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Asymco: the existential theory

Much of what I write is structured around theories of strategy and management. The word theory gets a bad reputation among managers because it’s associated with the word “theoretical” which connotes impractical. But a theory is a very practical thing because it’s a statement of causality. Causality means you don’t have to collect experimental evidence on whether when you jump out of a window you fall or not. There is a theory about gravity which you can use to your advantage.

So even though they scorn talk of theory, managers use theory all the time. Whenever a rational manager takes any action, it’s predicated on a theory already in their head. Whenever they put forward a business plan they are employing a theory that if they do these things they will be successful.

The problem is that much of what passes for business debate is the stacking of theories on either side of an argument. Unfortunately most of these theories are not much more than anecdotes. To say that “open always wins” is a theory but it’s usually backed only by one or two examples without a list of counter-examples. That’s not to pick on “open” as there are many more deeply flawed theories (e.g. the stupid manager theory of business failure) which have no evidence whatsoever to support them and all the evidence in the world to disprove them and yet they retain the highest popularity.

So the problem with management “science” is that most managers are not aware of what theories they are employing, treating them more like intuition or some God-given insight. They also don’t know whether or to what extent their theories are good or bad. They also don’t have access to a body of data that supports or challenges their theories. Business data is often locked away even from employees of the company producing such data. It’s buried so effectively that it’s often forgotten and has to be re-generated every time a new management team takes over. Corporations effectively kill self-knowledge and lack any institutional memory.

To illustrate the effect I can offer personal testimony. When working at my last job I spent a great deal of salaried time collecting data and presenting it. Much like what is presented in this unsalaried blog. The difference is that when a “work product” was done (almost always in the form of Powerpoint slideware), it would be released to the audience which requested it. This audience could be as small as one person or as large at a few dozen. But once consumed by the audience, the product had a half-life of about a week. It would be literally forgotten in a month. Now this could be used to one’s advantage as every few months a smart analyst could dust off some old product and re-release it to the amazement of another audience or even to the same audience who had forgotten. Taken to extremes, you can envision a Dilbert-like scenario where the analyst is like Wally who has a perpetual salary for repeating ancient knowledge.

The reason this model for analysis fails is because information is rationed in corporations. The transmission, dissemination, storage and consumption of information is intentionally constrained. This makes the work of an analyst nearly useless. I finally became disillusioned with the process when, at one point in time, having worked on one piece of analysis for two weeks on the premise that it would be presented at a high-level meeting, my time slot got bumped off the agenda due to scheduling issues. My work was never presented to anyone.

It was at that time that I realized that my “work product” was non-essential to the meeting anyway. It was, for the lack of a better word, executive entertainment. So, naturally, realizing that I was really an entertainer I resolved to become better at it. That led me to target not those who request the work, but the largest audience possible because they would give me better feedback. I began to blog internally.

Calling analysis entertainment may sound flippant, but at a more core level, it’s actually an enlightened way to see the process. Steve Jobs is an executive but his skill at entertaining an audience is what makes him an effective communicator with huge consequences to his firm. In olden days CEOs were lauded for their problem solving skills, then for their sales skills, but now they need to be “charismatic” and therefore entertaining.

This blog is an experiment in the opening of business theory and the open exchange of insights. In doing so I take a look at keeping the work relevant by making it approachable, illuminating and, yes, entertaining. So I went from a salaried producer of analysis for a small and forgetful audience to an unsalaried producer of analysis for a large audience in a format that encourages memory. A company was paying a lot of money for something that it ignored. I now receive no income for work that is (hopefully) ravenously consumed. I rather like this more.

When I started this blog I chose a word “asymco” which did not exist and had exactly zero hits on Google search. Now I’m glad to see that “asymco” has 77,300 results on Google search. I am grateful to all who have helped in making this possible and I’m looking forward to further collaboration.

  • Berult

    Kindred in motives, stereoscopic in perspectives; enhanced vision on complexity, probing inquisition into identity.

    A breath of fresh air…

  • JonathanU

    Being an analyst at a private equity firm, I share your pain. I can spend days slaving away over something, only to end up with output being forgotten about by the person that asked me to produce it in the first place.

    On a different tack, I must say your blog is by far the most professional and illuminative of the financial blogs that I follow. Keep up the good work!

    Also, stick some advertising on here. No sense in doing this for free forever!

  • brandon

    asymco google search: About 216,000 results (0.22 seconds)

    so maybe a bit more today eh?
    as a philosopher, and a business -minded guy, I agree wholeheartedly. It amazes me how the most insightful bits of datum are eclipsed by a fancy slide transition. We are supposedly still in the information era – maybe we should consider 2010 the last year in the information era, and start 2011 as the 'era of charm' because really, really what is more important in the greater context of being able to accomplish something great?

    by the way – you are read daily by many of my colleagues, glad you are writing

    • http://www.asymco.com Horace Dediu

      Be sure to use quotes around "asymco" since Google will also try "asimco".

      • Roman

        Hmm, I was getting 81,200 half a minute ago (I think). Tried without quotes. Back with quotes, it's now 86,500

        You're working quickly, Horace! :o)

  • John Crawford

    I would like to make an entertaining and insightful comment, but I have no charming ideas, so ………simply thank you for your entertaining and insightful commentary.

  • Norton

    Love your work! Always an excellent read.

  • Alan

    Reminds me of my favorite alltime Dilbert cartoon. It was a Sunday panel.
    Dilbert is visited by Phil (Prince of Insufficient Light, ruler of Heck). Phil posits to Dilbert two choices, each equally bad:
    1. Dilbert can receive eternal high pay, but his work will be burned in front of him at the end of each day.
    2. Dilbert can receive eternal low pay, but his work will be valued and appreciated by many.
    Dilbert reacts that they are BOTH better than his current job and asks if Wally can get in on it too.

  • RattyUK

    A lot of work in big companies is done for work's sake – it seems a shame that insightful and important work gets ignored because they don't get around to it and getting around to it would save so much money / time going forward if people actually bothered to examine what they asked for. Truth be told many only want research material to back up their preconceptions.

    About 10 years ago I was involved in a Flash based product for a UK telecom to promote their offers. We did a comparison of all the offers around and presented the best one – the telecom announced that they would match a competitors rate going forward so all the results would amount in a sale.

    After coding they called us to say that it wasn't working right as a competitors offer was always coming to the fore. We sat them down and did the math by hand for them. We were right.

    The project lasted about a month before they decided on a different tack.

  • pk de cville

    Interesting. This March, 2008 quote from Steve Jobs has always been my favorite. Perhaps it explains something:

    "When you hire really good people you have to give them a piece of the business and let them run with it. That doesn't mean I don't get to kibitz a lot. But the reason you're hiring them is because you're going to give them the reins. I want [them] making as good or better decisions than I would. So the way to do that is to have them know everything, not just in their part of the business, but in every part of the business.

    "So what we do every Monday is we review the whole business. We look at what we sold the week before. We look at every single product under development, products we're having trouble with, products where the demand is larger than we can make. All the stuff in development, we review. And we do it every single week. I put out an agenda — 80% is the same as it was the last week, and we just walk down it every single week.

    "We don't have a lot of process at Apple, but that's one of the few things we do just to all stay on the same page."

    http://money.cnn.com/galleries/2008/fortune/0803/

    • Roman

      Amazing. Thanks for the reminder.

      • Xavier

        This is the exact same thing Sam Walton used to do every Saturday with every store manager. He made over 1,000 people drive or fly to come to his Saturday morning biz reviews. And if toilet paper is what was or was not selling, it was toilet paper that got discussed.

        «So what we do every Monday is we review the whole business. We look at what we sold the week before. We look at every single product under development, products we’re having trouble with, products where the demand is larger than we can make. All the stuff in development, we review. And we do it every single week. I put out an agenda — 80% is the same as it was the last week, and we just walk down it every single week.»

  • Mark Hernandez

    Horace, you and your site are one of the most remarkable around. Please don't change and please continue doing exactly what you're doing now. Personally, I recommend you keep advertising off your site if you can, and make money another way.

    I follow 60+ tech blogs daily and have them categorized in my RSS reader. The category asymco.com is in is called "A-List" which doesn't have very many people/sites in it and crosses all category lines. But working through "all the rest" of the feeds and their sub-categories always feels like I'm dumpster-diving looking for some good stuff that got caught up in the trash.

    You've garnered great respect now that's starting to grow fast. I reference asymco.com and I see others referencing you when they're trying to make someone else's incomplete work more complete, or show them how it should be done. For example, yesterday a pie chart was being passed around of Apple's handset profit vs. handset share at two snapshots in time. But I saw your more detailed "graph over time" version being passed around in the comments showing people something far more informative in the same number of pixels.

    As we all know, and all too well, the blogosphere has a dark side that touches most bloggers and sites. It starts when authors entitle their articles a certain way to make people think "What?" and click through to it, only to be disappointed or tricked. But the pageviews for the advertisers on that page go up measurably, and the blogger/site gets more money and they start to get addicted to the mini-orgasms and do it more and more. I'm watching GigaOM slide down this slippery slope and it saddens me because there are a few great guys over there.

    And I have a "Bad Pundit List" with six people in it thus far. These are the yehaws who write for big sites who purposely say outrageous things that they obviously know are untrue and just sit back and watch the little meter spin wildly while the suckers and children come and fill the comment sections to the brim with noise. They obviously don't care about the damage it does to their reputation and host site. You are way off on the far opposite end of that spectrum, and all your readers currently and will continue to love and respect you for that.

    You and your site have great respect because of the hard work you put into your articles, your language is clear and free of exaggeration, your articles are as long as they need to be (excessive brevity causes problems) and you're consistent. I work at the intersection of iOS app development, the Art of the Explanation, and Information Interface. You are clearly a master of the Art of the Explanation, and your Information Interface is excellent. I agree with Berult that asymco.com is a breath of fresh air, and to me "all the rest" come off like fingernails on a chalkboard in this regard.

    Thanks for helping us be smarter and better through your blog, and please stay in our "A-Lists." You make me feel like sending you flowers or a gift card. (Yeah, gift cards are better. :-)

    Mark Hernandez
    Information Workshop

  • Jason

    Excellent post Horace. I think one reason why a successful CEO or analyst is so rare is that what you describe above – charisma and insight really require a cerebral ambidexterity that I'm sure is exceptionally hard to come by. You need to utilize both sides of the brain to exercise these qualities. The right brain which would handle the creative approach (the "entertainment") of delivery and the left brain to handle to analytics and evaluate things in pieces.

    You obviously have this ability as I believe Steve Jobs and other mysteriously attuned people probably do as well. While it's not rocket-surgery it is rare and to those who don't grasp it, it is baffling (which is one reason why I believe there are companies that are run by people who will never "get it" and show that in their strategies).

    Excellent blog, excellent information and I hope that you can monetize your blog as it is only fair.

  • http://happy-moments.info Jurgis

    Great post. And great blog. To much of people talent is buried in everything "corporate" (rules, systems, guidelines, tools, strategies,…).

  • http://www.jaredsinclair.com Jared Sinclair

    I'm an ICU nurse with healthcare IT aspirations. I read asymco every day for insight. I sometimes think I'm the only person in the world of healthcare IT that has ever heard of the iPhone, or even a touchscreen. There is a revolution underway, and asymco is documenting it. Thanks.

  • Tom

    Thank you, Horace, for assisting us in thinking more clearly and fearlessly. When one doesn't understand what he's seeing, it can be a bit scary. For me, it was the onslaught of all those android devices from all those manufacturers. To stumble into your spotlight in a dark cavern just in time to find "The biggest losers" changed my entire perspective. Personal attacks from other commentors in other blogs becomes clear: they don't understand what they see and so they're afraid.
    Thanks for the greatest writing. For being ad free. For the accessible archives up top. For it all. U r da BEST!

  • skips

    I have only one problem with your description. You are misusing the word
    "theory." You have confused "hypothesis" with "theory" and they are different.

    The "theories" that you cite such as "open always wins" are really hypotheses. Yes, I realize that I am "splitting hairs" with this distinction, however, that is precisely what you are doing with this blog. Theories are concepts that match observed conditions and can be used to predict future outcomes. Hypotheses are concepts that may match someone's perceptions, but have not been demonstrated to match reality sufficiently to enable predicting future outcomes. In essence a hypothesis matches observed observations without any evidence of matching the underlying causality. Theories, on the other hand, have been demonstrated to relate to the underlying causality and so can be used to predict the outcomes of events that have not yet occurred.

    That is not to say that theories are absolute. For instance there is a theory that describes macroscopic motions (Newtonian Mechanics), but fails when extended to either sufficiently small or sufficiently energetic domains (where either quantum or relativistic mechanics apply better).

    None the less, you do a great job of looking at facts and attempting to relate them to hypotheses. This activity is the first step towards generating theories and should be commended. Please keep up the good work and (I hope) accept these comments as constructive criticism.

    • http://www.asymco.com Horace Dediu

      You are absolutely right about the distinction between theory and hypothesis. Whereas there are many hypotheses there are few theories. The theories I try to put forward are very lightly described here (see the "Parable of the transistor" for a reason why) but they are backed by rigorous research (see works of Clayton Christensen).

      In this blog I hope to expand the debate without becoming too esoteric.

  • Simon Elliott

    Horace,

    Fully support this outflowing of appreciation for your writing and comments. Entertaining, illuminating and thought-provoking. I have also never come across a site where the comments are so impressive and so lacking in the usual dross and flame. This is itself a further testament to the quality of what you do. Thank you very much indeed, and please keep up the amazing work you do.

  • Rob Scott

    Great blog, great work keep it up. Most of us can relate to your frustrations.

    Sell you skill to small and medium sized companies (something similar to Brightstar), they will appreciate it and you can build an empire at the same time. That is what I am hoping for, for myself.

  • famousringo

    Wow, I can't decide which I like better, the editorial posts or the analytical posts.

    Either way, I find it all quite entertaining.

  • http://matt.simerson.net/ Matt Simerson

    As an aspiring analyst, you are an inspiration. Keep up the good work.

  • Jon T

    Well, hats off to you, I am one that 'ravenously' consumes all you write at the moment, which as another wrote above, is a breath of fresh air.

    I did twenty years in big commercial insurance and I avidly promoted my economists who could bring data and information to everyone in the organisation in a digestible way. As a result, one guy became a bit of a superstar in the organisation. But yes, it didn't last, others wanted 'information containment'. Don't we loathe the types?

    Be interesting to know more about you Horace, with such an interesting name I'm sure more of us would like to know where you're from etc.

  • Jon T

    Well, you said 77,300 hits on Google.

    Now it is 117,000…that's pretty fast progress!

  • Kal

    My insight into the business of mobile devices is greatly enhanced by reading your blog. A friend of mine used to say only 20% of professionals know how to do their job, and I think he erred on the high side. I would say 10% know how to do their job and only 2% do it well. You certainly belong in the 2%.

    Keep those insights coming.

  • Rob Scott

    Google: 77,300 results
    Bing: 26,500 results
    Yahoo: 16,100 results

  • http://aaplmodel.blogspot.com deagol

    Love this post.

    "The problem is that much of what passes for business debate is the stacking of theories on either side of an argument. Unfortunately most of these theories are not much more than anecdotes."

    Well said. Wish I could express ideas as clearly as you do. Instead, I resign myself to documenting and sharing my results, without worrying about causality. More and more I find myself disillusioned by "science" due to its reliance on language which, being subjective, is often used to turn it into pseudo-science, yet is passed as fact to the consuming masses.

    But effectively communicating the true theories behind a business or financial model requires a lot of work and language skills, both from the analyst and from the consumer of the theory. These days there are not many readers willing to take the time and effort to understand the theory, or may not be able to. And, I'm lazy and lack writing skills (it took me 15 minutes to write this paragraph, and as you can see, it sucks). So I'm happy with just communicating the actionable results of the analysis.

    "So the problem with management “science” is that most managers are not aware of what theories they are employing, treating them more like intuition or some God-given insight."

    This hits home. I do see it as "intuition" although I believe it's a learned skill not some god-given insight. This is perhaps a cop-out as it's much easier for me not to justify my theories, and rely on smart guys like you to figure out the whys and hows, and most importantly, figure out the best way to communicate them.

    Thanks.

  • min

    You do good work.

  • bfl

    254 hits on my Mac :)

    $ mdfind asymco | wc -l
    254

    Awesome post, awesome website. Thanks Horace!

  • ericgen

    Yes, a most awesome website!!! I look forward to your writings, and their expansion of my perspectives and viewpoints, every day.

    Please keep on keeping on!

    Many thanks!!!

  • Adrian Rice

    Thank you sincerely for the insight. Asymco has escalated so rapidly up my attention charts, that you've ascended Sir Gurber as the first site I read each day. Astounding work.

  • Adrian Rice

    Thank you sincerely for the insight. Asymco has escalated so rapidly up my attention charts, that you've ascended Sir Gruber as the first site I read each day. Astounding work.

  • Reggie

    Horace, I too wish to thank you for the excellent work you put into asymco. I also wanted to touch on something from a post by Jared Sinclair (above), which is that your efforts here are reaching beyond those working in market analysis. I am a graduate student in landscape ecology, and you have been able to capture my interest in a topic I really know nothing about.

    I feel like I am getting a wonderful education here, often surpassing what one would get in university. Also, the most thoughtful commenters on any site I follow!

  • Stuart Lynne

    As one of the entertained I say thank you, thank you, thank you!

    Your site went to the top of my Google Reader tech blog list within days for stumbling across it.

    Keep it up.

    • http://web-tart.co.uk/ Tom Coady

      Ditto. Thanks Horace.

  • Daniel

    Like so many have already said, thank you for your insight and intelligent analysis.

  • IBob

    For years I worked as a product development engineer. Not everything panned out. Some products never got to market. But I didn't consider my efforts to be failures necessarily, nor failures of management. I understand that Steve Jobs nixes a good number of projects that are well along toward being released. I doubt that the people associated with those projects felt unappreciated or neglected for their efforts.

    But on another note I was more than once assigned to projects doomed to failure. Sometimes that can't be avoided. I should say that I was no less likely to commit errors than management.

    It's hard to see clearly. You are doing a better job than most. Thanks for your considerable efforts.

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  • Hantu13

    Your description of corporate entertainment made me chuckle and rings so true.

    Keep up the great work, this is one of may favorite blogs.

    In the interests of promoting other thinkers, are there any other bloggers or sites you particularly like to read?

    • http://www.asymco.com Horace Dediu

      I read mostly news sites and primary sources. Appleinsider is a good resource. Macdailynews for aggregated info. Twitter is increasingly my source of new insights. I read daringfireball.net, and participate in The Mac Observer/Apple Finance Board here:
      http://www.macobserver.com/tmo/forums/viewforum/7

      I actively avoid reading gizmodo and engadget.

  • Walt French

    Another reason that so many analysts' information is near-useless is that a short- or medium-term stock speculator only needs info that's about 51% accurate. Most broker recommendations, and most mutual funds seem to rely on these rather low-accuracy assessments. Have a hunch and bet a bunch, then move on to the hot rumor from the analyst in the financial services sector.

    And even if an analysis is bogus, the trade still works if the rest of the street buys it and you can get out ahead of the collapse.

    Not a field that's especially amenable to making a reputation for one's deeper, more long-term analyses. Better to shoot first and ask questions … uhh, “later.”

  • Niilo

    The biggest compliment I can give you, is that this is the first thing I read in the morning– even on a saturday.

    Keep up the good work– hope you have found a business model that will allow you to do so!

  • Alex Khan

    I’m a non-techie consumer who follows the tech industry as a small AAPL and ORCL shareholder. How Apple or Oracle does with their stock price won’t really make or break me financially. I’m more of an enthusiastic Apple products user and an avid student of strategy and, particularly, military history. My moniker derives from two heroes of mine in this area: Alexander the Great and Genghis Khan. I’m probably a little more tech savvy than an average consumer or an office drone but am in no way qualified to argue or debate about the finer technical details of the guts of an operating system or computers in general.

    This site has been a real revelation to me in better understanding the converging tech and consumer electronics industry. It’s a fascinating industry to follow from a strategic perspective compared to various other industries, including the one I work in – the musical instruments industry which moves at a glacial pace compared to the tech-CE business. I also follow the auto industry a bit but it’s definitely the tech industry that’s the most fun to follow due to the speed of its change and innovation.

    I’m thoroughly enjoying this site and your blogs (as well as the contributions of various posters here) because of the emphasis on strategies employed by the players in this industry. Having followed the tech industry since the late-80’s (as well as various other industries), I’m quite taken aback by what Apple has achieved in the past decade. When I compare what Apple is doing right now, the only other precedent I can compare to from a strategic and tactical perspective is what Alexander the Great achieved during his conquest of the Persian Empire in 3rd century BCE. Make no mistake: Apple is making history on a grand scale.

    Your broad yet deep analysis of the tech-CE industry provides an insight which I haven’t been able to see anywhere else. In the similar way I study the military campaigns of Alexander, Caesar, Genghis Khan, Gustav Adolphus, and Napoleon, etc., I study Apple, Oracle, Microsoft, IBM, Google, HP, etc. When I study military history, I want to understand the terrains, the geopolitical situations, the cultural environments, and the personalities involved in waging the wars. The same goes for studying this industry.

    I’m no geek and I never will be, but as Lou Gerstner Jr. proved during his remarkable turnaround of IBM in the 90’s, one doesn’t need to be from a technical background to understand the dynamics of the tech industry. What I’ve observed and learned from the great strategic leaders of history (military, politics, and business alike) is that they always knew how to frame and simplify complex problems and solve them with simple and elegant solutions.

    Some of the technical details discussed and debated about on this site and other tech sites may fly over my head, but I try to understand things from the customer’s perspective. As an average Joe consumer myself when considering a technology-oriented purchase – whether it’s a family computer for the kids or a music player for my wife, etc. – I’m primarily thinking about what can I get done with it and do so in the most painless and time-saving manner possible.

    Specs and features very rarely come into the factor anymore. My wife certainly couldn’t care less. We just got the new iMac and she is absolutely amazed by how easy it is to use to just get things she wants done. It literally took minutes to set up, connect to the Internet wirelessly and just use like the old computers that we’ve had around for years. The only thing I had to plug in was the power cord to the electrical outlet.

    That made me think: “Hmmm… It’s no wonder Apple is winning.” All the geeks on tech sites like this can argue until they’re blue in the face about specs and features and spew hatred towards Apple, but it really has no bearing on what an average Joe consumer like me needs. Heck, I don’t even have the iPhone. I don’t need it, so why should I get one? A dumb flip phone is enough for me. I use iMacs at work and at home and a MacBook Pro on the road. Someday I guess I’ll get one but I’d rather get the next iPad for vacations and weekend getaways than an iPhone.

    I really believe it’s Jobs’ ability to understand the needs of the average Joe consumer that sets him apart from the competition. He knows how to put himself in the position of the average Joe. It’s obvious that he just couldn’t care less about the geeks. Perhaps that’s why the Windows/Android geeks hate him so much. LOL Great leaders have that ability to appeal to the masses – like Alexander did with his army and the peoples he conquered. I see a very similar parallel there.

    Anyway, I really enjoy this site and it’s interesting to read the comments of thoughtful “geeks” such as yourself and others here as well. It’s like reading the comments of military experts or of professional musicians in their respective fields. People outside of those fields really won’t get the total gist of things. As a musician myself in the industry I work in, I know how those things work. But even in the musical instrument industry I work in, the truth is that most customers aren’t professional musicians, just average Joe consumers who are hobbyists or dreamers.

    Keep up the great work!

  • eagle2232

    Horace, you absolutely rock. Thanks much for your thoughtful, balanced perspectives. Very high quality "work product" IMHO. And, I might add…most certainly entertaining. Keep on…keep on!