On the face of it Apple has one innovation problem that it needs to overcome – find a new category-busting product like the iPhone. Not so easy, of course. But the intervention of hedge fund manager David Einhorn, mad at the company’s inability to leverage value from its $137 billion cash pile, tells us that its innovation problems are significantly bigger.
It needs to re-instantiate the idea that it could be worth a $1 trillion.
Instead Apple is a company whose current, core customer-centric mission has acted like a dehydrator in the company’s idea closet. Its insistence on a very narrow definition of what it does has made it impotent to use that money. It’s creativity is all but dried up.
Contrast that with Google, which also has a cash pile, though more modest in scale. Driverless cars (where I have voiced skepticism) and Glass are great forward thinking projects. The company just needs more of them. And the reason is that the very long term form of innovation is back in fashion – or will be soon.
I said a couple of days back that companies need to function on three levels with their innovations – innovate every day, innovate in the long term (the new 10 – 30 year cycle) and innovate in the process of creating wealth by changing how an enterprise looks, feels and functions.
Like Google, Apple has its lean innovation programs fine tuning and improving its internal processes. But I think Apple misses the point of what an enterprise is for because of its narrow product and brand focus. Apple needs to think like a global leader – the global leader in tech.
We face two simultaneous problems in the global economy. The first is the accumulation of capital for non-productive uses – Bain reports that by 2020 the total of financial assets in the world will be $900 trillion, $300 trillion more than today, and its effect is constantly to threaten a surge in non-financial asset prices such as commodities. Apple is a symptom of that problem hoarding cash it is too scared or unimaginative to spend.
The second is the growth of a global middle class that will be extremely resource hungry and that is causing enormous structural problems – or opportunities – because of the pace of development. These are Apple‘s future customers.
I got talking recently about this, and the role of the USA, to Bhaskar Chakravorti, senior associate dean of International Business & Finance at The Fletcher School at Tufts University. Bhaskar also runs the Institute for Business in the Global Context.
“America’s future actually depends on a global system capability in innovation,” says Bhaskar, “that is deep, long-term investment in solving problems on a systemic basis.”
There’s some sense in applying this obligation also to corporations. As Bhaskar points out 40% of global GDP comes from emerging markets, yet only 10% of US GDP comes from these areas. America is letting opportunity slip by.
Of course to invest long term in distant markets was previously a development role – Governments went out the solve the problems of poor countries. But in the 21st century we are not talking about poor countries. The fast evolving economies that cover over half the world’s populations have problems created by economic bottlenecks – air quality, water access, inadequate infrastructure and so on.
In the west, our needs are fundamentally solved. Where we experience poverty it is a distribution and opportunity issue.
So what’s that to do with Apple? If you believe Apple‘s only role is to create bight shiny objects then nothing, of course. But prior to its obliteration by Apple, mobile phone giant Nokia was a major player in the development of emerging market infrastructure, applications and capability raising. Take a look at this 2008 post on Nokia in Africa.
Apple, like the US Government, needs a new approach to the fast developing world and needs a vision of what it means to be the world’s leading tech company, what it means to take responsibility in the communities it profits from as well. But that doesn’t preclude further profit. It needs a 20 year vision of what it will do to solve problems and make money here.
All this will help anchor Apple in more hearts and minds and help anchor Einhorn’s assertion that it could be go to a $1 trillion capitalization and beyond.
Clearly to do that it needs friends.
I suspect the one idea of enduring value that came out of last week’s debate about driverless cars was that the Google version would be perfectly attuned to the new mega-cities, preventing congestion and improving air quality at the same time as accelerating mobility.
Apple has the cash and ingenuity to play an important role in balanced development but to do so it needs to think 10 – 30 years ahead, beyond devices, beyond its current brand and perhaps also beyond its well-healed customers of today.
You might also like to read this brief account of Google’s innovation layers.
English: Google Logo officially released on May 2010 (Photo credit: Wikipedia)
Google used to be hailed for its tinker-time projects, the 20% that people used to get away from regular work to do interesting projects. What we are seeing emerge now is Google as a model for structured innovation.
Earlier I wrote about the 3 keys to innovation in the 21st century. In short, I said companies have to move beyond the idea of incremental vs disruptive innovation. There are now three types of innovation and they are not incremental or disruptive – Google serves as an example of these in action.
They are: the return of very long term innovation, innovate every day, and enterprise transformation.
Google is active on each of these levels.
# Google – Innovate every day.
Actually in its core business it has been caught out by innovate every day. In social search and in communities Google was aced by Microsoft and by Facebook. But now it has caught up, and caught up also in the UI where it had an Apple moment around design last year. And across its complex portfolio Google has also adopted a leaner release cycle particularly for its Cloud based products.
#Google – the very long term
Very long term research is making a come back and Google is doing its bit to promote it with is driverless car and Glass projects. Though there’s been a fuss about the driverless car being sooner than you think, actually Google‘s project has a much longer time horizon than that of the car makers. Google is doing the long term thinking on structural innovation. Similarly with Glass, no phone maker has been as public or visionary.
#Google – Enterprise transformation
Finally companies need to change themselves. Google is letting itself down here. It’s still far to secretive for us to know how the structure is shaping up and there are no pronouncements from Page on how he might innovate enterprise wealth creation. In fact the company tends to shrink back into the same shell – ad dollars – when stressed.
Still, like Amazon, they are relatively free of Wall St so why not show us what the enterprise of 2030 might look like
Follow me on Twitter @haydn1701
Three Steps (Photo credit: Pavan Chavda)
One of the oddest aspects of innovation writing is how little time gets devoted to how innovation itself changes. I think there are 3 key shifts going on and each requires a different response from innovation leaders – heck from strategists, CEOs, CIOs, CMos and just about everyone. This is urgent.
First – how do we think about innovation? It’s either incremental or disruptive, right?
Well, no. These two terms in fact polarize innovation into business as normal and business torn apart.
My sense is most people are in a different place – business as scrambling to keep up.
In the background, longer term transformation in the economy and the technology base is forcing companies to re-open the long term strategy book.
So it’s not about incremental vs disruptive. It’s about pervasive, it’s about process and it about a new long termism. By the way will be talking about these trends at the Amplify Festival in Sydney in early June.
Change #1. The very long term innovation environment
Strange to think of the very long term again. We’re used to companies emerging in a blaze of light, Facebook-like, growing to a billion users before a decade has barely passed.
But there are four good reasons for saying companies will have to focus on the 10 – 30 year time-frame.
The first is the financial climate and the superabundance of capital. Bain recently reported that global aggregate financial assets will increase from $600 trillion to $900 trillion between now and 2020. That means continued very low real interest rates for years to come.
Companies need to make use of this by investing in long-term far horizon project as part of a balanced approach to their businesses.
But it also means that asset bubbles will continue to inflate around us – so they must hedge through the long term.
And I think there is another reason for taking the long-term – enterprise transformation. Enterprises are thirty years in to a long term transformation of themselves from manufacturing to post-service platforms. They must become conscious of this and create leadership and vision of the change rather than being reactive to it.
Finally there is the technology base. We have only begun to understand and experience the impacts of technologies like connected mobile computing. Like the PC itself there is a 50 year journey here.
So long term re-imagining humanity and how we create wealth. The context for the long-term is a total transformation of how people work and spend their time. This is uncertainty of a new order, particularly as the new global middle class is born.
Change #2. Innovate everywhere, always
The innovate everywhere moment is already upon us and it is driving companies nuts. I did a series of interviews recently where CIOs were telling me their biggest problem is finding people who can adapt to this environment, of monthly innovation.
This is really running to keep up stuff and it is made worse by SaaS platforms that do good lean, regular updates that clients then need to adapt to.
Image via CrunchBase
I got talking recently to Scott Levy over at Fuel Marketing and in a fascinating discussion about SEO (it’s really about social now) Scott made a chance comment that seemed to throw up a new trend. Yes, marketing online is all about social but it’s also about inspiration and motivation and Twitter is the best platform for this new marketing genre.
I guess that’s also a way of saying it’s about figuring out ways to keep a following interested. But do people could need motivating and inspiring in 140 characters? Several times a day?
It means that a large part of the Twitter leader-follower relationship is almost like therapy. It’s like motivational speaking but in short hand.
But there’s definitely a group of social media influencers whose tweets and interactions are regularly interspersed with homilies and since Scott said it, the trend has become obvious, like a sub-culture that’s suddenly mainstream, or mainlining bite-sized wisdom.
I don’t have the resources to research that thoroughly but here are some examples and a question…. well two:
Is this new?
Have I lost my way in life? Because I would never think of it as my role to communicate with you in these ways. Yet it seems to be part of the packaging of a social media leader.
Kim Garst has 128,00 followers and posts several times an hour….
@KimGarst – successful people are simply those with successful habits
@KimGarst – Shoot for the moon and if you miss you will still be among the stars
@KimGarst – Man, alone, has the power to transform his thoughts into physical reality
Scott in fact does a lot less of those types of tweets, even though he talks about the need to really reveal personality. Scott also tweets every hour, several times But it’s a varied bunch of content – tweeting out newspaper articles, tweeting interactively with other people in social media, and then therapy too:
@fuelonline – Good Morning everyone! I hope you have a kick ass day & challenge yourself to do something great today!
@fuelonline – The difference between a successful person & others is not a lack of strength, not a lack of knowledge, but rather a lack in will
@fuelonine – Good morning Twitterverse! Just wanted to say I love & appreciate all of you!
Mari Smith has 180,000 followers:
@marismith – Think like a wise man but communicate in the language of the people
@marismith – Hold yourself responsible for a higher standard than anybody expects of you. Never excuse yourself
This television commercial, first aired during Super Bowl XVIII, launched the original Macintosh. (Photo credit: Wikipedia)
I was interested to see, after the initial acclaim for Samsung’s Next Big Thing ad, whether it got people onto their laptops or tablets to search for more information – for example like where to buy one. Or did the Apple-ribbing have any impact?
Earlier followers of the blog will remember I do a lot of sanity checking by looking at how people behave on Google Trends.
In the early days of Trends Google argued that search could be a good predictor of sales – but they used cars as the example. At least in the case of advertising you should be able to see an increase in search activity if an ad has worked well.
Samsung’s Super Bowl ad got a lot of good press but did it increase searches for Samsung or Galaxy? And did it take interest away from Apple?
You might argue that it’s too soon to test that level of reaction but as Google trends exits, why not use it? I did the research today so that the Google trends database had time to catch up.
What are the findings?
#1. Fast developing economies other than China favor Samsung
The day after the Super Bowl ad showed no real uptick in people searching for the term “Samsung” globally. In the USA it made no difference to the number of searches for Samsung and if anything searches for iPhone rose slightly over the weekend.
However, there is an uptick for Samsung in India, the day after the Super Bowl. You might think that is an odd product of an ad in the USA but in fact the Super Bowl ad-saga has run across all the English language press, so possibly it has had this effect in India.
Longer term, in India Samsung dominates the iPhone and Apple. In the Philippines it is a similar story though not as pronounced. The same is true of Brazil.
However only India shows an uptick in visitors following the Super Bowl ad.
What’s also a surprise is that interest in the iPhone is unabated in China. It kills Samsung and Galaxy as search terms, with roughly 10 times the number of searches over a 90 day period and the same over a 7 day period.
#2. The developed economies favor the iPhone
In the advanced economies iPhone search interest is high but in Germany Samsung is higher, on a 7 day and 90 day average, whereas in Russian Samsung and the iPhone are neck and neck.
#3. People are searching for iPhone more than they are searching for Apple
If Apple were to do a RIM and change its brand tomorrow to iPhone then it would do ok by it. People search for the iPhone much more than they search for Apple. In Samsung-friendly Philippines and Brazil the ratio is 3:1, whereas in India it is less than 2:1.
So what’s the conclusion? The real story of the Super Bowl was the ads and Samsung got usurped by social. The $15 million they paid seems to have impressed some but overall its impact has not been as pervasive as the opportunism of the Twitter users at Oreo and Audi.
Underneath this though Samsung and Apple have clear territory where interest in one dominates interest in the other. But the tongue in cheek ribbing of Apple seems to have gone far enough.
Follow me on Twitter @haydn1701
Image via CrunchBase
Interesting piece yesterday from Eric Savitz, Forbes Tech Editor on the need for an Apple phablet. Terrible term. I will say iPhone hybrid.
Samsung is widely credited with innovating form factor size to 5″ while Apple is resolute at 4. The problem for Apple is that the 5″ form is growing in popularity, particularly outside the USA. Eric quotes Barclays‘ Ben Reitzes:
Our global tech team believes that growth for the 5”+ smartphone market will exceed that of the overall market, rising from 27 million Phablet units in 2012 to 230 million in 2015 at a CAGR of 105%, not including a new iPhone version.
Reitzes sees China as the key battleground for the larger form factor, not the USA, so how Apple and its rivals shape up outside America will be key to his idea that Apple stands to make a substanttial gain from a phablet.
I did a quick analysis of uptick in Samsung and Apple‘s search interest following Samsung’s Super Bowl ad and will come back to the detail later today. However, first blush says Samsung got very little lift from the crafty ad in terms of Americans going online and then searching for Samsung or Galaxy. American remains somewhat Samsung-neutral.
However, look outside the USA and search interest increased significantly in India and the Philippines.
Whereas globally more people search for “iPhone” than for either Samsung or Galaxy, that picture is quite different in places like India where search interest this week has been 3 times stronger for Samsung than for Apple. It went up Saturday and Sunday. There has been a strong differential in favor of Samsung over the past 90 days.
In other words outside the USA, Apple might have a growing brand problem that could be addressed through a hybrid phone/tablet that matched more closely the interests and needs of people in these economies.
My contention, however, is that should Apple go down that road its reputation for innovation will suffer as it will be seen pursuing Samsung’s form factor, which given the litigation of 2012 be a gift for Samsung’s ad agency.
Follow me on Twitter @haydn1701
One activity that got a sure boost from the weekend’s sport was social media. To get the measure of it I got talking with Robin Carey who runs Social Media Today, meeting place of the world’s social media professionals, and discussed the Super Bowl “interventions” by Oreo and Audi
We wanted to be a bit more live with this interview but our agendas clashed a bit – but hey, leave comments and ask more questions if you like.
So it was all smart stuff. But what is the context?
1. As we know some super-smart brands jumped on the power outage at this year’s Super Bowl and got some good real-time engagement – it’s great, it’s fun but is it new?
Yes it is new, we never before had the ability to respond to advertising in real time. But it’s only valuable if it’s sustained … and the agency, 360i, has shown that they are nimble enough to keep this up. What is also new is that digital marketing partners and agencies will now be tied to real-time events for creating new brand opportunities. Audi also had a clever response with its offer to send LED lights for the Mercedes sign at the SuperDome.
2. Does it mean we are headed to ads as dialogue?
Yes. The brands which react the best and fastest will trump those that, for example, spent $15M on a passive, static message.
3. What do you think it means for how companies should regard their social media efforts – this was all driven by Twitter but Twitter might give you a few thousand eyeballs that are busy with other things? Isn’t this a lot of effort for a little gain?
Not at all. Have you seen the buzz today about Oreos on Forbes, Business Insider, Buzz Feed, etc? Twitter drives traditional media, and has for a long time. If anything, it’s a little effort for a lot of gain.
4. You talk across the country about social media, and talk with most of the best practitioners – what in your view are the big changes taking place in the business right now?
Wow, big question. Obviously, we are beyond the “what and why.” Everyone is saying that buying fans and likes is a waste of time. But I’d say that one of the concerns is the degree to which they outsource social vs. working on social in-house. Companies also are beginning to understand that they need to convey something authentic (very few do this well) and that they have tremendous resources in their back yards with their own customer interactions.
5. One piece of advice for marketers tomorrow?
Plan to be spontaneous.
So, in short: ads are real-time, sustained, brought more and more in-house for authenticity, recognize that Twitter is a major distribution platform, and leverage customer interactions. That should be all part of the plan.
Follow me on Twitter@haydn1701 and ask Robin any questions here.
English: Google driverless car operating on a testing path (Photo credit: Wikipedia)
Last week’s debate on the Google driverless car raged across Forbes, auto sites and Google +, yet I found little in the discussion to convince me that this is Google‘s opportunity.
Last week I said the idea of a Google driverless is nonsense and I repeat it – Google will not be a force in autos. In fact I’d go further and say I doubt this is a disruptive innovation. It is happening incrementally, now.
But what Google has done, through intense lobbying and publicity, is pave the way beautifully for BMW, Mercedes and Volvo to launch autonomous cars in 2014. Yes, 2014 (go here for information on 4 almost autonomous cars you can drive today).
Within two years these major European manufacturers, particularly BMW and Mercedes who sell upmarket cars and have the margin to innovate, will have all the components of an automated car on the road, in production vehicles.
For example, to quote the World Future’s Society: “BMW plans to extend that idea in its upcoming i3 series of electric cars, whose traffic-jam feature will let the car accelerate, decelerate, and steer by itself at speeds of up to 25 miles per hour—as long as the driver leaves a hand on the wheel.”
And: “Mercedes is equipping its 2013 model S-Class cars with a system that can drive autonomously through city traffic at speeds up to 25 m.p.h.”
Here’s some more detail:
The S-Class will sport a stereo camera on the windshield to peer ahead in 3D, short- and long-range radar in front and rear, and short-range radar on the sides. Twelve ultrasonic sensors will detect objects very close to the car—during self-parking, for example. And added to external sensors, the S-Class will have internal sensors to monitor drivers.
And the other types of things that will happen, down the range, are more automated braking, more collision avoidance, more safety, more incremental change that began as as long ago as the early 2000s and whose R&D history spans back to the 1980s.
So why won’t these car makers go to Google? To understand that better I talked last week to Richard Bishop Richard who appeared on Twitter commenting on my post and Chunka’s. A good thing too.
He is a former head of the US intelligent highways program and oversaw public trials of driverless cars in the 1990s. Since then he has been consulting in this area to car companies and Governments.
1. The don’t need Google
The German car makers are using different technology. “The (Google) system combines information gathered from Google Street View with artificial intelligence software that combines input from video cameras inside the car, a LIDAR sensor on top of the vehicle, radar sensors on the front of the vehicle and a position sensor attached to one of the rear wheels that helps locate the car’s position on the map.” But most are manufacturers are not dependent on complex databases and retrieval. They use sensor technology to recognize what is around them.
Might Google be setting itself up for the wrong project. Its system relies on rich data maps, which can also be created by its laser technology, so it looks like a great “organize the world’s information” project. But maybe not that necessary for cars. However, there is no doubting it could have a role in freight distribution for when you get used to the idea of lorries on the highways with no driver!
2. They already do great, safe software.
Automated safety technology is in the DNA of Tier 1 suppliers like Bosch who brought the world the first advanced braking systems. They have years of experience in creating safe software for cars, according to Richard Bishop, and they test the hell out of it. Before automated cars go down the car range to mid-market luxury car makers will have more years of experience and data. Bosch is offering its automated driver technology for 2014, also.
3. Google has a poor record outside search and ads
Google‘s great moment was its first – monetizing content through search related ads. But its record of pulling off further disruptive change since then has been poor. Android is an exception but is Google the real beneficiary there? Samsung benefits. So does Amazon. As do HTC and ZTE.
Google‘s extra-curricular projects appear more designed to boost its information businesses and in cars it might just want the opportunity to organize the world’s spatial information at a deeper level of granularity than it can right now. Can that goal produce a competitive enough product?
What I read into last week’s debate is that people are thirsty for some disruption and opportunity. Sorry, but this isn’t it.
Amazon founder Jeff Bezos starts his High Order Bit presentation. (Photo credit: Wikipedia)
Amazon’s Jeff Bezos has a famously academic rather than business-like approach to strategy. He pressures executives and innovators to write essays and to be thoughtful and comprehensive when taking the podium at his strategy meetings.
He sells products close to cost, if not below. And he invades markets where he doesn’t belong – like consumer electronics at the time he was selling books, cloud services at the time he was big-retail, or devices when he became a publisher.
What we know about Amazon is it breaks the rules. He runs Amazon like a bunch of start-ups. He takes the long view, in contravention of Wall St culture. And he hops around adjacencies in a way that totally ignores the idea of core competency. For strategy read: we do it our way.
And his share price has risen from below $200 to $270 during the past twelve months. Shares rose again after it reported a profit decline this quarter.
Remember those Apple numbers and its subsequent share price decline?
Facebook meanwhile fell again yesterday after announcing a jump in mobile ad revenues -a jump![/entity][/entity]
Trouble for Facebook is the jump wasn’t high enough and it seems to have persuaded analysts that their mobile strategy is not good enough, certainly not when set alongside Google‘s.
Meanwhile RIM has finally shown us its two new Blackberry devices and a revamped branding strategy (it will now be called Blackberry). And it too saw its shares drop.
Nine months ago I wrote that RIM’s problem lay in its lac of strategic options. It seemed to be doing the only thing it could be doing. And herein lies the challenge for RIM, Facebook and a host of other companies, including Apple. Either de facto or in appearance, they are now companies that seem tied to one option.
That appearance is not always fair. Facebook has search – yet it’s never going to be a Google, so how strong an option is it? QNX, the OS behind the Blackberry re-launch has interesting projects in cars and healthcare but cars are a small market and healthcare is a difficult one to crack. With Apple we are waiting on the next move – will it be TV? Will it be a different size iPhone (a move that could wreck its reputation for innovation)?
Where are the options that Apple seemed replete with a year ago – maps and location-based services, voice interface, TV, Ads, or you name it because there is cash enough in the bank to do anything?
In The Elastic Enterprise, Nick Vitalari and I made much of this point, that innovation today requires complex portfolio management. We called it the strategic options portfolio.And what we meant by it is that you need innovations you might never use but that you can drop into the market seemingly at will, you need multiple options to keep the market guessing and you need options to prevent the impression that RIM gives of being in a make or break moment.
Successful companies breed options. They don’t always take those options. Sometimes they hold back as Jobs did with the iPad (cautious no doubt after his Newton moment). But what they have are enough options to tune the market to their song.
Now look at Amazon. It is probably the most successful Cloud company out there, is unparalleled in the online business, has taken customer service to a new level, has ramped up its apps market to bring it to the top of the tree in terms of monetization, within a year of launch, is in the device business with maybe a smartphone soon and leads the way in crowd labor.
Amazon has also taken over from Apple as the leading ecosystem management company. A lot of what Amazon does is encourage other businesses to build on its platform, so the crowd community builds around Mechanical Turk, Kindle fire and its apps market attracted developers very quickly, its Cloud services power SaaS businesses, in publishing Amazon is a key enabler of the little guy, the promise Jobs made soon after the iPhone launched.
All this is important because we are now in a peer economy. More and more the cornerstone company is a platform for its peers, to do business.
Elsewhere I’ve called the underlying expansion strategy radical adjacency and the only other company I can think that is mastering it at this level is Samsung, which recently launched into ads, has a smart TV in the market, does multiple smartphone lines, is launching its own new OS, and breaks the rules around form factor with Notes . I expect Samsung will move into content soon.
The point about these two companies is they never get stuck with one option, or the appearance of one option. They have multiple options, all of which appear deeply credible. And certainly in Amazons case the line running through all its actions is its peer group and the advantage Amazon brings them.
Go 50 (Photo credit: Wikipedia)
This time last year I published a list of the top 50 social media power influencers as measured by PeekAnalytics. The list had some surprising names, some omissions and the usual heroes.
Over the past few weeks the original article has had several thousand new readers, a few of whom have contacted me about the list. Time to update it, with your help I hope.
I’m going to update it during February and I would like readers to contribute names of bloggers and influencers they think should be on the list. Please remember to add the Twitter handle.
Some baseline conditions. The idea is to discover those people who are most influential about social media. There are plenty of people blogging about a hundred different topics who have influence but the list will be those who teach, advise, opine and influence around social media and social business.
It’s important, then, to nominate people who are creating original content, not just people who curate on Twitter.
Last time out I excluded corporate bloggers because they would not necessarily be strong on social media itself. But this time please propose away – I will create a separate list. I’ll also create a list for PR influencers.
Once again I will use PeekAnalytics metrics. Once we have that list we can think about some form of public vote or perhaps a discussion around its validity, to adapt it, if consensus is at all possible!! But the initial list will be totally objective (based entirely on the numbers).
Last year I did most of the leg work because I was interested in finding out who the algorithm says is most influential. It would be truly great if you could help with your suggestions this time around – please put nominations in the comment box please. Bear in mind that the bar is very high. Power influencers have very large followings across all networks – and this metric focuses on the strength of those networks – particularly how active they are.
There has to be a deadline of course – three weeks from now, the 20th February.
To keep up with the project follow me on Twitter @haydn1701