by Adam Hartung | Mar 7, 2011 | Books, Current Affairs, Innovation, Leadership, Openness
Why do some businesses (or products) seem to launch onto the scene with incredible success? According to a new book, “Enchantment” releasing March 8, 2011 (available on Amazon.com at about 50% off the list price), it is the ability to go beyond normal marketing, PR and other business practices in a way that enchants customers. Author Guy Kawasaki says that being likable, trustworthy and prepared allows you to overcome natural resistance to change and move people to accept, adopt – and even become supporters of your solution.
The book is tailor-made for entrepreneurs. Especially those in high-tech, who are looking for rapid adoption of new platforms. So when Guy sent me a copy and asked for my review I asked him for a 1-on-1 interview where I could focus on how the vast majority of people, who work away in large, less than enchanting, organizations, could gain value from reading his latest effort. I wanted him to answer “how am I supposed to be enchanting when dullness reigns in my environment?”
Here’s his finput from our meeting, and his reasons to buy and read Enchantment:
Guy’s first recommendation – “enchant your boss.” There’s a chapter in the book, but he focused on what to do if your boss is a real dullard. Firstly, don’t ever forget to make the boss’s priority your priority, because without that you won’t be effective. The more you can convince your boss the 2 of you are on the same wavelength, the more he’ll be likely to give you space. And space is what you want/need in order to start to identify the next perfomance curve. Then, if you have some space, you can start to demonstrate how new solutions could work. Use your aligned priorities to help you reframe your boss’s opinion about the future, and always ask for forgiveness if you’re found reaching a bit too far.
Secondly, enchant those who work for you. Give them a MAP. (M) is for Mastery of a new skill or technology. Give your employees permission and encouragement to master new areas that will help them grow – and put them in a position to teach you! (A) is for Autonomy. In other words, give them the space discussed above. (P) is for Purpose. Help people to see their work as having more value than just money. Add purpose to their results so they can feel great. With a MAP they can succeed, and you can too.
Thirdly, enchant your peers by working hard to be likable. Guy offers a chapter in which he deconstructs likability, and provides a series of tactics to make you more likable. This isn’t manipulation (although it may sound like it), but rather a guidebook of what to do to help your true self be more likable. With peers, the #1 objective is to be trustworthy! Show them that you can help expand the pie, so there is more success for everyone, rather than being the kind of person always lining up to get his piece first!
When you find yourself disappointed in your work, or employer, Guy recommends we take from his book the idea that you seek out a dream for what your work group, or employer, can be. Don’t accept that today is the best case, and instead promote the notion that tomorrow can always be better, more fun, more fulfilling. He believes that if you say you’re going to do something that seems impossible, and you undertake it with enchanting techniques, your behavior will become infectious. Behave like an enchanter and you will create other enchanters in the organization. (If this sounds a bit Pied Piper-ish I guess it does take some faith to follow Guy’s recommendations.)
I asked him how a Chief Enchantment Officer could help Microsoft (readers of this blog know I’ve long been a distractor of the strategy and CEO at Microsoft). Guy said he felt Micrsoft could become VERY enchanting if the company would:
- Focus on making Micrsooft more likable and trustworthy. Old behaviors were in the past. Going forward, if leadership applied itself Microsoft could implement the things in his book and drive up the company’s likability and trustworthiness amongst constituents – including customers, developers, suppliers and investors.
- Rethink the definition of a “product” to make offerings more enchanting. In Guy’s view, Apple would never say a product is good enough based upon its specifications or functionality. An iPad has to go beyond those things to offer something much more. Too many companies (not just, or even specifically, Microsoft he was clear to point out) launch “ugly” products – without realizing they are ugly! With a bit different direction, different thinking, about how to define a product they could be more enchanting, and more successful. (When I compare the iPhone or iPad to the xBox I start to clearly see the difference in product description to which Guy refers. Guy agreed with me that Kinect is a very enchanting product. Unfortunately it appears to me like Microsoft still doesn’t realize the value of this in its xBox efforts.)
- Train the organization on the importance of, value of, and ability to be enchanting. Most companies are clueless about the notion, as people work hard delivering solutions with too much of an “engineering mentality”. Apple has trained its organization so the people think about how to make products, services and solutions enchanting, and therefore non-enchanting things are unacceptable. Raise the bar for making sure solutions are likable, trustworthy and prepared for what the customer will want/need. Not merely functional. Build that into the behavioral lock-in and Guy believes any organization cannot miss success!
I told Guy that often I’m frequently pushed to believe that a company is “beyond the pale;” unable to do better, or to be better. Simply incapable fo ever being “enchanting.” Guy is convinced this is balderdash – if you want to change. He talked about Audi, which suffered horribly from problems with unintended acceleration a couple of decades ago. Audi changed itself, and now is doing quite well (according to Guy) while Toyota is suffering. It’s easy for an organization to slip into dis-enchanting behavior over time if it starts cost-cutting and obsessing about optimizing its past. But any company can become enchanting again. “Hey, look at how Apple slipped, then came back, and you can see how enchantment is possible for any company.”
I don’t know that Enchantment will solve all your business problems, but for $14 (and free shipping on Amazon.com) it’s full of ideas about how you can move a company to better performance. And surely make it a better, more compelling place to work!
Guy Kawasaki became famous as a Macintosh Evangelist for Apple back in the 1980s. His passion for creating technology products that help people’s lives, and work, improve, has been compelling for 2 decades. His blog is entitled “How to Change the World,” demonstrating how high Guy sets his sites. Guy also created and remains active in Alltop.com, a compendium of blog listings on important topics, where ThePhoenixPrinciple.com is part of the Innovation section.
by Adam Hartung | Jan 19, 2011 | Current Affairs, Disruptions, Games, In the Rapids, In the Swamp, Innovation, Leadership, Lock-in, Music, Openness, Web/Tech
The Wall Street Journal headlined Monday, “Apple Chief to Take Leave.” Forbes.com Leadership editor Fred Allen quickly asked what most folks were asking “Where does Steve Jobs Leave Apple Now?” as he led multiple bloggers covering the speculation about how long Mr. Jobs would be absent from Apple, or if he would ever return, in “What They Are Saying About Steve Jobs.” The stock took a dip as people all over raised the question covered by Steve Caulfield in Forbes’ “Timing of Steve Jobs Return Worries Investors, Fans.”
If you want to make money investing, this is what’s called a “buying opportunity.” As Forbes’ Eric Savitz reported “Apple is More Than Just Steve Jobs.” Just look at the most recent results, as reported in Ad Age “Apple Posts ‘Record Quarter’ on Strong iPhone, Mac, iPad Sales:”
- Quarterly revenue is up 70% vs. last year to $26.7B (Apple is a $100B company!)
- Quarterly earnings rose 77% vs last year to $6B
- 15 million iPads were sold in 2010, with 7.3 million sold in the last quarter
- Apple has $50B cash on hand to do new product development, acquisitions or pay dividends
ZDNet demonstrated Apple’s market resiliency headlining “Apple’s iPad Represents 90% of All Tablets Shipped.” While it is true that Droid tablets are now out, and we know some buyers will move to non-Apple tablets, ZDNet predicts the market will grow more than 250% in 2011 to over 44 million units, giving Apple a lot of room to grow even with competitors bringing out new products.
Apple is a tremendously successful company because it has a very strong sense of where technology is headed and how to apply it to meet user needs. Apple is creating market shifts, while many other companies are reacting. By deeply understanding its competitors, being willing to disrupt historical markets and using White Space to expand applications Apple will keep growing for quite a while. With, or without Steve Jobs.
On the other hand, there’s the stuck-in-the-past management team at Microsoft. Tied to all those aging, outdated products and distribution plans built on PC technology that is nearing end of life. But in the midst of the management malaise out of Seattle Kinect suddenly showed up as a bright spot! SFGate reported that “Microsoft’s Xbox Kinect beond hackers, hobbyists.” Seems engineers around the globe had started using Kinect in creative ways that were way beyond anything envisioned by Microsoft! Put into a White Space team, it was possible to start imagining Kinect could be powerful enough to resurrect innovation, and success, at the aging monopolist!
But, unfortunately, Microsoft seems far too stuck in its old ways to take advantage of this disruptive opportunity. Joel West at SeekingAlpha.com tells us “Microsoft vs. Open Kinect: How to Miss a Significant Opportunity.” Microsoft is dedicated to its plan for Kinect to help the company make money in games – and has no idea how to create a White Space team to exploit the opportunity as a platform for myriad uses (like Apple did with its app development approach for the iPhone.)
In the end, ZDNet joined my chorus looking to oust Ballmer (possibly a case study in how to be the most misguided CEO in corporate America) by asking “Ballmer’s 11th Year as Microsoft’s CEO – Is it Time for Him to Go?” Given Ballmer’s massive shareholding, and thus control of the Board, it’s doubtful he will go anywhere, or change his management approach, or understand how to leverage a breakthrough innovation. So as the Cloud keeps decreasing demand for traditional PCs and servers, Brett Owens at SeekingAlpha concludes in “A Look at Valuations of Google, Apple, Microsoft and Intel” that Microsoft has nowhere to go but down! Given the amazingly uninspiring ad program Microsoft is now launching (as described in MediaPost “Microsoft Intros New Corporate Tagline, Strategy“) we can see management has no idea how to find, or sell, innovation.
We often hear advice to buy shares of a company. Rarely recommendations to sell. But Apple is the best positioned company to maintain growth for several more years, while Microsoft has almost no hope of moving beyond its Lock-in to old products and markets which are declining. Simplest trade of 2011 is to sell Microsoft and buy Apple. Just read the headlines, and don’t get suckered into thinking Apple is nothing more than Steve Jobs. He’s great, but Apple can remain great in his absence.
by Adam Hartung | Aug 30, 2010 | Current Affairs, In the Rapids, Innovation, Leadership, Web/Tech
Summary:
- We like to think we can compete effectively by waiting on others to show us the market direction
- You cannot make high rates of return with a “fast follower” strategy
- Companies that constantly take innovations to market grow longer, and make higher rates of return
- White Space allows you to learn, grow and be smart about when to get out while costs are low
“I want to be a fast follower. Let somebody else carry the cost of learning what the market wants and what solutions work. I plan to come in fast behind the leader and make more money by avoiding the investment.” Have you ever heard someone talk this way? It sounds so appealing. Only problem is – it very rarely works! Fast followers might gain share sometimes, but universally they have terrible margins. Their sales come at an enormous investment cost.
Those who enter new markets early actually gain a lot, for little cost. Take for example Amazon.com’s early entry into electronic publishing with Kindle. Entering early gave Amazon a huge advantage. Amazon may have appeared to be floundering, potentially “wasting” resources, but it was learning how the technology of e-Ink worked, how costs could be driven down and what users demanded in a solution. Every quarter Amazon was learning how to find new uses for the Kindle, making it more viable, finding new customers, encouraging repeat purchases and growing. Now Mediapost.com headlines “Review: New Kindle Kicks (Even Apple’s) B*tt.”
Now there are a raft of “fast followers” trying to catch the Kindle in the eReader market. But the Kindle is far lighter, easier to use, with greater functionality and available at one of the market’s lowest prices. While the cost of entry was low, Amazon learned immensely. That knowledge is not repeatable by companies trying to now play “catch up” without spending multiples of what Amazon spent. Amazon is so far in front of other eReaders that it’s competition is the vastly more sophisticated (and expensive) mobile devices from Apple (iPhone and iPad). By entering early, Amazon has lower cost, and considerably more/better market knowledge, than later entrants.
We see this very clearly in Microsoft’s smart phone approach. Microsoft got far behind in smart phones, losing over 2/3 its market share, as it focused on Windows 7 and Office 2010 the last 3 years while Resarch in Motion (RIM) Apple and Google pioneered the market. Now the 3 leaders have millions of units in the market, low price point establishment, and between them somewhere between 400,000 and 500,000 mobile apps available.
As reported in Mediapost.com “Microsoft Gets Serious with Windows 7 Phone” entering now is VERY expensive for Microsoft. Microsoft spent almost $1billion on Kin, which it dropped after only a few months because the product was seriously unable to compete. So now Microsoft is expecting to spend $500million on launch costs for a Windows 7 mobile operating system. But it faces a daunting challenge, what with 350,000 or so iPhone apps in existence, and Google giving Android away for free (as well as sporting some 100,000 apps itself).
The cost of entry, ignoring Microsoft’s technology development cost, to get the mindshare of developers for app development (so Windows 7 mobile doesn’t slip into the Palm or Blackberry problem of too few apps to be interesting) as well as minds of potential buyers will more likely cost well over $1B – just for communications!! Microsoft now has to take share away from the market leaders – a very expensive proposition! Like XBox marketing, these exorbitant marketing costs could well go on for several years. XBox has had only 1 quarter near break-even, all others showing massive losses. The same is almost guaranteed for the Windows 7 phone. And it’s entering so late that it may never, even with all that money being spent, catch the two leaders! Who are the new users that will come along, and what is Microsoft uniquely offering? It’s expensive to buy mind and market share.
Clearly Apple and Android entered the smart phone market at vastly lower cost, and have developed what are already profitable businesses. Microsoft will lose money, possibly for years, and may still fail – largely because it focused on its core products and chose to undertake a “fast follower” strategy in the high growth smart phone business.
We like to believe things that reinforce our behaviors. We like to think that tortoises can outrun hares. But that only happens when hares make foolish decisions. Rarely in business are the early entrants foolish. Most learn – a lot – at low cost. They figure out where the early customers are with unmet needs, and how to fulfill those needs. They learn how to identify ways to grow the business, manage costs and earn a profit. And they learn at a much lower cost than late followers. They capture mind and market share, and work hard to grow the business with new customers keeping them profitable and maintaining share.
We want to think that innovators bear a high risk. But it’s simply not true. Innovators take advantage of market learning to create revenues and profits at lower cost. Companies that keep White Space projects flourishing, entering new markets generating growth, earn higher rates of return longer than any other strategy. Just look at Cisco, Nike, Virgin, J&J and GE (until very recently). The smart money gets into the game early, developing a winning approach — or getting out before the costs get too high!
by Adam Hartung | May 25, 2010 | Current Affairs, Defend & Extend, In the Swamp, Innovation, Leadership, Lock-in, Web/Tech
The leadership of Microsoft's entertainment division are leaving, as reported at TechFlash.com "Bach, Allard leaving Microsoft in Big Shift for Consumer Businesses." Whether by their own choice or by request, the issue is simply that Microsoft has not driven the XBox to a dominant position versus the Sony Playstation or the Ninendo Wii. It is competitive, but not a big winner. The entertainment division has only recently moved beyond break-even, after years of losing billions of dollars. In the high-growth gaming business, Microsoft has simply not performed, despite its vast resources. And mobile devices developed in this division have lost over half their market share in under 2 years to Apple and Google.
Some of the weakness may have been that the leaders were long-term Microsoft veterans, comfortable to Mr. Ballmer and other leaders, rather than executives committed to their markets. Messrs. Bach and Allard were not they type of leaders to challenge the Microsoft Success Formula, instead willing to accept mediocre results rather than violate Microsoft Lock-ins that would have jeopardized their careers. Microsoft was willing to lose money, and not be a big winner, as long as the division leadership didn't challenge Lock-ins or the company focus on desktop computing products.
I'm not optimistic now that the division is reporting directly to CEO Steve Ballmer. He had an enormous role in the company decision to commit vast resources to Defending the old Success Formula by massing hundreds of billions of dollars behind development and rollout of Office 2007, now office 2010, Vista and now System 7. Yet, these projects have done nothing to grow Microsoft; instead only helping the company hold onto old customers. Worse, Mr. Ballmer himself recently informed the world in his CEO Summit (as reported in Computerworld "Microsoft's Ballmer admits 'Window's Vista was just not executed well") that he's not a good leader of product development – costing the company thousands of man-years in wasted development when admittedly mismanaging Vista!
Chart source Business Insider
Now, largely due to the ongoing Defend & Extend management practices of Mr. Ballmer, Microsoft and Apple's valuations are in a dead heat. Growth at Microsoft is poor, while Apple with its multiple new products is growing much faster – causing Apple's value to catch up to what has historically been the world's largest software company.
As I commented on the recent interview for bnet.com (available as a podcast) Microsoft's Defend & Extend management practices are deeply rooted in the industrial economy. But they are insufficient for success in today's rapidly shifting marketplace. I discussed this in more depth for my keynote address at the Western Michigan Innovation & Energy Summit last week, and a second article was published in the local newspaper on Saturday "Customer is Always Right? Columnist says not for Innovative Businesses." Specifically, Microsoft's total commitment to maintaining old operating system and Office customers has created an inability to re-focus resources on high growth markets like gaming and mobile devices.
Although Microsoft has solutions – including tablet technology – it's management is Locked-in to Defending what it always did and not committing to new growth markets. Anyone who thinks Microsoft will be the major player in cloud computing, just because it has demonstrated some new products, must look closely at how poorly the company has developed these other growth markets. Technology and products are not enough when management is Locked in to protecting past markets. Microsoft is far behind Google, and has practically no catch of being a major player with so much resource dedicated to Office 2010 and System 7.
Thus investors as well as customers and employees are not doing so well at Microsoft. In the rapidly shifting technology and gaming markets, this inability to commit to new markets is deadly. For Microsoft, replacing the heads of the entertainment division is most likely analogous to rearranging the deck chairs on ocean liner Titanic. The pending outcome is rapidly becoming inevitable. Time to look for lifeboats!
by Adam Hartung | Apr 15, 2010 | Defend & Extend, In the Swamp, Leadership, Lock-in, Web/Tech
Hi, two readings recently have really surprised me.
Firstly, Dawn Beaupariant from the public relations firm Waggener Edstrom contacted me regarding my Forbes column. I learned this firm is the PR agency for Microsoft. They took exception to my Forbes column ("Microsoft's Dismal Future"). But not because any facts were inaccurate.
Rather, it was their point of view that because OS 7 is now the largest selling OS of all time that demonstrated it was a successful product. Of course, when the television standard was changed in the USA to digital and everyone had to transition set-top boxes those also became big sellers. But it wasn't because everybody wanted the new product. More, it was the impact of a monopolist. We all know Microsoft has had a near monopoly in PC operating systems (even though every year it is losing share to Linux), so the fact that they can force people to use a new one on new machines, or upgrade, is less than an enthusiastic market endorsement of the product. For every "reviewer" who likes OS 7, there are 100 users saying "this gives me bells and whistles I don't need or want, and complicates my life. Can I simply keep my old product, or do my work on my smartphone?"
The Forbes column didn't debate whether Microsoft was likely to remain dominant in PC operating systems – that is a foregone conclusion. The issue is that markets are shifting away from PCs to mobile devices. And Microsoft has lost 2/3 its market share in mobile operating systems. And it is not developing a strong product. If people keep shifting from PCs to Blackberry's, iPhones and Androids – and PC sales start declining – in 10 years Microsoft could dominate PC OS sales (and Office applications) but it may not matter. Too bad the PR firm didn't get that.
Secondly, the PR firm claimed that Microsoft could put forward new products readily, leading to capturing dominant share in new markets. Their one claim that Microsoft had accomplished this was xBox. The PR person conveniently ignored the smartphone market, the Zune-style handheld market, the market for mobile applications (where Apple sold 2billion apps in its first 18 months), the search market (where Microsoft lags Google and would be nowhere without picking up Yahoo!'s declining business) and a host of other markets where Microsoft simply let the horse out of the barn.
To make matters worse, as Microsoft has invested to Defend the PC operating system and office products business, xBox is losing market share (exactly the point I made in the article – using the smartphone example instead)! According to IndustryGamers.com "PS3 'Steadily Increasing' Market Share Across the Globe" (Feb, 2010). Bad pick Dawn!
- The PS3 is dominant in Japan and Korea, and as of June 2008, has begun
to outsell the Xbox 360 in Europe. It is also steadily increasing its
market share in all other regions across the globe, including in the
North American market
- PS3 sales have been surging (44%
over the holidays) and SCEA senior vice president of Marketing and
PlayStation Network, Peter Dille, recently insisted that PS3
will eventually overtake Xbox 360
Most commenters have reflected my viewpoint, saying that they see Microsoft so horribly Locked-in to its old business that it is almost GM-like in its approach to new products and markets. Not a good sign. Those who defend Microsoft simply take the point of view that Microsoft is huge, has high share in PCs, and is very profitable in OS and Office Product sales. Wow, just like people defended GM was in the 1970s comparing to offshore competitors! These defenders completely miss the point that the marketplace is now rapidly shifting to new solutions, and the companies driving that shift with the most product are Apple, Google and Research in Motion (RIM)! Microsoft may look like Goliath, but it would be foolish to ignore the slings of new technology being brought to the battle by these David's with their smartphones, Chrome O/S, mail products, etc.
I was struck this week at the backward thinking offered on the Harvard Business Review blog posting "Is This Innovation Too Disruptive for My Firm." The author justifies companies sticking to their defensive positions, just as Microsoft is doing, simply because most companies fail at moving away from their "core." He seems very content to offer that since most companies can't really move into new markets well, so they might as well not try. Exactly what they are supposed to do as revenues dwindle in their "core" markets he never resolves! I guess he'd rather management simply not try to grow, and go down valiantly with the sinking ship.
Quite concerning is that he takes up the mantle of "core capability." He points out that most of the failures happen when companies move away from their "core" and therefore he recommends that all innovation remain close to the "core." His big argument is that this is lower risk. Well, Xerox remained close to core with laser printers – and how'd that work out for long-term value growth? Apple remained close to its Macintosh core and was almost bankrupt in 2000 before jumping into music and smartphones. Polaraoid stayed close to its core of instant film photography, and Kodak stayed close to its similar core. Now one is erased from the marketplace and the other is a no-growth inconsequential competitor.
Analogies are risky, but here goes. For the HBR author, his arguement isn't a lot different than "Over the last 200 years we've noticed that ships which sail out past the horizon often never return. Therefore, we recommend you never sail beyond the horizon. Clearly, this is risky and returns are uncertain – so don't do it. Ever. Very likely, there is nothing out there you will ever capture of value." Sort of sounds like those who wouldn't back Columbus – good thing he finally convinced Queen Isabella to give him 3 ships.
In 2008 and 2009 we've seen many great companies driven to bad returns. Layoffs abound. Growth has disappeared. Listen to HBR, and behave like Microsoft, and you'll never grow again. In 2010 we need a different approach – a different solution. Companies must realize that focusing on "core" capabilities, customers and markets has rapidly diminishing returns these days. You cannot succeed by focusing on Defending your business – even if it is a near-monopoly like PC operating systems! Why not? Because markets rapidly shift to new solutions that obsolete your products and even when you have high share, and high margins, sales can disappear really fast (like Xerox machine sales or amateur film sales – and probably laptop sales). If you aren't putting a big chunk of resources into GROWING in new marketplaces, by using White Space teams to drive that learning and growth, you will eventually become an historical artifact.
