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?

[More]

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.

by 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.

[More]

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.

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. 

by 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.

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.

by 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.