford dictum that you could have any color of car you wanted, as long as it was black. Everyone was a cog in the wheel of process, even the CEO. Strength came from presenting a monolithic edifice of tremendous power.

The hierarchical structure worked for simple processes but, as only the person at the top knew everything, the organizations were not very adaptable.

Companies for the 21st century operate differently. We know who runs the company, not only who is at the top but also their close executives. They make things for individual customers. While they can make hundreds of millions of things, these can be easily personalized by those who purchase them.

Strength comes from presenting a kind face hoping to make an individual’s life better. It’s personal.

So we have Apple, whose CEO is not only known to many by name but also puts the signatures of everyone who worked on the original Macintosh inside the first Macs. In fact, at the famous Apple Keynotes, the VPs and even lower level executives are introduced on stage to discuss new developments.

In contrast, few can really name who was involved in the development of the Windows OS. Or the designers of the new Boeing airplane. Or any new car.

These 21st century companies create a community that really appreciates what the company provides. They stay in constant contact with each other on a personal level.

Steve Jobs provided apparently personal responses to many emails people sent him. Not with corporate speak but with real personality – sometimes a LOT of personality.

Elon Musk, the CEO of SpaceX, told the world about the failure of their latest efforts by tweeting it, not by hiding it.

The ability to move information around, to engage in a large community, provides tremendous advantages when it comes to succeeding at complex efforts.

It enlarges not only the pool of people excited by the things being produced but also provides tremendous abilities for rapid feedback in positive ways.

We will see more of these sorts of organizations coming soon.

Image: NASA

Can AT&T copy Apple?

AT&T wireless store revamp to emphasize smartwatches, home security and more 
[Via – Yahoo Finance]

As growth in the wireless phone business slows, AT&T (T) is rebooting its vast chain of retail stores to put more emphasis on other offerings, from wearables and tablets to video, connected car and home security services.

The second-largest U.S. wireless company plans to open a series of larger flagship stores with dedicated areas for each segment along with a modernizing revamp of many of its current 2,000 outlets, Yahoo Finance has learned.


Apple has created a huge ecosystem that incorporates so much more than just selling computers, cellphones and software. It has created, and is tremendously focussed, on sustaining a community.

A community that continues to support Apple, as long as that focus is laser-like. To Apple, those people are not consumers but are customers deserving of the best.

AT&T also has millions of people that use it. And it is rapidly becoming much more than simply a wireless company ≠ home automation and security. It could actually model itself after Apple, with a warm connection to the people who drop by its online and real-life stores.

But it must make a key change away from what the multi-national, mass production companies of the 20th century have moved towards.

The users need to be treated as customers rather than consumers. They take an active part in the social interaction that is a purchase, rather than passively but things.

That will be a tall order to fill.

More insight into Pixar and Steve Jobs

Pixar’s Ed Catmull: It was the changed Steve Jobs that made Apple great
[Via MacDailyNews]

Michal Lev-Ram reports for Fortune, “For our recent cover story on Disney, I sat down with Ed Catmull at Pixar headquarters. Here is an edited excerpt from our conversation in October, which ranged from Pixar’s rocky beginnings to Disney’s use of technology to the late Jobs.”

A snippet:

The thing that the general public has missed is that there is a perception of ‘bad boy Steve’ when he was younger and that that behavior led to this giant success at Apple. But while Pixar was going through its rocky beginnings, the reality is that Steve was learning and changing dramatically. About 15 years ago he figured out things and we saw the change in the person. He became very empathetic and changed the way he worked with people. And after that point everybody that was with Steve stayed with him for the rest of his life. It was the changed Steve that made Apple great, not that guy. It’s like the classic hero’s journey, except people didn’t know that.


I’ve written before about Pixar a lot. It has been a hallmark of the 21st century company. Apple is one also and Jobs is a big reason. I wrote a long, three part series on the Synthetic Organization based on Pixar.

As discussed in the original article, Pixar views each  movie as a reason to incorporate new technology, to solve a new problem. DIscussing the new movie coming out:

So that group has to solve the problem for how they make that work, and how you do exaggeration and carry the emotions with those kinds of characters. Every film has new technical problems that we have to solve.

“Every film has new technical problems we have to solve.” Hierarchical authorities – which is how 20th century companies were organized – are designed to take action, not to solve problems. Distributed democracies – which are strong in 21st century organizations – are designed to solve problems, but not really for taking actions.

Pixar has created a company with a tremendous balance between the authoritarian need to get things done and the democratic need to solve problems. Strong leadership from Lasitter and Catmull at the top permits difficult problems to be solved. 

The article details very quickly how this is done – keeping two separate animation groups who each have to figure out solutions themselves, instead of depending on another. Diversity, smart people and low hierarchy.

So now we have two great animation studios. And Jobs learned how to accompish this while working at Pixar and neXt. Instead of being the authoritarian at the top – as he was so often  in his first stretch at Apple –  he began to create a culture that allowed talented individuals to solve difficult problems. 

This is the key – very strong leadership that works with the distributed democracies solving problems. There needs to be hierarchy to get things done but there also needs to be ways to route around the hierrchy to solve problems, to get answers from anyone.

Image: Brett Jordan

An important book on innovation from Pixar

Incredible Bokeh 

GM and Philips nearly bought Pixar, but deal’s collapse allowed Steve Jobs to invest
[Via AppleInsider]

Pixar co-founder Ed Catmull reveals in a new book that the now-legendary animation company was nearly sold to General Motors and Philips for its technology, but the deal fell through just before it could be signed.


What happened at Pixar not only serves as an example of an innovative business but may also help explain one of the great transformations in recent history – Steve Jobs from his original Apple incarnation to his modern Apple incarnation.

He gained much better understanding of what worked with creative solutions and how to positively destroy things in order to move on to new areas.

Things would be so much different today if GM and Philips had gotten Pixar.

A 21st century company eschews patents?

Elon Musk, Tesla Factory, Fremont (CA, USA)

Tesla’s Elon Musk champions open source cars: ‘All Our Patent Are Belong To You’
[Via Boing Boing]

“Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.”


While we will have to see just what this means, it espouses something very important – a 21st century company must remain nimble and adaptive. Relying too much on patents and IP protection can induce complacency.

Patents may be a good defense but should not be really used to prevent someone else from innovating.

And patent trolls are a bane of our existence.

So good for Musk.

Balance – we need both authoritarian hierarchies and distributed democracies


 Complexity of Life

How do we shift to a more agile organization? Podio a Case Study
[Via Robert Paterson’s Weblog]

Most people would agree that many organizations today are too stiff, too slow and too disconnected to do well in the complex world we live in now. 


Many large organizations have placed their bet on a new technology platform that will connect all their people’s work. Some think that real change can only come from the bottom up. Many feel that any form of hierarchy is outdated. Some talk about culture but are not clear about what this means.

Few are making any progress. So what is the better way to go? 


Great discussion. We are out of balance dealing with complex problems because authoritarian hierarchies –so important for 20th century processes – are seen as the only way to get things done.  Maybe for simply processes but not the complex ones facing us.

Distributed democratic approaches using social networks are all the rage. For the first time in 10,000 years we have major tools that leverage these inherent activities of humanity’s culture. They can now overpower hierarchies especially when examining complex processes.

But, they alone cannot solve what we face. Disctibuted democracy is great at cranking the DIKW cycle to get to knowledge. The problem arises because they often want to keep turning the cycle than actually take an action.

They can spend too much time talking and not enough time doing. I’ve written about the need for a Synthetic Organization, one that is leader-full bit leaderless. 

We need some aspects of hierarchy to get things done. It is finding the right balance, designing feedback to permit leader-full approaches to survive while preventing the accretion of power that hierarchies can produce.

I have worked at organizations that found the right balance. We just did not have a firm understanding of why it worked.

Now we are getting much closer to defining how to create the balance between the two key aspects of human social interaction – authoritarian hierarchy and distrubuted democracy.

The groups that accomplish this will be the ones that truly helpus solve complex problems.

Perhaps by making learning easier, Apple leads the way

appleby Stephen A. Wolfe

The diffusion of iPhones as a learning process
[Via asymco]

All theoretical and empirical diffusion studies agree that an innovation diffuses along a S-shaped trajectory. Indeed, the S-shaped pattern of diffusion appears to be a basic anthropologic phenomenon.

This observation dates as far back as 1895 when the French sociologist Gabriel Tarde first described the process of social change by an imitative “group-think” mechanism and a S-shaped pattern.[1] In 1983 Everett Rogers, developed a more complete four stage model of the innovation decision process consisting of: (1) knowledge, (2) persuasion, (3) decision and implementation, and (4) confirmation.

Consequently, Rogers divided the population of potential adopters according to their adoption date and categorized them in terms of their standard deviation from the mean adoption date. He presented extensive empirical evidence to suggest a symmetric bell shaped curve for the distribution of adopters over time. This curve matches in shape the first derivative of the logistic growth and substitution curve as shown below. Screen Shot 2013-11-06 at 11-6-1.51.57 PM

In the graph above I applied the Rogers adopter characterization to the data we have on the adoption of smartphones in 


This is a very useful analysis of the way smartphones are diffusing throughout the US. I’ve written about the diffusion of innovation throughout a community many times and it is nice to see that smartphones are following the same curve.

Now, this post makes the point that the speed of adoption entails a learning stage. There have been 5 stages postulated in the personal adoption of something new: Awareness, Interest, Evaluation, Trial and Adoption.

Where someone falls along the adoption curve depends on how fast one moves through each stage. Innovators move very rapidly. The middle takes more time. In fact, they usually get stuck at the evaluation stage. They wait the thought leaders in the early adopter group to help them change.

Notice that the adoption of an innovation is slow until about 16% have made the shift. Then you see explosive and rapid growth, once the early adopters are on board.

So the faster the early adopters can evaluate and learn about the innovation, the faster it will spread. Perhaps by Apple making it easy to learn, especially for the thought leaders , allowed it to rapidly spread throughout a community. 

Other phone makers, whose platform was not as easy to evaluate and learn, suffer from churn as the evaluation process becomes muddy and undirected.

By making the evaluation process easier, Apple makes it more likely that the necessary thought leaders will convince the rest of the community to shift. and see explosive growth.

This explains why the smartphone took off so fast once Apple released the iPhone and why everyone else copied them. The same thing happened with the iPad, while Microsoft had no luck with its tablets for years.

The key step to rapid adoption is not just cool technology. It must be made very easy for the critical early adopters to evaluate. That is Apple’s real innovation.