Subba’s Serendipitous moments

October 21, 2009

The Apple juggernaut rolls on

Filed under: Business,Competition,Leadership,Strategy — Subbaraman Iyer @ 1:23 pm
Tags: , , , , , , ,

Apple’s juggernaut continues unabated going by the latest results. Thanks to the iPhone’s game changing play that’s elaborated here. A blow out quarter.

Record shipments:Apple sold 7.4 million iPhones this quarter (ending Sept 2009)which is a 7% growth from last year. It sold 3.05 million Macs in this quarter up 17% a year ago. Both of these are milestones in Apple’s history. Sales of iPod touch were up 100% year over year. iTunes store is now in 23 countries and has become the world’s largest retailer.

Cash: Apple has $34 billion in cash this quarter compared to $31 billion last quarter. There’s a hint that there could be a share buyback soon. No debt. And to put this in context, this cash hoard is greater than that of Microsoft and more than the market cap of Dell.

Profit: A quarterly profit of $1.67 billion on revenues of $9.87 billion. It is the most profitable quarter ever in Apple’s history.

Future outlook: The future outlook seems still better with iPhone making an entry in on of the largest markets in the world — China, followed by Korea and a few other additional countries.

New accounting rules: Apple can recognize revenues from its subscription devices immediately rather than spreading it over a 2 year period.

Competition: Apple’s competition is actually languishing. Nokia the largest mobile device vendor reported a $834 million loss — the first in a decade due to falling mobile sales. Its smart phone sales saw a huge decline in market share as well. Sony Ericsson also suffered losses.

I am wondering whether Nokia or Sony Ericsson will make a bid to acquire Palm.

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September 10, 2009

Steve Jobs with a new liver and astounding numbers.

Steve is back with a new liver. He’s back and his unexpected presence at the Apple event got him a long standing ovation. He mentioned that he now had the liver of a person in their mid-20s who died in a car crash. He talked about the significance of organ donation. He ended by telling everyone to think about organ donation, as it saved his life.

That’s wonderful Steve. But would you create a charity organization for organ failures, do something to encourage more organ donation and set an example. When can we see Steve the philanthropist?

That way Steve you would have put your wealth, creativity, charisma and presence to a great cause.

Steve went on to mention Apple’s great successes:

iPhone:

30 million iPhone have now been sold worldwide in a little over 2 years.

There are now over 75,000 apps in the App Store

There have now been some 1.8 billion App Store downloads

The 3.1 update for iPhone and iPod touch will launch today.

iTunes:

     iTunes is now the #1 music retailer in the world

     8.5 billion songs have been downloaded from iTunes

  There are now 100 M accounts on iTunes, making it one of the largest stores on the web

     iTunes 9 is launching today, with a revamped look and feel

     An easier way to organize apps on the iPhone and iPod touch

     iTunes LPs (this is the “Cocktail” feature)

iPod:

     Apple has sold over 220 million iPods to date

     It’s one of the most successful products in history

     In the U.S., the iPod has 73.8% market share

     The next biggest MP3 player is “other” with 18%

     “Microsoft pulling in the rear with just about 1%”

     There have been over 20 million iPod touches sold.

     So combined that’s 50 million iPhones and iPod touches.

     21,178 games and entertainment titles in the App Store now

     Compare that to 3,680 on the Nintendo DS and 607 on the Sony PSP

Amazing mind blowing results and again Steve at this best !

August 20, 2009

How to build a successful innovation team?

Recently I delivered a talk on business innovation. My main thesis was why that offers a competitive advantage and offers the best barrier to entry. There were interesting questions, but the question that flummoxed me was asked by a young MBA student and it went as follows: How to build a successful innovation team?

Not having worked in R&D or an innovation team, I had to admit my ignorance. I promised that I will think about it and revert. I asked several HR managers, consultants and even some innovation experts. I was not satisfied with most of the responses because they talked about examining past track records, achievements and so on. That doesn’t say much and I don’t necessarily agree with experience being a true predictor.. So here’s what I have come up with:

  • Hire someone who doesn’t care much for stability, hierarchy, order and predictability. Every problem is unique and will need a different thinking approach.
  • Find someone who appreciates and thrives on ambiguity. Ambiguity often has negative connotations, but to me to be able to appreciate the grey area and to live in the mental conflict zone is key to finding the breakthrough.
  • A deep competency is good, but the person should be genuinely interested in other things. It is when you are looking at something else with genuine interest, a serendipity play converts the competency to a breakthrough.
  • Have the ability to “abstractize” a practical problem and see a practical problem and hence an opportunity in an abstract thought. This calls for people who can have their feet on the ground and the head in the cloud and span the space between them.
  • Finally and I think this is the most important: The last thing a team needs is finding another clone. Stop looking for something similar to what you already have. You need to fill gaps that are in your team and complement the competency and hence the more of the same doesn’t always make it successful.

(I am assuming that there exists some amount of passion, enthusiasm, respect for people and inter-personal communication strengths.)

It would be difficult to expect all this in an individual. However collectively the team should have these qualities. Whether they become successful or not is a different question. It depends on the mindset and a whole range of factors. But at least you know that we have a good capable team of cracking a problem.

Does anyone have a competency model to build innovation teams?

August 3, 2009

Be yourself

“Tension is who you think you should be. Relaxation is who you are.” — Chinese proverb.

I can’t think of a more simple, yet a deep truth. I was discussing my earlier blog post with 2 of my friends. Both believed that to be successful one should adapt, which means constantly changing oneself to circumstances. And if one has to change, one has to let go one’s true self. I will write my response to their observations in a separate post, but for now, I just want to do a follow up post which hopefully should clarify my stance.

I think most of us have a tendency to sell ourselves in situations even when we faintly perceive that we are being evaluated or judged. We worry too much about who we think we should be, instead of just being who we are. We over-value what we aren’t and undervalue what we are.

Regardless of where, when, or why of any situation, we should always be ourselves. I am specifically referring to a staying true to one’s principles and faith. The challenging part of this that there will be times when we need to challenge ourselves from a personality standpoint. We cannot just say, “Well, that’s the way, I am”. We all have such opportunities to challenge ourselves in matters of ability, growth, mental models and even beliefs. I say this with a smirk because I can tell from experience that it isn’t easy, though it may sound so.

People miss the amazing leverage that can come into play when they do buy into their vision for their own life and determining what’s preventing themselves from achieving it.

Death isn’t the greatest loss in life. The greatest loss is what dies inside of us while we live.

July 27, 2009

When intuition outsmarts rationality

In October 2001, a fire crew was fighting a fire in a disused bingo hall in Leicester in the UK. Even though it was big, the fire chief decided it was safe enough to send the crew into the building.

They were starting to make progress in knocking the fire down when the fire chief decided something was wrong, and ordered his team out of the building. The team protested, unwilling to give up the progress they had made. But the fire chief insisted and as they exited the building it exploded in a massive fireball. If the decision to evacuate hadn’t been made the entire team would have been killed.

It turns out that the fire was one of the rarest and most dangerous phenomenon in firefighting – a backdraft. The fire chief had never experienced a backdraft before, he just knew that something was wrong and they needed to get out. In the ensuing investigation it turns out there were three things that were unusual: the smoke was more orange than usual, air was rushing into the building rather than out of it, and the fire was unusually quiet. The fire chief was right in his decision, he just didn’t know why at the time.

Well, all is well, that ends well.

But let’s take a moment and reflect what could have happened to the same event in a different set of circumstances. Assume that the fire chief was not the decision maker but he had to refer the decision to his boss.

There was clearly no evidence that something unusual was underway and that the teams were in disagreement with the fire chief. The teams were actually making progress and were engaged in a great endeavor to put out the fires. Normal rational thinking would have demanded that the boss would overrule the fire chief. The firemen would continue to fight the fire and the entire team would have been killed.

An investigation would have ensued and the decision would have been termed as rational and the whole thing written off as a terrible tragic accident.

July 6, 2009

Understanding competition — the Bill Gates way

I thought that I had analyzed the levels and degrees of competition fairly comprehensively. In fact, I have used that as an organizing framework to understand competitive advantage.

Recently a friend of mine sent me an excerpts of an interview with Bill Gates when he was still the CEO of Microsoft which makes interesting reading.

Flying on the Delta Shuttle with Bill Gates 12 years ago, Richard Karlgaard– the Editor of Forbes asked Bill, “What Microsoft competitor worries you most?”

“Goldman Sachs.” Richard gave Gates a startled look. Was Microsoft about to try the investment banking business? “Software,” he said, “is an IQ business. Microsoft must win the IQ war, or we won’t have a future. I don’t worry about Lotus or IBM, because the smartest guys would rather come to work for Microsoft. Our competitors for IQ are investment banks such as Goldman Sachs and Morgan Stanley.”

Getting the brightest bulbs to work at Microsoft has always been his obsession. It’s paid off. But what about now?

The best and the brightest want to work for companies like Google and Facebook. Microsoft seems to be losing the talent war. And does that explain why Microsoft has not made any ground shifting move in recent years yielding that terrain to Google and others?

Microsoft is caught in a classic dilemma of its own making. Its major revenue and profit streams continue to be Windows and Office which needs to be defended at all costs against young new attackers. Now will the smartest guys want to work for a organization where they would have to defend legacy or want to take a crack at changing the world?

The answer is obvious.

Unless you are a Singapore government scholar who has no choice but to work in the Singapore civil service because of the scholarship bond that you sign when you are 18 years old.

May 25, 2009

Managing change

Peter Drucker in a conversation with Peter Senge said, ‘Every organization will have to become a change leader. You can’t manage change. You can only be ahead of it. You can only make it.’

How true it is. Let us be ahead of ‘change.’

May 24, 2009

Singapore and Israel — a study of contrasts

I had a chance meeting with a NUS don and we ended up discussing my post on whether East Asia can produce a Susan Boyle. While remaining neutral about the arguments that I put forth, he mentioned the reason about Singapore being “small”.

I have heard the argument of Singapore being “small” ad nauseam. Singapore uses that as a convenient excuse whenever there’s a short coming or if they have to justify any hard measure to contain order. They also use it to explain away many of the things where they have come short. But, if you turn around and ask them how Singapore achieved some wonderful things in specific areas despite its small size, the discussion has veered off into a different direction.

Size and stability may be good, but lack of size and stability is not a deterrent to be successful. This reminds me of the famous lines in the old classic The Third Man: ” For 30 years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love and 500 years of democracy and peace, and what did that produce? The cuckoo clock.”

To serious skeptics, I usually cite Israel (population of 7.2 million) as an example.

Israel since its independence in 1948 has fought a several wars with its neighbors. It is always in a state of military preparedness. Yet it ranks highest in terms of human development, freedom of the press and economic competitiveness amongst Middle East countries. It is a parliamentary democracy and the average span of Israeli government of 22 months. The governments have often changed for a number of reasons — political scandals, peace process with their neighbors and the role of religion. It has the highest level of civil and human rights comparable to any Western world democracy and the freedom of press has been ranked highest amongst the Southwest regions.

Economically it is rated 3rd in the World Economic Forum’s Global competitiveness report. It has the 2nd largest number of startups after the US and the most number of companies listed in NASDAQ. Many of the large technology vendors like IBM, Microsoft, Cisco have advanced development centers in Israel.

Contrary to the Singaporean thinking, the Israelis have used the small size of Israel as an advantage. A Israeli start up knows that is home market is limited and hence function as a “mini-multinational” from day one. A surprising thing among Israelis is that they are never scared of failure and if 5% of the start ups in US are headed by repeat entrepreneurs, in Israel the ratio is well over around 30%.

Now coming to creative arts, Israel music has influences from all over the world. The Israel Philharmonic Orchestra has been operating for over 70 years and performs over 200 concerts each year. It also has a vibrant theatre scene.

How does one explain these successes in so many diverse fields despite its size and lack of peace? My view is their ability to be an inclusive society and they valuing diversity. All Jews irrespective of their lineage are welcome and they constitute 75% of the population. Muslims are the largest minority and it equally welcomes Christians.

The difference between Singapore and Israel was neatly summed up by Guy Kawasaki in one of his recent visits to Singapore. He called Singapore an one-opinion town. His precise words were: Israel has 5 million people, six million entrepreneurs, and fifteen million opinions. Singapore has 5 million people, six entrepreneurs and one opinion. Yesterday Lydia Lim a political correspondent from Straits Times referred to this difference, but only to defend Singapore and make a statement that Singapore has more than one opinion.

Her effort was painstaking, but what she ended up doing was only to reinforce the Singapore’s stability mantra which gives the society the order, but fails to deliver the innovation and creativity that Singapore badly needs in these times of global slowdown.

May 20, 2009

Can a Susan Boyle happen in East Asia?

My learned friend Ananth put this question to his email group. His precise question was: Can Susan Boyle, (58 million views on YouTube), Julian Smith and Diversity happen spontaneously / organically in East Asian societies?

Here’s my answer to him and I just thought I would post it here as well:

I don’t think it can happen spontaneously / organically in East Asian societies. Let me try to deal at 2 levels: — The nature of East Asian society and the issue of culture and specifically creativity.

For such things to happen, society needs to be a genuine melting pot. East Asia may have immigrants, but the practice of assimilation and morphing of identities is only residual. Cultural pluralism may exist on the surface, but politicians and institutions have often curbed growth because they felt the need to retain control or sometimes even believed that they need to architect society, and hence have never allowed cross-cultural pollination to take place freely. Hegemonic practices have often imposed covert forces on the sections of society which have lived on the edge and tried to dominate them. In Western societies there is a not merely an appreciation of diversity, but a collective conscious to make it inclusive.

Now one aspect of spontaneity and organic growth is that it should be possible to have keen debate, not dumb reverence for just great personalities; historical consciousness and self-reflection not adherence to supposedly timeless values; and a continual expansion of a societal canon to match a necessarily unsettled sense of who we are and what we care about. East Asian societies in its singular adherence to Confucian thinking has led to creating a hierarchical and often authoritarian social constructs which has curbed spontaneity. Now add to that, the sheer fixation on commerce and materialism becoming a prime pursuit, it is natural to see less emphasis on experimentation and spontaneity.

Culture is not a package of knowledge, attitudes and customs which can be parceled up, handed over to the child and then passed on intact to the next generation as seem to be the general thinking in East Asia. It has to take deep roots and often allowed to find its own flow.

There is a dialectic between culture and learning which in turn is a manifestation of spontaneity and growth. Creativity thrives when the social substratum has been enriched with diverse experiences and perspectives. And such diversities occasionally produce creative conflicts. East Asian societies have often shunned anything that could even remotely produce a conflict and placed a (undue) premium on compliance.

Now coming more specifically to creative minds (the Susan Boyle of the world), immersion in an environment of cultural ferment is more likely to fuel the selection process. Pablo Picasso is a case in point. He borrowed, stole, and assimilated his way and produced over 20,000 works of art in varying styles because there was a deep cultural ferment during his time. Being surrounded to by contemporary creators often inspires even marginally talented people to attain heights well above what they could possibly achieve in isolation. The individual genius often flowers through cultural interaction.

Creative people by their innate nature often tend to have wider interests and are open to more varied influence. They thrive on ambiguity and have varied interests. They are non conforming and independent minded. They have the capacity to expose themselves to a full range of cultural variants available in their milieu and then choose to adopt a unique subset that develops their talent. In East Asia such creative people do not have much opportunity and hence even if there existed such people, they tend to migrate to environments where their nature is better appreciated.

People have often asked me both seriously and causally about whether India or China can produce the next Google or Facebook. My answer is the same — The chances are very low, because while Indians or Chinese may be smart engineers; the kind of business thinking that needs to envision something novel is not there.

May 17, 2009

Management tips from Steve Ballmer of Microsoft

Steve Ballmer has changed considerably since he became the CEO of Microsoft. Not the impatient, belligerent Steve, but becoming a more balanced Steve.

The interview here gives an inkling of some of the changes that Steve wants to bring within himself. I have to say that while they seem trivial, both listening deeply and keeping the fine balance between positive thinking and realism is very important. Listening changes the level of trust, confidence and chemistry in a team work and the balance keeps one better focused.

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