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The highway to hell

A glance at Nokia and RIM’s market values today shows that they are both valued below book. With respect to RIM,

The company’s share price has collapsed in the past year, and it is now only valued at about $5.4 billion, down from $84 billion at its peak in 2008. Excluding its cash and the estimated value of its patents, RIM’s device business and its 78 million subscribers around the world are in aggregate worth less than $1 billion to investors.

Analysis: RIM’s new woes seen speeding loss of BlackBerry users – Yahoo! Finance

With respect to Nokia,

MKM: We are downgrading Nokia to Sell from Neutral following our U.S. retail Lumia model checks. We assume no value for the handset business and no value for the roughly four billion euros [about $5 billion] in net cash.

Nokia Suffers From Hang-Ups – Barrons.com

Three years ago the situation was dramatically different. RIM’s share price was six times higher and Nokia’s about four times higher. Here’s what the market looked like in Q1 2010:

This summary view shows individual competitors in the phone market as well as their combined total volumes. The profitability/volumes/pricing can be visualized as well as margins and revenues.

The same visual summary is presented for the first quarters of 2011 and 2012 below:

The change may be subtle to the untrained eye, but it can be summarized as contraction for most vendors and expansion for Apple and Samsung. RIM and Nokia not only contracted in terms of revenues and volumes but also, crucially, lose money.

I’ve written about this before (many times.) But it’s important to repeat again that this is a very short time span. Only three years separate the top chart from the bottom right. The “shape” of the market participants has not changed much but a tipping point has been crossed. This is the point where some participants are disrupted enough that they cannot recover.

Did it happen in 2010, 2011 or 2012? We’re only looking at data which results from hundreds of decisions and thousands of actions. It’s improbable that there was a single moment when the shift occurred or a single decision that caused it. But it’s equally improbable that the disrupted could have countered any of the actions that got them to this point.

The cause (and remedy) for disruption is never found in a single act. It’s a process and a way of operating and thinking. Is management to blame? That’s always the answer. But how did management go from being smart to foolish so quickly and why did all managers in a firm, even an industry, conspire to become foolish at the same time?

If you study the decisions on a day-to-day basis, management consistently applies all the lessons they learned that led to success in the past. But these lessons lead to decisions that end up with exactly the worst result possible.

The crux of this dilemma is that doing the “right thing” leads to the wrong result. In a comment I questioned the possibility of management in a public company solving the dilemma.

Some have argued that public companies with professional managers entrusted with fiduciary responsibility are inherently incapable of solving the innovator’s dilemma and are thus doomed to be disrupted. I’m starting to believe the argument. Whenever you as a manager try to work out the solution to the dilemma, you encounter a value destroying obstacle that cannot be surmounted while maintaining your position in the company. [As you attempt to solve it, you lose your position] Your successor won’t make the same mistake and [thus] the whole enterprise collapses.

There are counter-examples however. The reason Apple should be studied is that it gives hope that they have cracked this problem.

  • jdsweet

    So that’s what 73/20/1 profit looks like – thanks as always for the great visualizations!

  • jdsweet

    AAPL’s profit looks to be roughly equal to Samsung’s COGS.

    And RIM’s profit reversal – though I’ve read about it several times (from you!) – over the last year is stunning in those charts!

  • pxldot

    Do you see any way that the current system of professional managers could be adjusted in order to allow for them to make the decisions necessary to prevent stagnation/ disruption?

    • deemery

      Doesn’t this start with changing the focus for CEO evaluation from short-term results to long-term results? That’s a 3-way challenge: (1) within each company and its board; (2) within the investment community (look at how they value APPL) and maybe most importantly (3) within business schools, changing the focus from ‘finance’ to ‘management and strategy’.

      • pxldot

        I just don’t know that this is the answer. It’s certainly the traditional response to the business school question of how we can promote the creation of real, long-term value. But I feel like we are dealing with an even more challenging aspect of human nature here. You have to find some way of encouraging management to constantly seek a way to disrupt itself; effectively, you need them to choose to continuously change their job, or even to make it obsolete.
        I’m not sure that there is an answer to this; it’s very much a “lizard brain” problem where each individual is afraid to act in a way that would change the status quo, which innevitably leads to the inability to react when a competitor without that same baggage comes along. Maybe some sort of rotating management structure? It takes a special kind of person to be willing to completely redefine their vectors of competition, and it may simply be impossible to have a sufficient number of such individuals once a company is large enough that it becomes ripe for disruption.

      • deemery

        Fair enough… But I guess I’m concentrating on removing the roadblocks that I suspect prevent the more “enlightened” (and harder) concerns. It’s my suspicion that few companies could let a Steve Jobs equivalent run it this way.

      • http://twitter.com/mark_a_howard Mark Howard

        If we think of organizations like icebergs, most people ask why cant the tip of one just move over to where the other one is. It cannot as it is physically blocked by the hidden mass below.

      • JohnDoey

        You promote the creation of real, long-term value by focusing solely on creating customer value, which creates long-term customers.

        When my current MacBook Pro is 3 years old and AppleCare expires, I’ll go to the Apple Store and buy another MacBook Pro without even looking at the specs because for over 10 years now, they keep making me a better notebook every time that pays for itself even faster every time. I am like money in the bank for Apple. I make Apple very valuable to shareholders because a shareholder can expect Apple to have a market to serve over the course of this decade, made up of many, many people like me who are so totally and completely spoiled by Apple that we can’t even switch away if we wanted to. And we don’t want to.

      • pxldot

        This still just doesn’t address the issue of disruption, in fact, I would say that it increases the likelihood of just such a thing occurring. I agree that you get great value, as a customer, by sticking to a company whose primary focus is you. But, if they continue to focus solely on your needs and improving their existing products, they will likely lose sight of where things should be heading and instead just give you more of what you wanted in the past. If Apple had focused only on giving their Mac customers more of what they wanted, they wouldn’t have ever dedicated hardware and software resources to the iPhone or iPad.

        You need to focus on your customers, but at some point it is imperative to skate to where the puck is going to be, and not where it is. Ask Microsoft, who must have felt they were focusing pretty hard on their customer (enterprise) in the 90’s, only to find the rug pulled out from under them. It takes a brave manager to understand when the time has arrived to take some temporary pain (from bosses, subordinates, customers, shareholders) in order to handle the next wave coming through.

      • http://twitter.com/WalterMilliken Walter Milliken

        I think one of the problems here is that CEOs seem to be disposable — when their business doesn’t do well, they tend to get the ax, whether it’s due to their actions or not (e.g., “it’s the economy, stupid”). Hence all the golden parachutes and similar nonsense — the CEO knows he’s the whipping boy, and wants to be compensated for the fact he’s likely to get booted for reasons outside his control.

        Unless this changes, I can’t see CEOs seeing any advantage to embracing a long-term view of the world; they simply aren’t likely to be around anyway. Long term rewards would have little or no value to them.

        Obviously, there are long-term CEOs in some industries, but I think most of them are very mature, stable companies with little change; exactly the opposite of what we’re talking about being needed here.

      • JohnDoey

        RIM had 2 co-founding CEO’s.

      • safi kariv

        Do you see it also as different sociatal and cultural gap (Canada and Europe Vs. US)? Perhaps some understanding in Sociology as KNOWLEDGE transfers from State and centralized entities (few TV corporations) into the Moms and Pops internet?

      • JohnDoey

        The cultural difference was computers versus telecommunications.

        iPhone is a computer, first and foremost. Telecommunications is just one category of apps.

  • http://twitter.com/BruceHoult Bruce Hoult

    I don’t think RIM and Nokia could have done anything to stop it. The iPhone wasn’t developed in a year or two, it was the end result of twenty years of an essentially private branch of operating system and programming language and API development under Jobs at first NeXT and then Apple. There’s no way a crash program at RIM or Nokia could have matched that.

    The pre-existing ecosystem created by the iPod and the iTunes store and and used by tens of millions of customers also was something you can’t easily do from a standing start.

    By the time the direction became visible, it was already unstoppable.

    • deemery

      Where RIMM totally blew it was with their tablet. A tablet that provided -secure email- and a walled-off app store would have been very attractive for business/industrial use. I -still can’t believe- that RIM didn’t think it was important to have self-hosted email on their tablets!!

      • http://twitter.com/mark_a_howard Mark Howard

        It was important. But RIM’s infrastructure was designed circa 1997, and had one device = one user design constraint. That was hardcoded deep. When people started amassing a phone and a tablet tied to the same back end Exchange mailbox, RIM’s systems couldnt handle it. Even now with BB10 they gave up their proprietary method and rely on ActiveSync (like an animal!) for Exchange access which allows multiple devices per user.

      • TheEternalEmperor

        “like an animal”

        Very funny!

    • r.d

      What is funny is that all those people pontificating that
      Apple must switch to Java from Obj-C in order to win.
      Blackberry is Java which is the original clone of NeXT API and Obj-C
      and supposedly superior language and tools.

      • TheEternalEmperor

        Java is by any measure a success. But a successful development environment cannot save an inferior phone.

    • JohnDoey

      It is even worse than that, because in 2007, Microsoft also had 20 years of its own operating system — including 11 years on ARM mobiles — and Microsoft was also caught totally flat-footed by iPhone.

      My theory is that it doesn’t have anything to do with technology. Even now, Apple is still the only company that is trying to make the best phone as defined solely by the user of the phone (not carriers, advertisers, handset makers, or others.) That is why it is now the only phone that users want. It’s like kindergarten business strategy.

      • Mark

        Yes, but Microsoft’s 20 years were made with making deals with CIOs and CEOs and not with the user’s plunking down their money for most of their success. So in a way, they were like Nokia and RIM in that their contracts ran out when individuals were given a choice of product. It’s just that the process is a lot slower for them. I would say Apple has a democratized business strategy, not kindergarten. The process has been going on for centuries now.

    • Mark

      Exactly right.

  • http://twitter.com/nuttmedia nuttmedia

    Sounds very much like a concept of corporate leadership I think of as practiced by a benevolent dictator. Someone with near autonomous decision-making power, and the group interest entirely separate and above that of his/herself. What it provides is speed of decision-making, clarity of message since it comes from a single point of focus, and as you point out, minimization of the principal/agency dilemma.
    The usual friction points of large corporate bureaucracy are diminished.

    With Steve Jobs, and perhaps still with Tim Cook, it is easy to see how that applies. But just as easily, it also illustrates the tremendous difficulty and inherent flaw as it absolutely requires an individual who is capable of divorcing their self from the usual frailties of the human condition in addition to being savvy enough to make the right decisions. Moreover, you need to have developed the right corporate culture to accept and thrive under such a structure. Again, very Apple-esque.

    This viewpoint was actually honed outside of an Apple lens, through numerous conversations with Chinese national analysts and investors from a prior life. Was fascinating how attuned they were to this framework given their familiarity with it from a political perspective.

  • morgan

    I would propose the two single decisions that have killed Nokia and RIM.

    1. Nokia’s hiring of Elop and his decision to outright dump Symbian for windows instead of choosing a more measured path of transition.

    2. Back in 2009 Lazaridus stated that RIM would not get involved in the North American ‘smartphone arms race’ and would thereby end up essentially skipping a generation of technological development in RIM’s portfolio.

    I am not saying that this disproves the innovator’s dilemma, i am saying that it shows two market leaders taking opposite sides of the innovation decision and both causing catastrophic failure. However, despite all the decisions that were made to support the strategies passed down from the top, it was the core mission put forth by these singular decisions that lead to the downward spiral.

    • Sander van der Wal

      Nokia had already “dumped” Symbian in 2005, way before iPhone was announced, to be gradually replaced by Maemo: http://en.wikipedia.org/wiki/Maemo. This was supposed to be a slow dump, ie a transition that would take a long time. Why? Because Symbian OS development was going at an incredibly slow pace, among ither issues.

      After iPhone Nokia bougth Qt in 2008 to unify Symbian and Maemo development, by putting Qt on Symbian and Maemo as the UI. Why? To leverage Symbian’s massive userbase against the iPhone and Android threats to Maemo.

      When Elop found out that Maemo (now called MeeGo) did not work out (as described in that BusinessWeek article, there would be no reliable OS in two to three years) he switched to Windows Phone.

      A good example of the decision chain that led to Nokia’s current predicament. There is not a single point of failure, but certainly some decisions were smarter than others.

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

        Symbian was not dumped in 2005. There were alternative options being evaluated but there was no change in strategy in 2005. Maemo was near death on multiple occasions and it took the efforts of an executive champion (Vanjoki) to keep it from cancellation.

    • simon

      Elop’s responsibility for the current failure of Nokia is a bit overstated. The Nokia N8 was a failure after the initial launch even before Elop’s comment took hold. Symbian was just not competitive enough against iOS and Android. Nokia would’ve suffered just as much even if they stuck with Symbian-Maemo/MeeGo. The failure was set in the stone a while ago when they failed to move Symbian fast enough.

  • Gprovida

    The issue is not Nokia and RIM fail, but why did SAMSUNG thrive, fast follower/copycat? Or SAMSUNG adopting Android which can argued was the SW version go copycat?

    • http://twitter.com/WalterMilliken Walter Milliken

      I’m not sure, but I think we may be looking at who the company views as its customer. For Nokia, it was pretty clearly the carriers; for RIM it was enterprises; and for Apple it was consumers. I’m not sure who Samsung sees as its customers, but looking at some of their shotgun product strategies, it may be “whoever we can get to buy something, and then we double down on that”. I.e. Samsung is trying to serve *all* those customers, and then quickly chasing any profits they see.

      Apple’s focus on the end-user as customer seems to have driven their success, I’m not sure whether Samsung is getting that same traction with their primary successful products (Galaxy), or whether they’re being pushed primarily by carriers as the best iPhone alternative when the carrier doesn’t have it (or want to sell it).

      Looking a little wider, I see Microsoft as being in the same boat as RIM — they view their customers as OEMs and enterprises, not end users. Whether Windows 8 turns that around, I’m not going to guess at this point. They at least seem to have done some decent user design for Metro, which is a nice change.

      What isn’t clear to me is how Google fares in all this, since their customers are the advertisers, not end-users (who are Google’s product). This puts them into the same category as most of the media companies, which seem to be prone to severe disruption in the Internet age.

    • http://twitter.com/ChristianPeel Christian Peel

      In a recent post (http://www.asymco.com/2012/05/19/an-interview-with-kenney-ho-of-the-chosun-daily-of-korea/ ) Horace thought that Samsung brought out a ‘distribution innovation’ by targeting every possible market niche with a phone. Similar to what Walter describes.

      So far it has looked like Android (and Samsung) has been taking market share from Rim and Windows Mobile; to some degree Apple and Android have not been directly competing against each other for the same customers. In the next year they definitely will be competing directly for the same customers; it will be interesting to see who will win.

    • JohnDoey

      Samsung did well by making counterfeit iPhones, which they sell in more than double the locations where iPhones are available.

  • http://twitter.com/rcastano rcastano

    “Only three years separate the top chart from the bottom right.”
    In fact it is only two years and that makes it more compelling.

  • KirkBurgess

    Apples biggest phone handset market disruption was actually introduced in 2008 with the app store creation of a mobile OS ecosystem tied to its true mobile computing hardware.

    Nokia & Rim did not at that point have the hardware to compete, even though they had an ecosystem.

    The choice of android as Verizon’s answer to AT&Ts iPhone exclusivity, was a decision that would have meant little to Nokias & Rims worldwide sales per-2008, but was a huge blow in the new world which would end up favoring Mobile OS ecosystems over brand & hardware design.

    Verizon’s introduction of Droid caused a tipping point that kick started a robust app ecosystem that quickly led to carrier adoption worldwide as the preferred iPhone alternative.

  • Mike Wren

    “The cause (and remedy) for disruption is never found in a single act. It’s a process and a way of operating and thinking. Is management to blame?”

    Compare the rambling, incoherent original RIM co-CEOs to the concise, profound Steve Jobs. If you can’t describe the job to be done in a way that the customers and employees can understand then how can you compete with the iPhone. RIM still has a strong niche in corporations that need the best security. And many still prefer them for email and BBM messaging. I can state the job to be done as the “best secure communicator” but the co-CEOs could only spout techno-gibberish about multicore CPUs and multitasking. The Playbook required tethering to a Blackberry to use email and BBM and the TV commercials emphasized Flash videos.

    They rested on their laurels and bought QNX for their new operating system too late. They should have bought it soon after the iPhone came out. So sometimes a single decision can doom a company if its bad enough. But not being able to speak and think clearly is the root cause and for that management was to blame. A fish rots from the head(s).

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

      The best security for governments and companies is to route all their emails through a few servers in Canada? I’m reminded of the time when the French government banned BlackBerries for official email on account of dangerous insecurity. Broadly speaking, any argument based on “security” should _always_ be suspected.

  • http://michaelkdawson.com/ TrendRida

    Show me a company that is willing to cannibalize their cash cow and I will show you a company that is capable of solving the innovators dilemma. To my knowledge there have been only two tech companies that have done that – IBM & Apple. Continue to say IBM is a far more interesting case study since they have pivoted multiple times with different management teams…

    • http://michaelkdawson.com/ TrendRida

      Here is a recent blog that I wrote on the same subject starring Facebook instead of Rim. http://www.michaelkdawson.com/2012/05/28/has-facebook-topped/

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

      Has IBM really sacrificed their cash cows or have they simply moved on when the cow was dry?

      • http://michaelkdawson.com/ TrendRida

        It’s sorta like when you are running from a lion – you only have to be faster than the other guy. IBM sold their PC division in 2004 at the time they were the number 3 seller of PCs worldwide. HP tried to sell theirs 7 years later. Dell still hasn’t figured out which way is up…

  • Walt French

    “The reason Apple should be studied is that it gives hope that they have cracked [the innovator's dilemma].”

    There are numerous reports that the original expert on the innovator’s dilemma, Dr. Christensen, himself does not understand how Apple managed to disrupt not with low-quality, low-price rough toys, but with expensive, polished gems. Seems from your recent interview like he’s still doubtful that the successes weren’t flukes, somehow exceptions to the rule. And I think he’s right (even though I think there are more exceptions coming).

    Apple’s skill is in entering nascent markets (the music player) or creating them anew (the iPod/internet communicator/phone; the all-day, lightweight tablet). Heck, The Innovator’s Dilemma treats successive generations of disk drives as “disruptive innovations” but despite all the technological effort and new applications made possible, they were relatively easily extrapolated from a customer’s viewpoint. That type of change is entirely subsumed within just the classic iPod brand, as it went from the original 5GB to 160GB disk, gaining reliability, battery life and compactness along the way.

    Actual disruption is more like the iPod Touch: it replaced a standalone game player that can do a handful of games, with one that can play hundreds, plus it texts friends and plays music. It disrupts not so much the gameboy as a bastard collection of gizmos. It might cost more than any one, but it does the job of several.

    That’s Apple’s formula: (1) it understands consumers’ love/hate relationship with technology, and (2) it has a formidable arsenal of re-purposable building-block resources: OSX, iTunes, deep engineering & design talent, etc. It’s able to create or refine a product category that was at best vaporous, pull together its pieces (maybe e.g., creating a whole new RF lab for phones along the way), and create a specific, iconic product because it does so very well the things that it is built for.

    I say “formula” instead of “secret” because Cook, Ive and about everybody else at the company tells us that’s exactly what they do. And while not every product is an instant success (MacBook Air; Siri), their successes are exactly attributable to the formula, and often enough, the less-than-greats achieve that polish in an iteration or two.

    Most businesses don’t have the incredible flexibility of resources that mostly software or design/engineering can provide: the firm I work for has fine products but they’re all purpose-built and we’re also regulated enough that brand-new concepts are (rightly!) looked at suspiciously. But that’s why Asymco is valuable to me: to sketch out, as you do, at least one firm’s solution to the dilemma of ever-changing business.

    • JohnDoey

      The hit products are not flukes. Apple created hundreds of products over the past year — they only shipped 10. They put the 90 that were not hits into the trash and none of us know anything about them. In addition to that, they did many, many prototypes of each shipping product and threw all of those out, too.

      They built an iPad in 2003 that would not have been a hit and they did not ship it.

      Bruce Springsteen’s “Born in the USA” album contains the best 10 songs out of 200 he recorded for the album. It’s a much better 10 songs than if he had just used the first 10 songs he wrote.
      Jobs learned everything he knew about business from music. If you are a musician, everything Jobs did looked 100% sensible in every single way and you wondered why nobody else in business was doing that.

    • Chandra

      In a theoretical sense, Disruption is something not to be outwitted by any company, including Apple. But if it does, even as an exception, that is a hole in the theory. In a couple of videos I watched, Mr. Christensen does about these theories as analogous to scientific theories. That is, if you find an exception, that is a great opportunity to modify the theory to accommodate the new finding. ( like the Precession of the perihelion of Mercury which Newton’s laws could not explain )

      Management theories may not raise to the level of preciseness of scientific theories but major exceptions do call for a reflection. Two things that may not be fully accounted for in disruption theory ( just speculating here ) are: 1) People’s love/hate relationship with technology and Apple moving it more towards love by making it intuitive and easy to use and 2) which Walt alludes to, namely, making it do many things that are important for people and doing it in a compact physical footprint that is aesthetically pleasing. Sufficient number of consumers are willing to pay extra if these two things are done right and it is probably resistant to disruption using lower cost products for some time. This ‘democratization of technology’ has been going on over a long period of time. Apple managed to that in the consumer space by making that possible in an aesthetically pleasing way, thus catapulting that trend to a next level.

      The one analogy I can think of is the democratization of music over a few centuries and the role technology played in accomplishing that and the companies that prospered in making that happen.

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

      I think it will be shown that disruption has more dimensions beyond the low-end, new market and professional (skill-based). I suspect disruptions can be rooted in value network evolutions, centralization/decentralization and ecosystems-based business models. The original framework can be stretched to account for new dimensions of business model innovations. It’s the anomalies like Apple that help us see these new dimensions.

      • Walt French

        I think your price/profit/volume charts could do a nice job of showing the value evolutions.

        Imagine comparing the original iPhone to the Nokia N95 (introduced about the same time). The Nokia started out at over $900 (per esato.com‘s price history), had a screen half as big with half as many pixels that weren’t touch-sensitve, and had less working RAM and a much less capable browser without the pinch/zoom manipulation.

        Next to the $600 iPhone that’s half profit, the iPhone’s extra value is the near-$400 on the top plus all the extra functionality that it had. This is indeed a huge shift in value network: customers suddenly had a new gizmo that was about half the cost for like functionality. New jobs to be done, plus people who wanted to do them, burgeoned. And the ecosystem largely built itself. (Could Jobs have really been so anti-app, or was he just holding back until the dev kit was ready?)

        I wonder whether the pinch/zoom TouchUI notion was enough once added to the musician’s thought process that JohnDoey describes above: taking the one germ to its most audacious conclusion (what??? NO keyboard???), Apple blew by the hapless Palm (whose modern OS efforts had been plagued by technical problems); by Nokia, who were the bastions of Conventional Wisdom that didn’t appreciate the Silicon Valley dynamic; by Microsoft, who was captivated by its methodical stodginess; and by RIM, which had ALWAYS aimed for a very different market.

        The world is full of incremental innovations but Apple went macro-disruptive by daring to develop a radical idea so much farther than the incumbents would have been willing, before they tried to monetize their ideas.

        I think the network effects only kicked in once Microsoft decided not to create a Manhattan Project to counter it; they HAD the resources and perhaps the talent; Google’s start-from-scratch effort show that with a powerful license from Sun or Microsoft, other firms could have done it, too, had they been willing to make a billion-dollar gamble. Jobs’s belief that Apple had a 5-year head start allowed the company to build the product into the smash, asymmetric disruptor that it was.

  • JohnDoey

    > The reason Apple should be studied is that it gives hope that they
    > have cracked this problem.
    They cracked it by remembering that they are supposed to create value for the CUSTOMER, not the shareholder. Then the customer lines up to pay Apple $$$$ which creates value for the shareholder.

    • http://twitter.com/alberthartman Albert Hartman

      Bingo. The big realization Apple had is that only the product in the service of the customer mattered. All other considerations took a back seat. With this focus it was easy to disrupt yourself and deal with the threats to your current business that a new product/service presented, the conversation never came up

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

        The problem I have with this is that if a company were to adopt the “customer first” approach, would they be automatically successful? It seems a necessary condition but not sufficient.

      • TheEternalEmperor

        Agreed. Apple has pretty much maxed out there profits with respect to their products. There is clearly space to still make fat profits and lower the price of products like the iPhone and iPad.

        So, while they make products that customers crave, it isn’t *just* customer first or they would sacrifice maximum profits for customer happiness.

        Customer first is one load bearing brace in this construction.

      • famousringo

        The big challenge in “customer first” is that the customer doesn’t know what they really want. You can’t simply ask the customer what they want and give it to them, or you end up with “The Homer” (Google it if you aren’t a Simpsons fan).

        Nobody wanted a touchscreen phone in 2006. You have to give people something that they don’t yet realize they want. I guess that’s called innovation.

  • echotoall

    Apple has consistently shown us the answer: a willingness to disrupt an existing product line.

    Easier said then done, obviously. Apple rarely gets any critisms anymore for this because they execute so well at the transition. But when other companies start the process, they get knocked and incorrectly categorized. Google is the most recent example of the critisms.

    Takes a ton of courage to solve the innovators dilemma.

    • jawbroken

      What existing product line would you say Google is disrupting, and how?

      • echotoall

        Search!

        The most obvious being SPYW. The more subtle being semantic search.

        Can’t ignore Google’s willingness to scrap projects and start again. Android’s UI being the most prominent example.

      • Walt French

        Umm yes, I think Google sorta gets it.

        But they are NOT disrupting themselves. Recent reports have 4.0 at 7% of their users; it has definitely NOT replaced 2.3, which continues to be sold. In fact, 4.0, widely reported as a step ahead of earlier versions, will probably peak below 10%, as yes, there are a few users who’ll upgrade to 5.0 when it comes out soon.

        Google intended to disrupt Microsoft, but by the time Android was capable, WM was irrelevant. Still haven’t found a new raison d’être.

    • http://www.noisetech-software.com/Home.html Steven Noyes

      I think Google is a prime example of a company 100% unwilling to even think about self disruption. Even more than MS, Google ties everything into their ad engine. From Social to Mobile to Seach to Email to Documents they [Google] have the same product. The delivery method changes but the product and customers are the same.

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

      Courage is what I always cited as the requirement, but it seems to require even more. It seems to require sacrifices that few are willing to make themselves or on behalf of the entities they are charged to maintain.

  • Capitalistic

    It’s simple. Apple had a devoted “niche” customer base in the 80’s and 90’s. Those customers were easy to assimilate into you products and services. Then Apple focused on converting other customers.
    Apple was proactive. The competition was reactive. Proactive vs. Reactive depends on execution.
    I think Jobs learned a lot during his exodus. If he had remained, I doubt that Apple would have been able to to realize this remarkable success.
    The problem with RIM is/was leadership. Leaders should have the foresight to surround themselves with younger talent. Instead, most leaders, like you mentioned, tend to rinse and repeat. But after awhile, rinsing and repeating doesn’t remove the stain.

    • TheEternalEmperor

      Don’t buy it. Jobs was surround by seasoned veterans, not young hotshots.