Nokia: Running in molasses

Every time I think about Nokia and Symbian, I can't help picturing a man knee-deep in molasses, running as fast as he can. He's working up a sweat, thrashing and stumbling forward, and proudly points out that for someone knee-deep in molasses he's making really good time.

That thought came to me several times during a briefing day that Nokia and the new Symbian Foundation held recently in San Francisco. A recurring theme was a deeply earnest discussion of how big and complex their business is, and how proud they are that despite the complexity they can make forward progress. For example:

Charles Davies, CTO of the new foundation, pointed out to us that Symbian OS has about 450,000 source files. That's right, half a million files. They're organized into 85 "packages," all of which have been charted out in a diagram that will be posted soon on the foundation's website. Davies was proud that the diagram is in SVG format, so you can zoom in on it and see that "this is an architecture that's not just a plateful of spaghetti."

The diagram looks a bit like a plateful of very colorful spaghetti (although in fairness to Charles, that's true of every OS architecture diagram I've ever seen). Anyway, the big takeaway was how huge the OS is.

Davies talked about the substantial challenges involved in open sourcing a code base that large. He said it will take up to another two years before all of the code is released under the Eclipse license. In the meantime, a majority of the code on launch day of the foundation will be in a more restrictive license that requires registration and a payment of $1,500 for access. There's also a small amount of third party copyrighted code within Symbian, and the foundation is trying to either get the rights to that code, or figure a way to make it available in binary format.

Those are all typical problems when a project is moving to open source, and the upshot of them is that Symbian won't be able to get the full benefits of its move to open source until quite a while after the foundation is launched. What slows the process down is the amount of code that Symbian and Nokia have to move. I believe that Symbian OS is probably the largest software project ever taken from closed to open source. If you've ever dealt with moving code to open source, you'll know how staggeringly complex the legal reviews are. What Nokia and Symbian are doing is heroic, scary, and incredibly tedious. It's like, well, running in molasses.

Lee Williams, Nokia's software platform SVP who is moving over to become head of the Symbian foundation, picked up on the theme of massiveness. He said the OS is on 200 million devices, with 200 device types shipped and another 100 in development. With support for five different baseband modems, seven different processor architectures, symmetric multiprocessing, and a broad set of displays, "your options are dramatic and huge."

This sort of infrastructure is needed, he said, because IT, telecom, and the Internet "have merged almost completely.... It's the perfect storm of convergence. There's almost nothing it can't eat or it won't use." He compared its importance to the creation of movable type, color palettes, and the Renaissance.

He noted that some people think the Symbian Foundation is a response to Android and other competitive moves, but said the company can't move that fast, and actually the change was in the works long before Google announced its software.

At dinner, I had a chance to chat with one of the Nokia managers. He was kind enough to let me play around with a pre-release N97 (more on that below), and the discussion gravitated to the iPhone. He told me how excited he is by the many new products Nokia has in the labs but can't talk about yet, and expressed some frustration that people don't understand why it takes time for Nokia to respond to changes in the market. He described Nokia as a giant ship. "It takes a long time to turn it, but when we do..." he said ominously, and then reminded me that Netscape once had a lead over Microsoft before it was crushed.

The problem with talking to the folks from Nokia is that you're never sure what they believe vs. what's the official story they're trying to put out in the market. They're disciplined enough that they can stay on message quite well, and in most conversations they focus on talking about what they're doing rather than asking for feedback or getting into a two-way conversation.

So I'll assume that Nokia was being serious. In that case, let's look at some financials from 1997 (Netscape vs. Microsoft) and 2007 (Apple vs. Nokia):


All figures in millions of dollars.

Don't worry too much about revenue and net income; those are usually tied up by the ongoing operations of each company. The line I want you to focus on is cash. That is your ammunition -- the extra resource available to fund a big marketing campaign, or a new product development program, or an acquisition of an innovative new technology. Microsoft had 46 times more cash than Netscape in 1997, and it wasn't seriously threatened in any of its other core businesses. It could, and did, spend Netscape into the ground.

Apple has about the same cash hoard as Nokia. Much more importantly, Apple can focus that cash on a narrower battlefront. Its situation relative to Windows is relatively safe. Although Microsoft can never be ignored, it is innovating so slowly that Apple can take some profit from its PC business to fund other things. The music player business is also stable; although it's not growing like it used to, no one has come close to matching the integration of the iPod and iTunes. So Apple is free to spend huge wads of cash to establish its new iPhone business. It can pick the countries and vertical usages it wants to dominate, and as long as it doesn't do too many things at once, it can outspend almost any competitor.

Nokia, on the other hand, has battlefields everywhere:
--In mobile phones it's fighting Samsung, LG, and SonyEricsson, and a badly wounded (therefore desperate) Motorola.
--In entertainment smartphones it's fighting Apple.
--In communicators it's fighting RIM.
--In OS it's fighting Google, Microsoft, etc.
--In online services it's fighting Google, Yahoo, Microsoft, etc.

As Nokia EVP Anssi Vanjoki put it recently (link):

There’s a company that says they can index the world; we are going to go deeper - we are going to coordinate the world.

Sweet! He calls out Google and says he'll beat them in their core business. It's a noble effort. I love the company's ambition. But does Nokia have the resources to fight all those battles at once?

If the folks at Nokia really think they are well positioned to crush Apple, they need to go re-read The Innovator's Dilemma. Being big is not a benefit in a rapidly-changing market with emerging segments. A big company can't respond nimbly to that sort of change, and the segments attacked by new entrants are usually too small to justify huge investment by an incumbent. So new challengers like Apple and RIM pop up all around you, you gradually shed little chunks of market share, and you complain that people don't understand how powerful your core business is.

I am not at all saying that Nokia is doomed. They are an outstanding company, with smart people, a great brand, and enormous strengths. But they need to understand that turning the battleship a little faster won't win the war. Nokia's smartphone competitors are not standing in molasses; they won't stay still long enough for the 16-inch guns to be pointed at them. More importantly, the competitors on the services side breed like vampire rabbits. By the time you blow away a clutch of them, three dozen more have hatched and are sucking blood from the other side of the ship.

To succeed in smartphones, I think Nokia needs to start creating the sort of integrated software + hardware solutions that the smartphone winners excel at. And on the services side, it needs to start breeding its own killer rabbits (small entrepreneurial experiments that move fast and die quickly if they fail). So far what I think I see looks like a more design-savvy version of the smartphone business of Samsung (throw hardware at the wall and see what sticks) coupled with an effort to create a 16-inch cannon of services.

That's probably not enough to win in the long run. Nokia still has a lot of time to get it right. But do they really understand what needs to change? I can't tell, because all I usually get from them is monologues on how big their business is and how much cool stuff they have in the lab.

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A few other tidbits from the day...

N97: Second cousin twice removed of the Revo. I got a chance to play with a pre-release N97, Nokia's upcoming qwerty phone. The screen slides sideways to reveal a little keyboard underneath.

The look and size of the device reminded me a little bit of the old Psion Revo, although it's a pretty distant echo. The sliding process of the screen has a very nice feel to it; it's the sort of physical detail that Nokia excels at. Even in a pre-release state, the phone felt nice and solid in my hand.

The software needs a lot more work, but they admitted that. It's a pre-release device. No worries at this point.

As for the keyboard, I thought it was mediocre. The keys, and especially the microscopic letters on them, are a little too small for my taste (I have big thumbs). Typing was slower than I expect on a thumb keyboard. I'd put it about on a par with the Blackberry Storm (that's the Blackberry with the on-screen keyboard). The Storm has bigger letters than the N97, and unlike David Pogue I like the tactile feedback when you tap on its screen, although it is not as good as a real keyboard.

So the N97 has real keys but they're too tiny, and the Storm has bigger keys but they're not real. The tiebreaker is the software -- the Storm is notoriously unstable (it took me about 40 seconds to crash it). I think neither product is ready for the market yet. Unfortunately for RIM, the Storm is already shipping.

The destiny of Trolltech. About a year ago, when Nokia purchased Trolltech, I wondered what they were going to do with it (link). Now we know -- Trolltech's Qt software layer is going to become a graphics layer for Symbian. No word on what happens to Trolltech's other products.

That's nice, but what's it good for? Symbian is adding symmetric multiprocessing to the OS. In a session discussing the change, a member of the audience asked what you'd use symmetric multiprocessing for on a mobile device.

Long pause. "Well, some games use it..." Another long pause.

This is the difficulty of taking a technology-only approach when talking to developers. Although software developers are technophiles, what they really care about is what sort of cool products you can enable them to build. If your feature doesn't let them do something cool, they won't care about it.

(By the way, according to an article here, the benefit will be in performance tuning and battery life -- critical to handset vendors, but sanitation issues to application developers.)

Some alternate opinions. Some other people briefed by Nokia are not as worried as me about the molasses thing. In the interest of balance, here are a few examples:

Commentary from SymbianOne (link).

Fabrizio over at Funambol (link).

SonyEricsson on the event (link). (Never mind, that was a report from 2003. I am so embarrassed.)

Proposition 8 and community review sites: Everyone loses

What happens to a community review site when members of the community use it as a weapon against people they don't approve of? Sites like Yelp and Citysearch are finding out, as users target businesses that supported California's Proposition 8 (the state's recently-enacted gay marriage ban). The results so far are not pretty. They illustrate some of the weaknesses of online reviews, and the complexities of managing a community site.

It's a learning opportunity for any company that relies on online reviews or runs a website that allows user comments. I wrote about it over on the Rubicon site (link).

Mobile data: Be careful what you wish for

The consensus around the industry seems to be that mobile data is starting to take off. Text messaging is still the leading data function, accounting for about 65% of total data revenue, according to Informa (link). But Nielsen reports a steady rise in the number of mobile Internet subscribers (link), and a faster increase in revenue (implying that those who do use the mobile web are increasing their online activity). Young people are apparently important drivers in the increase, with 37% of US adults age 18 to 24 using their phones to access the web, according to the Mobile Marketing Association (link).

The cause is supposedly not just the iPhone and other smartphones; what I'm hearing from multiple companies is that web access and other data usage is rising even on feature phones.

This increased activity is creating an uncomfortable problem for some mobile operators: it's apparently overloading their networks. There have been predictions for years that this could happen -- a report from 2005 pointed out that the typical 3G network would be overloaded if 40% of subscribers used video just eight minutes a day (link). It predicted potential traffic overload by 2007. There have been charges that service problems on the AT&T network in the US have been caused by the iPhone (link).

In the UK, the BBC's popular iPlayer streaming video service is supposedly threatening the economics of even wired ISPs (link -- very interesting article), so it's easy to imagine what it could do to mobile networks if broadly deployed. Supposedly the mobile version of iPlayer for Nokia S60 is set up to stream only over WiFi, but the discussion here (link) points out that restriction is likely to be evaded by enterprising users.

It's very hard to confirm exactly what mobile data is doing to the networks because the operators don't like to discuss this sort of thing in public. But the number of data-capable phones is definitely growing faster than network capacity, so overload is just a matter of time. I've gotten several off-the-record comments from friends in the industry saying that the operators are worried about the problem and are quietly trying to throttle traffic, especially to online multimedia services that consume a lot of bandwidth.

The problem is complicated by the all-you-can-eat data plans that have been adopted by many operators. If you're charging people for the amount of data they consume, their data use becomes self-limiting. But limited plans are unpopular with users, who get practically unlimited data on their PC web connections. When you tell people that they can have the web on their mobiles, they expect to be able to use it like the web they already know.

So the operators are stuck with either throwing out people who use the "unlimited" network heavily, or covertly degrading the quality of their service so they'll stop using so much data. Both practices are very dangerous to their long-term prospects.

The problem is that the people who use a lot of data aren't just the freakish fanatics that the industry would like to imagine them as. They are Internet power users, a group that we labeled the Most Frequent Contributors (MFCs) when we recently researched Internet usage patterns at Rubicon (link). They don't just use a lot of video -- they are generally very involved in all sorts of online activities. Most importantly for the operators, they write the majority of the reviews and user comments posted online.

So, if you kick a power user off your network, or throttle their performance, they are extremely likely to write about you online. Extensively. Where their complaints will be read by most other Internet users. Check out the comments here and here if you want a sample.

Systematically punishing your noisiest customers is not the way to build a sustainable business.


What else can the operators do?

I wish there were some magical formulation that would make users happy and operators financially sound. But there isn't, because the problem is inherent to the way a wireless network operates. And as the installed base of smartphones grows, and video and other multimedia services increase in popularity, the problem is only going to get worse.

The most damaging approach is that one that operators seem to be leaning toward now, covertly throttling traffic. They can probably get away with that for a while, but eventually people online will compare notes, figure out that network performance is being systematically distorted -- and then the class-action lawyers (in the US) and government regulators (in Europe) will be unleashed.

Honesty is the best policy. Ultimately I think there's no alternative to moving to pricing plans that acknowledge the physical limits on the wireless Internet. That, and the operators need to resist the temptation of advertising their Internet as identical to the wired Internet. The MFCs are technically sophisticated, and capable of understanding the need for tiered pricing if it's explained to them clearly and honestly. What causes endless friction is the hypocrisy of calling something "unlimited" and then limiting it.

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Belated thanks to Voip Survivor for featuring my post on app stores in the Carnival of the Mobilists (link).

The Influencers are dead. Or not.

As we continue to sort through the results from Rubicon's recent research on Internet usage (link), we're finding interesting insights on how the web is developing. One insight is around the concept of Influencers.

When we first looked at the results of the survey, we thought they confirmed the Influencer idea. But after some more digging, our thinking has evolved. There are basically two schools of thought online about the influencing process. Some people say a small group of Influencers drive most consumer decisions. Others argue that the Influencer idea is a fantasy, and that ideas spread through society from random starting points, without a hierarchy.

The evidence from our research shows that both groups are wrong in important ways, especially when the web is taken into consideration. That has big implications for how companies market online, so we wrote about it. If you're interested in learning more, you can read the analysis on Rubicon's website here.

FEMALE BOSSES ARE BETTER FOR EMPLOYEE HEALTH!

The smirk on my face all but got wiped out when I saw the University of Colorado 2005 report [‘Worker wellbeing and supervisor gender’] which confirmed beyond doubt that “working in a more female dominated environment” was truly beneficial for employee health! Chauvinist that I was, I couldn’t digest the fact that finally, to get ‘healthier’, I had to work under – of all blistering barnacles – a female boss!!! I mean, there obviously had to be better methods to get healthier than getting fried in the devil’s pan, right?! And there began the quest of my team members to escape perdition.

In fact, if one thought that not having a female boss would lead to productivity losses, the National Business Group on Health [representing 185 companies, primarily Fortune 500 firms covering more than 40 million workers...] shows how, for US firms, “...productivity loss resulting from... smoking related diseases cost a staggering $157 billion every year.” [In fact, the Purdue University’s Health Care Special Report puts this at a killing $234 billion]. This dirge is just the tip. The US Office of Technology & Assessment conclusively proved [in ‘Burden of Tobacco on Your Workplace’] that smokers averaged a whopping 300% more sick leaves than non-smokers. Seattle University showed how “the propensity for smokers to become disabled and retire early is almost 600% greater than for non-smokers!” But what left me stunned was this incredible research of Cappelli, Pauly & Lemaire of Wharton, [‘The Effects of Obesity, Smoking & Drinking...’] who quote that “obese individuals have 30%-50% more chronic medical problems than those who smoke or drink heavily!”

The authoritative US National Bureau of Economic Research and Chicago GSB confirm in their benchmark September 2008 paper that “expenditures on health care in the US are likely to rise from a current level of about 15% to about 29% of GDP by 2040.” That is a mind boggling $3 trillion even at current prices! So are global firms getting worried? Hewitt Associates’ April 2007 survey found out after surveying 8 million workers that now 77% of firms are “profiling chronic health conditions prevalent in their workforce!” This figure was a mere 43% just a year back. Without doubt, employee health & productivity are perfectly correlated! Period! GEMI, a top non-profit research firm with Fortune 500 firms as members, irrefutably proves [in ‘Clear Advantage: Building Shareholder Value’] that excellence in health [and even environment and safety issues] can add dramatically to shareholder value by almost 50 to 90%, apart from reducing operational and capital costs [16% less for high performing companies, as per the noted Towers Perrin ‘2008 Health Care Cost Survey’].

So who should take the blame for all the productivity losses occurring due to bad health habits? The big league Watson Wyatt covered 5 million workers in their stupendous 2005/2006 survey [‘Staying@Work: Employee Health...’] and established that a compelling 74% of organisations believe that “their employees should be held accountable.” Weyco Inc, a top health care firm, now has a policy of throwing out employees even if they smoke at home. BusinessWeek’s February 2007 cover story shows how the ‘totally-smoke-free’ $2.7 billion Scotts Co. throws out its employees for failing nicotine detection tests [for which, Jack Welch exclaimed to Scotts’ CEO Jim Hagedorn, “Man, you have balls of steel!”]. Tell me now boys, after reading all this, doesn’t it occur to you that there are obviously better ways to improve productivity than to have female bosses?! Tony, to have the guts to say yes, all you will need, like the thrice-married Jack mentions above, are two metallic spheres! Got them?

Everything you always wanted to know about web community, and then some

It's been a long time since I posted, and I apologize. In addition to doing a bunch of work for clients at Rubicon, I have been preoccupied with a big strategy project we just finished, on online community. We released the results today, and I think you might find them interesting, so here's a summary.

In our strategy work with tech companies, we're frequently asked about web communities -- how they operate, what they can and can't do, and how a company should work with them. The companies we deal with generally fall into three camps when it comes to community:

--Many companies are still learning about online community and don't know what to do or what to expect.

--Some companies have already tried some online community activity, but were disappointed -- often because they attracted only a few enthusiasts rather than the masses of end users they expected.

--And of course some companies run successful web communities, either as a sideline or as their core business. They're very hungry for information on how other communities operate, and insights on what they could do better.

To help deal with all of those questions, we conducted a study of online community in the US. We surveyed more than 3,000 US web users on their overall internet usage, and then dived deep on their use of online communities and what impact those communities have on their lives. I know some of you will be disappointed that the survey is US-only; we'd be delighted to repeat the research in other parts of the world if anyone wants to sponsor it ;-)

Meanwhile, here are some of the key things we learned:

--Small groups of enthusiasts dominate most online conversations, but that doesn't mean online communities matter only to a narrow segment of people. Most web users read community content rather than contributing to it, and are strongly influenced by the things they see there, especially product reviews and recommendations. Those reviews are now second only to word of mouth as a purchase influencer for web users.

--Because most web users are voyeurs more than contributors, if you're running an online discussion, you should think of it as theatre -- it's a performance in which the community leader(s) interact with a small group of contributors for the education and amusement of the rest of us. All the web's a stage, but we're not all players in it. At least not equal players.

--This means companies that turn away from web communities because they're populated mostly by enthusiasts are missing the point. They've mistaken their fellow actors for the audience. If you're running a community, you need to take care of the active participants in a community so that the rest of the audience will watch and learn.

--If a company needs more incentive to work with the Internet, it turns out that the web has also become the number two source of product support information for web users. After checking the manual, web users are more likely to check a company's website for information or search the web than they are to take traditional steps like calling the manufacturer or asking a dealer. That will be comforting to many companies that want to reduce their support costs, since phone support is very expensive. But how many of those companies have bothered to put detailed support information online, and make sure it's well indexed by the search engines?

--There are an enormous number of tidbits in the study regarding web use. A few items that stood out to me include:

• -About a quarter of US web users say they have dated someone they first met online.
• -Although Twitter and SecondLife get a lot of press, their audiences are very narrow when you compare them to major social sites like MySpace, Facebook, and even LinkedIn.
• -Yahoo is the second most valued website in the minds of US web users, after Google. It's ahead of major web properties like YouTube and Facebook. All of the negative press about Yahoo sometimes makes people forget how strong its user base is.
  
• -The major social networks are much more satisfying and useful to teens than they are to adults. In fact, satisfaction with the social sites declines steadily after age 14.
• -Since we're coming up on an election in the US, it's interesting to look at political ties on the Internet. Democrats are more active online than Republicans, and say the web has a greater influence on their behavior, including voting.
• -Young people dominate online conversations, with people 22 and under producing about half of all user-generated content and comments. So if you sometimes feel like you're dealing with kids online, it may be because you are.

A full report on the findings is available in PDF format here (link). I know many people don't like to read PDFs online, and besides you can't easily comment on them or link to sections in them. So we've also posted the report online, cut into several sections for easy reading:

Part one summarizes the report, and gives detailed information on the use of community online, and what that means for business (link). This is the section that gives information on community usage rates and the "most frequent contributors" who dominate online conversations.

Part two discusses the leading web destinations in the US, measured in several ways, and discusses the role of community in them (link). This is where you'll find learn about the remarkable membership rate of Classmates.com, the #3 social community site in the US when measured by profiles. We also answer questions like: "Is Facebook more popular than MySpace?" "What do web users value more, Wikipedia or NYTimes.com?" and "What are the top five most-visited types of website?"

Part three talks about the role of community sites in the social lives of Americans (link). This is where we compare Republicans and Democrats online, and look at how different age groups use the social networking sites. We answer questions like: "How many young people lie about their age to get access to websites?" and "How many web users create fake identities online?"


What does it mean to mobile?

I always get that question when I post something that's not directly related to the mobile industry. In part, my answer is that I think this information's useful to anyone who's interested in technology. You're soaking in the internet, and it's good to understand how it works.

But community users don't limit themselves to only PC access, so online community will have a big effect on the mobile industry. It's important to understand what's really happening in the wired internet so you can sort out which mobile web opportunities have the best prospects. For example, I saw a presentation by someone senior at a mobile company the other day, and he was touting the importance of Twitter as a driver for the mobile web. I almost laughed out loud, because I had just been working on our report, and I knew how tiny the Twitter audience is. It's a classic case of people in the tech industry assuming something they use a lot is also being adopted by the masses.

That's not to beat up on Twitter specifically; they have a great base of users. But mainstream they ain't.

The other thing mobile people should think about a lot is the huge role that young people play in the generation of online content. As a group they are vastly more active online than older people. We aren't sure exactly what the cause is. Some of it may be that high school and college students just have a lot more time on their hands, and they spend some of it posting to the web. But probably also some of it is generational. Whatever the cause, it's likely that young users will be some of the heaviest drivers of use of the mobile web, especially the uploading of content and comments.

Not that Apple needs another advantage, but that probably plays to the strengths of the iPhone, because Apple has such a good franchise with young people in the US. It also helps to explain why RIM is trying to reach out to young people. In Europe, I think Nokia and SonyEricsson have a better chance at those users, because their brands are strong with young people. But they'll need the right products as well, which is a subject for other posts...

THE ‘LEGEND’ OF THE VAINGLORIOUS VISIONARY

Narcissistic! That’s how it was described. I found myself staring at the report quite disbelievingly. But I should have known, the warning signs had already been there for years. You tell me, would you ever like such a person around you, especially as your superior – a person who dominates meetings, a pathetic listener, not at all showing empathy, with a clear distaste for helping others and one who believes in giving vainglorious visionary speeches? In fact, would you want your CEO to be a narcissist?

Well, I’ve seen such losers all around. This man was born to a teenage unwed girl, who gave him up for adoption! A dropout from the Illinois University, he’s known for his ultimate arrogance, and has not spared even his family members, what to talk about employees. The four times married – thrice divorced – man once boasted to BusinessWeek many years back, “As long as Stanford keeps turning out beautiful 23 year old women, I will keep getting married.” His best friend, not surprisingly, is Steve Jobs, another temperamental leader with many similarities [including being put up for adoption and being a dropout]. Till date, this man doesn’t know who his real father is. Another friend, Andy Grove, warns in the BusinessWeek report, “I would beware of him as a businessman,” while Gates adds, “His hype has expanded to fill his ego.” In 1977, he founded Software Development Labs. From 1986 till late 2008, he has made its shareholder wealth grow by 950% to a super $102 billion!!! His vision is stupendous. His objectives are as arrogantly audacious as his attitude. He’s the 14th richest person in the world. His company is better known as Oracle. He’s Larry Ellison, my vainglorious visionary, whose biography is titled, ‘The Difference Between God & Larry Ellison: God Doesn’t Think He’s Larry Ellison!’

But does one example prove the complete hypothesis? Unbelievably, ivy league research now supports the concept that visionary leaders are narcissistic. In fact, considered amongst the ‘Best of HBR’ is their 2004 report, ‘Narcissistic Leaders – The Incredible Pros...,’ that says, “Many leaders dominating business today have a narcissistic personality. That’s good news for companies that need passion and daring to break new ground.” The report confirms that productive narcissists – like Welch, Soros etc – have “the audacity to push through massive transformations..., and have compelling, even gripping visions” due to their intense desire to compete and – through their awe inspiring speeches – have the capacity to inspire scores of people, despite their being poor listeners, lacking empathy and hating criticism. Professors Chatterjee and Hambrick of Penn University proved in their spectacular May 2006 paper, ‘Narcissistic CEOs...’, that narcissism in CEOs “is significantly positively related to several company outcomes, including strategy dynamism...”

Think about it. From the sniggery “You’re fired!” Donald Trump to the volcano-headed Steve Jobs, from the shoot-from-the-hip Michael Eisner [Disney CEO, added 2747% to shareholders’ wealth from 1984 till 2005, when he quit] to the don’t-know-don’t-care Roberto Guizueta [CEO, Coca Cola, 7100% increase, 1981-1998], the world’s top CEOs have been atrociously egotistical. Which brings me back to the report I started with at the top of this editorial. Lest you be mistaken, the report did not pertain to my ego-state [Oh please, I’m married; not a visionary!]. It was my irritating cook’s. His annual checkup – on which my money got wasted – threw up what I always knew. The ego-maniac is pompous, cooks up visionary unpalatable dishes, hates criticism, is a pathetic listener, and goddammit, behaves like a CEO all the time!

STAY HUNGRY, STAY FOOLISH!

I found myself on the top roulette table at Wynn, the leading casino in Macau [now the world’s largest gambling centre by revenues, larger than Vegas], wondering whether to bet on the next roll of the dice being even, or odd. The last four rolls had been odd, and I had lost all the past bets. Though the laws of averages – and my wife – were screaming out ‘even’, my intuition was screaming harder to be the ‘odd’ one out. Well, my intuition had almost always seen me through such crucial life-threatening situations [my wife, remember?!], and then, don’t even the top CEOs of the world depend mainly on gut feel and intuition?

Fred Smith received a ‘C’ grade [just escaped failing] in his college economics paper where he gave an overnight delivery business idea. “C was a very good grade for me,” he later explained, as his gut told him the idea would work. He started FedEx! Eric Bonabeau in HBR says “the stories are certainly seductive,” with Disney’s Michael Eisner [who, “knowing in his heart,” pumped in millions into the killer show ‘Who Wants To Be A Millionaire’], George Soros [who sensed “in his bones a big shift in currency markets and... made a billion-dollar killing”] and R. Pittman [who “had a vision...while taking a shower,” and created AOL] leading the gut-wrenchers gang! A. Hayashi, Senior Editor, HBR, writes, “Obviously, gut calls are better suited to some functions [strategy, planning, PR, marketing...].” Surely, as Chuck Porter, creator of the historic BMW Mini campaign, comments, “When it comes to creating advertising, we don’t research it!”

But it is not that intuitions are purely figments of irrational imagination. Professor Smith [Surrey] and Erella Shely of the most respected Academy of Management Executive prove that intuitive decisions are viewed by executives as “expertise that has been built up... and influences conscious thought and behaviour.” The Burson Marsteller CEO Survey, 2006, shows how “no effective CEO is driven solely by numbers.” The survey further proves that 71.4% of high-revenue-company CEOs believe that “intuition and gut feeling” are very influential in guiding their decision making [compared to 54.8% who depend on “analyst reports”]. The PwC Global Data Management Survey 2004 amusingly shows that globally, companies in fact feel low level of confidence in their own data, and “an even greater degree of scepticism over outside data.”

In his commencement address to Stanford students, he revealed how his mother [“a young, unwed college student”] rejected him and put him up for adoption, how the folks who were supposed to adopt him backed out at the last moment, how even his ‘final’ parents weren’t graduates, how he himself dropped out after joining college, how he would later sleep on dorm floors returning Coke bottles “for 5 cent deposits” to buy food, how he would “walk 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple.” And how he loved it all, as, much of what he “stumbled into” by following his “curiosity and intuition, turned out to be priceless later on.” He says, “You have to trust in something – your gut, destiny... This approach has never let me down... And most important, have the courage to follow your heart and intuition... Stay hungry, stay foolish!” On Fortune’s March 17, 2008 issue [where his company is ranked The World’s Most Admired in 2008], he says, “We do no market research. We just want to make great products.” He’s Steve Jobs, my hero! I went against the law of averages and bet on ‘odd’. I walked away from that hall resolute in what I had learnt from that one man... I’ll stay hungry, I’ll stay foolish! Yes, even though I lost...

LOSE IT LIKE GOIZUETA DID!

Unlike me, Goizueta wasn’t bald! But like me, it’s reported that even he had only one wife (!!!). Unlike me, that imp of a daredevil has already [in 1997] kicked the bucket (I mean, come on, I’m still alive... Right?!). Like me, the poor devil was, is and will continue to remain infinitely unknown through eternity. But unlike me, this impoverished Cuban immigrant – who escaped to Miami with his wife and $40 (not necessarily in the order of importance) to escape Castro’s political influence – became the best performing CEO globally in the history of mankind during his incredible 17 years at the top. Since the time he took over the CEO’s mantle in 1981, he created more shareholders’ wealth than any CEO in history – a mind numbing 7,100% share price increase – more than Lou Gerstner, Steve Jobs, Bill Gates, and even what the neutronic Jack Welch, could ever achieve in that time period!!! And ironically, this top performer’s biggest motherlode of a contribution to the management fraternity has been formalising the art of ‘losing it all when at the top’... in other words, ensuring that he was thoroughly replaceable and could be kicked out lock, stock and barrel, anytime – what we today know as ‘succession planning’!

The world’s most excellently performing CEOs believe religiously in finding their replacements. The ground-breaking 2006 research (In Search Of Excellence: In CEO Succession) on the world’s top-most corporations quotes the Harvard research that “merely announcing who your next CEO will be, can move [up] the market value of your company by 15% or more!” Global research displays unprecedented backing for CEO succession plans, with share prices of companies with planned successions over-performing those of companies without planned successions. And yet – according to National Association of Corporate Directors, US – only a pathetic 16% of directors “reported that their board is effective at CEO succession planning.” The noted Wharton management professor Dr. Katherine Klein comments, “The ideal scenario is careful succession planning that grooms people internally.” The famed 2007 Hay Group Study confirms that almost 80% of Fortune’s Most Admired Companies preferred an internal candidate as a CEO successor! Booz Allen’s 2008 CEO research confirms that around 80-83% of new CEO recruits globally are insiders! Booz Allen also proves beyond doubt that operationally and statistically, ‘insider CEOs’ outperform ‘outsider CEOs’!

And it’s clearly the current CEO’s job to shortlist future replacements [‘The Job No CEO Should Delegate’, Larry Bossidy, HBR]. From GE, where at any given moment there are 5 people battle-ready to become CEOs [Immelt (current GE CEO), Nardelli (current Chrysler CEO) and McNerney (current Boeing CEO) worked under Welch for years before Immelt was chosen], to Warren Buffet who has already identified his successors [in a secret envelope, with the lines, “Yesterday I died. That is unquestionably bad news for me; but it is not bad news for our business!”], top CEOs fire themselves out!!!

To end where we started, my hero, Goizueta had four people ready to takeover his throne at any given moment, and ten more to fill in their posts! Roberto Crispulo Goizueta died of lung cancer on October 18, 1997. For 17 sparkling years, this Cuban ‘revolutionary’ was the world’s best performing global Chairman & CEO of a Fortune 500 company we now know of as Coca-Cola! And nobody’s ever ‘lost’ it like he did...

App stores and APIs: It's the ecosystem, stupid

If you make a web application or mobile platform, one of the trendiest things you can do is add APIs and a software marketplace to it so developers will extend your product. Google is previewing its application market for Android (link), T-Mobile USA has promised a new applications store for its phones (link), and many people I've spoken with believe Microsoft bought Danger in order to get its software store technology.

The idea of encouraging third party developers dates back at least to the early days of MS-DOS, but it was associated mostly with operating systems until Web 2.0 applications took off a few years ago. Google played a big role in that change, by exposing APIs to Google Maps that made it possible to embed maps in other web applications. That helped Google Maps quickly blow past established mapping services like Mapquest, while the installed base of Google Maps extensions made it hard for Microsoft's web mapping product to gain traction.

The drive for web APIs got another big boost when Facebook enabled developers to extend its functionality, driving an explosion of widgets for Facebook that helped it grow past MySpace to become the #1 social network in the US (at least according to Alexa).

The web app people all noticed Google's and Facebook's success and furiously started adding APIs to their products. Today it's unusual to hear about a new web app that doesn't have some sort of API story or future plan to add them.

In mobile, applications have an interesting history. Lately some new mobile players have generated huge attention for their application marketplaces. The chart below shows the one year growth in the developer base for a certain well-known mobile platform:



If you're like most people in Silicon Valley, you probably think that's an Apple iPhone developer chart. But actually it's Palm OS ten years ago, from 1998 to 1999.

Disturbing, isn't it? The idea that a platform could take off like that and then crash and burn...makes you wonder if the same thing could happen to the platforms that are popular today.

And in fact, if you look at the history of APIs on both mobiles and web apps, the failures are more numerous than the successes. If you're a developer trying to pick the right platform to create your apps on, that choice is very dangerous -- you're betting the success of your company on something that has a better than 50-50 chance of failing.

If you work at a web or mobile company creating APIs or an app store, the news is equally disturbing: The odds are that you won't succeed.

So it's very important to look at the history of those failed platforms, to figure out what goes wrong and how to avoid it. When you do that, the answer is pretty clear:


It's the ecosystem, stupid

The success of a developer program is not driven just by the beauty of the APIs or the store, but by how the overall ecosystem works to enable developers to prosper. The two parts of the ecosystem that are most important to developers are the ability to create something cool, and the ability to make money. Coolness gets developers to try your platform in the first place. Most developers, especially the innovative new ones, gravitate to a platform that lets them easily create something cool that will impress their friends. But as those developers get older and more responsible, they eventually get tired of drinking lemon drops with Mark Cuban (link). They need to pay rent, buy food, and do other things that require money. If they can't make money from a platform, they will move away to the next one. So the financials are what makes developers stick around over time.

If the ecosystem breaks down anywhere in the chain, the developer community will eventually collapse. You can see this in process driving the history of some prominent web and mobile platforms:

Facebook. Earlier I said Facebook apps were a success because they helped the company grow. That's definitely true from Facebook's short-term perspective, but if you talk to Facebook developers the story is much more mixed. Some people online say there are lots of ways to monetize Facebook apps (link), but other reports say it's difficult to actually make the revenue come in (link). The online attitude toward this when Facebook's platform launched in 2007 was pretty dismissive. One commentator wrote (link):

The problem of not making money with your app is not a Facebook problem. It's your problem!

That's the right attitude for a developer to take: Control your own destiny. But monetization becomes a Facebook problem if nobody can make money. Developers poured into the Facebook platform like the tide in the Bay of Fundy, but a lot of them couldn't make money and promptly poured back out. I can tell you from personal experience that some are pretty bitter and unlikely to do anything with Facebook again.

Mobile Java's problem was that it's not a real platform. Handset vendors and operators were allowed to break compatibility between their implementations of Java, forcing developers to tweak their java apps almost endlessly, dramatically raising their costs and making it hard to scale their companies. The selling model for Java apps was also seriously broken -- to get prominent placement on a phone, developers often had to cut special deals with carriers. Some of the most successful mobile Java game developers have survived because they're great deal-makers; they figure out how to develop for a big brand that wants to create a mobile presence, or they hook into the promotion of a movie. This business model favors a few companies with the skill and contacts to cut the deals; the current mobile Java world is not an ecosystem that can support huge numbers of developers.

Palm and Windows Mobile both succeeded at first in enabling developers to create a lot of interesting applications. Although both operating systems had technical flaws, they were reasonably open to any developer, and the "write once run anywhere" idea mostly worked. Unfortunately, the marketing and sales model for those applications started out mediocre and got worse over time. There was no software store on device, so users had to go out on the web to find apps. This cut the number of people looking for applications. Those who did look online usually landed in the mobile application stores, which over time took a larger and larger share of the developer's revenue. Eventually, the stores' cut grew to more than 50% of revenue, making development uneconomical for many companies. When sales of Palm OS and Windows Mobile devices failed to grow rapidly, the financial model for many developers fell apart, and the ecosystems faded.


What to look for in an ecosystem

If you're a developer looking to find a viable ecosystem, or a platform vendor looking to build one, here are the things to look for.

How easy is it for developers to create something cool? How powerful are the APIs? Can the platform be programmed using standard development tools? Eclipse seems to be the preferred platform among much of the web app crowd, and it's free.

Is the platform programmed in a language that's obscure or difficult to use? This has long been one of the big barriers to Symbian native app development.

How do applications get visibility? Is the store displayed at the first level of the smartphone? How easy is it for users to navigate the store? Online stores like Handango are notoriously hard to navigate; the user experience is about like walking through a flea market.

Can good apps rise to the top? In some software stores, the developer has to pay for prominent placement on the store. This is incredibly corrosive to the ecosystem. The big software companies with money to pay for placement are often the least innovative. So users see an app prominently featured, try it, are disappointed, and never try another one. If web search worked this way, there's a good chance that the web as we know it would never have developed. The practice of pay for placement is a self-defeating, regressive tax -- it penalizes most the small developers who are most likely to create compelling new apps that make a platform more successful.

Ideally, placement on the store should be based on independent user reviews, so the best new apps can rise to the top naturally.

What are the terms of business? Can a developer bill for an app through the user's phone bill? Forcing people to input their credit cards separately slows adoption of software. Can the developer choose different forms of payment? Developers should be enabled to experiment with freeware and subscription payment systems, just as they do on the web. How much of the developer's revenue does the store keep? The ideal cut is no more than 20%.

Are there restrictions on the application's functionality? This is a sore point for iPhone developers. Apple won't allow intermediate platforms that run other applications. So no Java, no Flash, and no emulators like StyleTap's Palm OS emulator (link). This also inhibits other developers who want to expose APIs within their applications.

What is the overhead for security? Some platforms require applications to pay for a new security certificate every time the app is revised. The cost is typically a few hundred dollars, which doesn't sound like much to a big operator or OS company, but is a huge burden to a small company with several apps. They're basically punished every time they fix a bug, which is very unwise -- you want developers to fix bugs instantly, because that increases user satisfaction and reduces support calls. Basic security certificates can and should be issued automatically by the software store, at no charge.

How big is the user base? This will be a more and more important issue over time. For a developer, the ideal platform would let them sell to the whole base of mobile phone users, not just one brand or model.


Room for improvement

Based on those tests, no mobile platform offers an ideal ecosystem today. Apple probably comes closest at the moment. Here's how I'd grade it:

--Power: A-. The iPhone APIs give developers a huge amount of power, and there was a lot of delighted commentary on the web when the APIs were first revealed. But there is a learning curve for iPhone development; Apple has its own tools and its own variant version of C. And support for some typical OS features (such as cut and paste) is missing.

--Store: A-. The store is built into the device prominently, so apps are easier to discover. And there is a user-driven rating system. Developers can bill through Apple's iTunes system; not as convenient as billing through the carrier, but not bad. Apple takes 30% of revenue, which is not ideal, but is better than the 50% or more cut that burdens mobile app developers elsewhere.

--Terms: C+. There are significant, ambiguous restrictions on what a developer can do on the iPhone. The most onerous terms restrict the ability of developers to add functionality to applications and create software that run other applications. The terms cause a lot of confusion among developers; I'm on a mailing list for iPhone developers where they have been trying to figure out whether they can download content to an iPhone app. The answer: it's unclear as to whether content is a form of functionality, and you should ask Apple's lawyers. That is an incredibly intimidating message to app developers. It feels far too much like doing business with the operators.

--User base: Incomplete. It's relatively straightforward to make money from iPhone apps today because the number of developers is still relatively low. But over time, I think it's unlikely that Apple will be able to grow its user base at the same rate as the developer base is growing. If that happens, life will get much less pleasant for iPhone developers.

The ideal mobile app ecosystem would have the API power of the iPhone and the discovery experience of the iPhone store, coupled with business terms that allow add-on APIs like Flash, Java and Google Gears, all working across a much larger base of devices.


What it all means

If you're a software developer and some platform vendor or web company comes around evangelizing their software store or their APIs, you should evaluate the overall ecosystem they're providing, not just the store or APIs alone. If they haven't thought through issues like billing and discovery, it's a big warning sign.

If you work for a platform or web app company that wants to create a developer community, you need to plan the whole ecosystem and make sure it'll all work. This is especially important for a mobile company that wants to compete with the iPhone store. The way to fight iPhone for developers is to create a superior ecosystem. Apple's weak point is the business and technical restrictions on its developers, and the limited reach of the iPhone APIs. If another vendor -- say, Nokia or Google or Microsoft -- can pair a great store and powerful development with more openness and broader reach, they might be able to give Apple some serious competition. Elia Freedman had some good suggestions on ways to start (link).

____________

PS: Thanks to MobHappy for including my post on smartphone share in the Carnival of the Mobilists (link).

Conference time

I'll be doing the Grande Tour des Conferences in the San Francisco area next week. Let me know if you'll be in town and want to meet. My contact info is here.

On Monday, I'm speaking at Mobile Web Megatrends in Berkeley. My topics are:

Mobile data: Convergence or divergence?
The press is predicting a clash of the titans as Apple, Google, Nokia, and a host of other players all try to dominate the smartphone market. How is the battle likely to turn out? Will one company dominate the market? And where should a mobile app developer invest?

and

Apps for mobile devices - What happens next?
Apple's iPhone app store is getting a lot of publicity, and some industry players, such as TMobile USA, are rumored to be working on something similar. What's the future of mobile applications? Will the market grow explosively? What are the barriers to growth? Can a competitor beat the iPhone app store, or is everyone just going to play catch-up?

The speaker lineup is interesting, and I'm looking forward to it.

On Tuesday and Wednesday I'll be at the Tech Crunch conference in San Francisco (not speaking there, just taking notes). On Thursday it's CTIA, and then on Friday I'm an un-panelist at the Mobile Jam Session at CTIA. The folks at WIP have set up some very interesting discussion sessions.

I'll be posting some notes on what I hear, both here and at Rubicon's website.

THE STRANGE EXISTENCE OF JAGDISH SHETH

Two years back, when I heard this name being whispered in management circles, it sounded more like that of a garment trader’s [think about it, Jagdish Sheth & Sons...] than like that of the leading management thinker of modern times. At that time, Fortune had mentioned this media-avoiding former MIT & Columbia professor’s name in a futuristic article, with reference to his unique Rule of Three [a rule that competitive industries, in general, will finally only be left with three significant players]. An year later, this 67 year old imp of a powerhouse called Sheth combined his years of exhaustive global research on the world’s leading corporations and wrote the rule book on why CEOs of the world’s leading and most successful corporations will destroy themselves and their companies [The Self-Destructive Habits of Good Companies] because of a simple reason, “Complacency!” (The book was picked up by the famed Wharton Publishing).

“I used to think that competition destroys good companies. Strangely, I found that’s not true: companies destroy themselves… Success breeds complacency. The average life span of corporations is declining, even as that of humans is rising.” Out of the seven self-destructive habits of corporations, Sheth lists “The No-One-Can-Beat Me Syndrome: Arrogance & Complacency” as number one! From Prof. Carl Robinson of University of Maryland, [Why Great Companies Fail] to the famed Courtman & Wild of Turnaround Management Association [Avoiding Common Traps That Lead to Distress], leading management scientists now accept that complacency of CEOs is the Number 1 reason why companies get destroyed! In fact, now the most famous Prof. Clayton M. Christensen of HBS notes, “Leading companies decline and sometimes die not because of competitor’s advances, but because of new players with lower-quality solutions!” However out of this world this might, this is exactly what Sheth warns about. The first one to forecast that GE is self destructing itself in turf wars, all Sheth got from the world were chuckles. Today, Immelt has proved to be the worst performing CEO of all times for GE. During Immelt’s 7 year reign, GE stocks have plummeted by 30.2% [Jack Welch’s first 7 years had seen a 140.2% rise: Bloomberg].

CEOs have completely forgotten the concept of visioning. Forget visioning, unbelievably so, CEOs have even stopped “thinking.” Ask a CEO a modern management paradigm, and all you’ll see is a blank face. Ask yourself, when was the last time you sat down to ‘think’. Sheth is the first to statistically prove that where earlier “a [Fortune] company would be in existence for 50 to 60 years, now its life cycle is down to just 10.5 years!” Shocked? Sheth’s corporate clients roster now includes Cox Communications, Delta, Ernst and Young, Ford, Lucent Technologies, Motorola, Nortel, Sprint, 3M, Whirlpool, and even General Electric itself, the same company he doesn’t lose an opportunity to criticise. BusinessWeek now notes, “Dr. Sheth is one of the most globally acclaimed academicians, authors, and Board Advisors,” connected to 186 board members across the world [he’s now even a Director at Wipro]! Cut to June 2008, Sheth wins the Guizeta Global Innovation Award; it is presented to him by John Quelch, Senior Associate Dean at HBS in a small ceremony... It’s seriously a strange existence for this man I know of as Jagdish Sheth. And imagine, you hadn’t even heard of him! That’s complacency! This is a special double issue of 4ps B&M and as we have burnt a lot of midnight oil, I guess it is time for us to take time off and be a little complacent. we will be back after a break issue. Cheers!!!

Does anybody really know what smartphone market share is?

An article in Wired online this week had a chart showing US smartphone market share (link). The chart gave more detail than I've seen recently from other research companies, so I thought it was worth reproducing the data here:



The source is Nielsen Mobile, formerly Telephia. The interesting thing about them is that they do much of the service quality monitoring for the operators, so they have much more direct access to mobile usage information than folks like IDC and Canalys, the people usually quoted for smartphone share.

Wired was focused on Palm's loss of market share, which is indeed striking (but not exactly news). But take a look at the chart again; there are a couple of other items that I think are more newsworthy.

The first surprise is that Nielsen shows Apple in fourth place in smartphone share. That's wildly different from what Canalys, the source usually reported, has been saying (link). Here's how they compare for Q4 2007:




What in the world is going on here?

I'm not sure, but I have some guesses. Canalys doesn't directly measure market share, it receives self-reported shipment reports from the manufacturers and then adds them up. That means Canalys measures shipments into the channel rather than sales, and it depends on the hardware companies to be honest.

Riiiight.

Nielsen Mobile doesn't explain on its website exactly how it measures share, but apparently it's using a mix of survey results and the usage data it gathers from the operators (link). So its numbers should reflect current usage of phones rather than shipments. If Nielsen is measuring installed base share, rather than share of current sales, that might explain the difference. Although in that case, share should not be changing as fast as Nielsen shows. So I'm still confused.

If anybody can shed more light on the source of the difference, please post a comment. I've also asked Nielsen, and will let you know if I hear anything.

The conflict in the numbers underlines how ridiculously useless the publicly-available third party sales numbers are in the mobile phone market, and how little attention the press is paying to the inconsistencies. Apple's share varies from 8% to 28%, and no one even notices. Hey, we got a pretty chart and it confirms what we wanted to say, so don't ask questions.

If you want more information on the problems with mobile market share tracking, I wrote a detailed post here (link).

I said there were two newsworthy things about the Nielsen numbers. Can you spot the second one?

That's right, since the iPhone was released, RIM has been gaining share. So much for the folks who predicted at the launch of the iPhone that it was going to take the smartphone market away from RIM. Instead, at least in the first round of competition, we see what you'd expect from a segmented market -- RIM appeals to some customers, Apple appeals to a different group, and both companies do well.

I can't wait to see what the numbers will look like in six months, after the iPhone 3G has been out for a while. Although probably Canalys and Nielsen will still disagree wildly on what's happening.

Only 10% of Japanese people know how to use all the functions in their mobile phones

A Japanese survey of mobile phone users, translated by What Japan Thinks, reports that only about 10% of Japanese mobile phone users say they have mastery (or a good command) over all the functions of their mobile phones (link). About 75% of users say they have mastered less than half of the functions in the phone.

The most confusing functions were e-wallet, applications in general, music player, and Internet access.

What Japan Thinks concludes that few people in Japan "are really comfortable with their phones," which I find reassuring because it says that people in Japan aren't all that different from everyone else on the planet. In many countries there's a tendency to believe that people in Japan (and Korea) use mobile devices so differently from everyone else that there's nothing useful to learn from them. It's as if they're on a different planet. But the reality is that even in Japan, a phone overloaded with features and cryptic menus is confusing to anyone except the most dedicated technophiles.

It is interesting that so many mobile phones in Japan have e-wallet, applications, music, and Internet built in. That's a result of the aggressive rollout of integrated phones and online services by Japanese mobile phone operators -- the real driver that I think makes the Japanese mobile market so different.

(By the way, in case anyone's interested, another survey determined that 14 percent of Japanese cats won't go to the bathroom if someone's watching [link]. Who knew?)

THE LOVE GURU! YEAH, BABY, YEAH...

Ahuja! That was his name! He was my first boss and the teacher of my most important leadership lessons. He taught me exactly what never to do as a boss; because everything he did was, well, horribly wrong! I called him the Love Guru much before Mike Myers even made his first movie, because Ahuja showed me how much a ‘leader’ could be hated! He evoked that emotion – and much more – in almost everybody in office. I personally considered him the worst leader history had ever seen. And I realised all that one had to do to be a fantastic leader was to never do the things he did! Mr. Love Guru’s biggest claim to fame was that he never used to mix ‘work’ with ‘fun’! And he used to preach how the world’s top corporations reached ‘there’ because of this rule only. Ugghh!

If only Ahuja had even smelt of an imp of a company called Google! The 2008 Fortune 100 Best Companies To Work For list ranks Google at the brilliant position of #1 amongst all the companies in the world. In their in-depth analysis, Fortune writes, “Why is Google so great?... [Apart from other reasons] Google’s employees like to have a lot of fun during the work day – to relieve stress, build camaraderie and fuel creative thinking.” In fact, the “opportunities to learn, grow, travel and have wildly zany fun during the workday” are what sets the Google culture thoroughly apart. Google’s official “Top 10 Reasons to Work at Google” document clarifies amusingly, and in reality, “Work and play are not mutually exclusive.” Interestingly, Fortune writes that Quicken Loans, the 2nd Best Company to Work For, is also up there because of “its fun, family friendly workplace.” And that’s the common thread through the list. Digest this – Fortune’s year 2008 Best Paying Companies list gives the same Google the unbelievable last rank; clearly proving that being the best company to work for has nothing to do with pay!

Katherine Karl (Marshall University) and Joy Peluchette (University of Southern Indiana) perhaps wrote the rule book on this issue, How does workplace fun impact employee perceptions.... Their finding was succinctly put; and they wrote, “Our results showed that employees who experienced fun in the workplace had greater satisfaction with their job!” Renowned international behavioural scientist Robert Nelson comments, “There’s a big difference between getting people to come to work and getting them to do their best work. Making work fun brings out the best in people.” The notoriously likable Herb Kelleher, CEO, Southwest Airlines, quotes about the employees he hires, “What we are looking for, first and foremost, is a sense of humour!” The last century’s most admired CEO, Jack Welch, writes in this issue of 4Ps B&M how you, as a CEO, have to be “dead serious” about managing employee emotions and being passionate about it at every moment! Steve Wozniak, the co-founder of Apple (Yes! With Steve Jobs!!) gave the following title to his 2006 autobiography – How I invented the PC, co-founded Apple and had fun doing it. Of course, work is worship. But fun mixed judiciously with work is what the world’s excellent CEOs recommend if you want the very best out of your people.

And that, unfortunately, is what my first Hitlerian boss never understood... In fact, I still get nightmares of Ahuja. He’s my Vietnam post-war trauma experience. My wife now calls my symptoms the Ahuja Syndrome. I call it the Love Guru’s kiss. Yeah, baby, yeah...

THE LEAGUE OF INCOGNITO MAFIOSI!

This happened to me a few years back. It was my eight-year-old nephew’s annual school sports meet [I call him Kit; he calls me Mama]. And the apt ‘grand’ final afternoon event was a classic seven member 350 metre relay race. There were five teams pitted against each other – three mean looking teams from the sixth grade, one more hooliganish clearly over-aged team from the fifth grade, and the last one, my bespectacled nephew’s motley ‘we-were-better-off-in-the-shade’ three-foot tall team from the fourth grade. I realised right away that their chance of winning was worse than what the term ‘impossible’ could have defined; but still, I was all for cheering them like crazy! Come on, they seemed truly excited, and winning wasn’t everything, was it!? Yeah, right, till the time dear Kit, balancing his spectacles on his nose, ambled over confidently to me and shoved a relay-race baton into my hand, with the quasi-order, “Come fast Mama, the seventh member has to be a guardian, and he has to run first!”

The ten seconds of silence that followed, with me looking perplexed, was a lifetime. Me?!! A relay-race runner?!?! The sun was burning down hotter than in a western movie; I could smell the sweat running down the back of my head into my spine. Worse, the cannibal competitors seemed all set to massacre the ‘fourth’ graders. No way could I be humiliated like this in public. Neither was I fit, nor was I on the right side of 30! And my team’s incompetence was more evident than the burning dust on the track. I shoved the baton rudely back into Kit’s hands, ordered him to find somebody else, and shouted, “Anyway, what difference can I make in a team born to come last?” I felt the words hit him like a ton of bricks. His expression changed from eager enthusiasm to sudden disappointment... For a moment, I regretted my words... But then, seriously, can an individual really make a difference? Especially when the team, for the lack of a better word, sucks?

O. E. Graves was born way back in 1811, on a farm near Vermont, to a family in perennial financial trouble. Afflicted with poor health throughout his life, he moved to New York and worked as a mechanic in a railway workshop, where he understood the concept of railway safety brakes. Graves kept wondering why couldn’t such brakes be used in elevators [which had already been invented]. His mechanic teammates kept dissuading him for his inane idea, trying to convince him that elevator lines were practically unbreakable. Despite all negative opinion, Graves conviction grew in his idea and in the belief that he individually could make the change. After years of struggle, and more of financial pecuniary, he invented the first elevator safety brake. In 1853, Otis Elisha Graves founded the world’s first ‘safety’ elevator company, today the world’s largest elevator company.

This man struggled to handle his doomed-from-the-start shoe business for many years. His invention was neither a product or a service. He invented a ‘process’ called General Electric! Neither is he Jack Welch, nor is he Thomas Edison [the founder, on paper at least]. His name is Charles Coffin, the man who convinced Edison that rather than simply having a ‘GE’, the company should depend less on individuals and more on self-replicating processes. Coffin understood that world-class companies can succeed over a long term only if the concept of innovation is not restricted to singular people and only when top performing people find their replacement, and in hordes. Edison made him the first President of General Electric. Renowned management expert Jim Collins quotes, “While Edison was essentially a genius with a thousand helpers, Coffin created a machine that created a succession of giants.” Today, the long dead and gone Coffin is rated by Fortune as Number 1 in the list of Ten Greatest CEOs of All Times!

This man used to see Star Trek like nobody’s business. He was so enamoured by Captain Kirk’s “Scotty, beam me up!” calls that he decided to find out how to invent such a phone. Despite everybody dissuading him [because of the unbelievably high costs involved], this general manager in a tiny electrical company kept working on the concept. On April 3, 1973, from a Manhattan street corner, using an apparatus that had no wires attached, he rang up Joel Engel, Head, Bell Labs research, to tell him, “Joel, I’ve beaten you in the race to make the first mobile phone.” Martin Cooper, the inventor of the mobile phone, individually re-invented not only Motorola’s history, where he worked, but of global telecom.

It is the night of September 25, 2000. This promising 23 year old Boston basketball player, who is a draft member of the ‘NBA bench’, is stabbed ruthlessly by hooligans. Medical reports show 11 lethal injuries to the back, face and neck, enough to kill any man. Doctors work relentlessly through the night to save him. Just when they’ve given up, a do-or-die lung surgery unbelievably gets him breathing again. The man lives, but just... Devastated physically, the chances of his coming back are, like I mentioned before, worse than impossible. Eight years pass. It’s June 17, 2008. The judgement night of NBA Finals history. Banknorth Garden in Boston is more than jam packed. The totally unfancied Boston Celtics, who have never won the NBA Finals in the last 22 years, are playing against the second highest winners in history, Los Angeles Lakers [featuring legends like Kobe Bryant, coaches like Kareem Abdul-Jabbar]. The game finally ends. Lowly Boston Celtics have beaten LA Lakers by a margin of 131-92, the largest margin ever in a championship game. The captain of Boston Celtics is an unknown Paul Anthony Pierce. This is his first NBA Finals appearance in life. Though he scores only 10 points, he is surprisingly named the Most Valuable Player (MVP) of the NBA Finals, because of the openings he creates... Oh yes, they also comment that he’s the same guy who was stabbed many times eight years back...

I call all these singular people The League of Incognito Mafiosi. We never knew their names, yet they kept working, steadfast in their beliefs, never giving up in the power of their individual self... Kit was still standing there, not letting his three foot persona stoop in front of me, his face grim, yet not stoic. He hadn’t moved an inch. I knew Kit had been practising with his friends for a long time for this race. But I had no idea that the reason he had invited me so fervently to attend the finals was to make me participate as the lead runner! And he had even promised his team members I would be there. The sun seemed to be mercilessly burning my face. The heat was unbearable. The silence, more than that. Kit kept standing there, not moving, and I wasn’t sure but I thought I saw his eyes turning moist, when he looked at me totally teary eyed, and commented in halting words, “Mama, you can make a difference. We don’t have anybody else... and I believe in you.” [The baton felt too heavy when I ran the lap; oh yes, we lost the race; ...and we won too; Kit made sure we didn’t come last; he was our MVP! And this time, I’m practising with them for the next year... An individual does make a heaven of a difference... Kit was that individual... Yes, ‘I’ believe!

Hypenotized by Apple

Watching the cloud of hype around last week's release of the new iPhone, I was struck by the way Apple's psychological influence over the tech industry continues to grow. I'm having trouble thinking of any recent technology product, let alone a smartphone, that got such heavy coverage for both its announcement and its initial shipment.

Apple's PR miasma is also starting to twist the thinking of people in the tech industry who ought to know better. Apple's gradually becoming the yardstick against which other tech companies are measured -- and since Apple is such a unique company, it's almost impossible for anyone else to measure up.

Case in point: A recent commentary by a CNET reporter, writing about RIM (link):

"There is no RIM hype machine and when a new BlackBerry is released, hardly anyone in the major media outlets care. And if they don't care, neither will the average consumer who doesn't know too much about the tech industry and won't read columns like this; they rely on the NBCs of the world to get by. So if RIM wants to more effectively compete against Apple, it needs to do everything it can to follow the Steve Jobs formula: secrecy, compelling products, and a great PR team. If it does, look for RIM to not lose as much ground as you may think. But if it doesn't, Apple will run amok."

Problem number one with this thinking is that Apple and RIM don't sell to the same markets. RIM's core is middle-aged business professionals; Apple's is hip twentysomethings. I'm not saying there is no overlap, but I've spoken to plenty of RIM users who would be embarrassed to carry a music-playing, video-watching hunk of eye candy like the iPhone into a business meeting. It's like announcing to a client, "I spend my work time on YouTube."

The second problem is that Apple's skill at PR has somehow turned into an excuse for reporters not to do their jobs. The implied message in the CNET article is, "if you don't put on a spectacle, the press will ignore your products." Excuse me, but isn't the press's job to dig out the real value and separate it from the hype? Don't we pay you (or sit through your ads) to look past the PR and fancy speeches and advise us on what really matters? If we just wanted someone to echo the latest hype, we could get all our news from blogs.

But the third problem is the one that worries me the most. Apple is almost uniquely good at marketing. Its communication power is a combination of longtime company history, Steve Jobs' personality, and a culture that values perfection in marcom. Any tech company that makes its goal to match Apple's flash is going to look bad by comparison.

If anyone from RIM is reading this, please listen to me closely. I beg of you, don't be chumps. You're Canadian, for God's sake. You don't do sexy. You do humble and inoffensive.

Steve's from California. He's a pop culture icon from the '70s; the Madonna of technology. If you try to imitate him, you're going to look like mom and dad pogo-dancing when Rock Lobster comes on at a wedding reception.

Not pretty. Not pretty at all.

Which brings us to Microsoft's latest marketing plan.

Word on the street is that Microsoft is planning a huge advertising campaign this fall to pimp its image. Microsoft executives say they have finally tired of taking all that abuse from the Mac vs. PC ads, and they're going to fire back with their own cool advertising this fall.

Remember what I said at the start of this post about Apple twisting the minds of tech company managers? They have done an incredible number on Microsoft, the sort of thing I used to dream about when I worked at Apple.


Welcome, Microsoft. Seriously.

When I was at Apple, one the competitive team's central goals was to goad Microsoft and Intel into targeting us in public. We used all sorts of tactics to irritate them. We printed bumper stickers that read "Honk if your Pentium has bugs." We hounded them in online discussions. We did press and analyst tours demonstrating all sorts of annoying flaws we'd found in Windows.

The whole idea was to get them so pissed off that they would lash out at us in public. Because we knew that when a market leader attacks a challenger, it just makes the challenger more credible.

So what is Microsoft doing? It's attacking the challenger. Microsoft VP Brad Brooks specifically called out Apple in a recent speech (link):

"There are a lot of myths out there in the marketplace today, a lot of myths around Windows Vista...we know the story is very different than what our competitors would like our customers to think.... Windows Vista is the safest OS in terms of security vulnerabilities in its first year of operation, safer than any other commercial or Open Source OS in its launch. Now, I don't hear Apple making claims about security around a product that is that great.... The other big thing that's different this time around is that we've got a pretty noisy competitor out there. You know it, I know it. It's had an impact, been a source of frustration for you, but today, that line, we're going to start to challenge. We're going to get our story back out into the marketplace.... We've got a highly vocal minority out there in Apple. They kind of look at this and say, hey, you know what, you're kind of boring with the mundane message; it's not cool. They tell you it's the "i-way" or the highway. Well, you know what--we think that's kind of a sad message."

Macintosh share is still just a small fraction of Windows' share, but Microsoft is treating Apple like not just a challenger, but as the opinion leader. Microsoft is responding to Apple's marketing, and what's worse, it's bragging about it in public. What an incredible turnaround from Steve Jobs' first days back at Apple, less than ten years ago, when Bill Gates appeared on the big screen and Jobs publicly kowtowed to him.

It's easy to say what Microsoft shouldn't do, but a lot harder to say what they should do. They do have an image problem, and they do need to do something about it. Here's my take: Apple has always been the cool one, and always will be. Microsoft has traditionally been the safe one. Not as flashy as Apple, but dependable and prudent; the choice that'll never get you fired. That's why 80% of the public has chosen Windows over the years. Rather than trying to act cool, which is destined to end in embarrassment, I think Microsoft should apologize for the problems with Vista, give a timeline for fixing them (I think many of them actually are fixed by this point), and then move heaven and earth to make sure people see them deliver on that promise.

The ironic thing is that Brooks actually did some of that in his speech:

"We had an ambitious plan. We made some significant investments around security in this product. And you know what, those investments, they broke some things. They broke a lot of things. We know that. And we know it caused you a lot of pain in front of your customers, in front of our customers. And it got a lot of customers thinking, and even yourselves and our partners thinking, "Hey, is Windows Vista a generation that I want to make an investment in?" "

That's not a bad start, but in today's Apple-soaked industry atmosphere, the snide comments on Apple dominated the coverage. The best example was the Wall Street Journal's business and technology blog, which headlined its article, "Microsoft Ready to Hit Back at Mac Guy" (link).

So now every Microsoft ad in the new campaign is going to be judged on whether or not it's as clever and cool as an Apple ad. I'd like to ask for a show of hands -- who thinks Microsoft can out-cool Apple?

Anyone?

And as for RIM, well, I'm sure you could do a better job of PR than you do today. But don't try to be sexy. A message more like, "real men use a thumb keyboard" is probably the ticket for you.

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Thanks to mjelly.com for featuring Mobile Opportunity in the latest Carnival of the Mobilists.

WHY WOMEN LIE, CHEAT AND CAN NEVER BE TRUSTED!

Jesus Christ! If I had made this statement in the US, I might have been flogged in public! But think about it, is there any woman in this world who doesn’t lie all the time, who doesn’t cheat people every moment, and who can ever be trusted even for a nano-second? Well, if you’ve reached this part of my editorial, you’ve fallen into the trap I laid for you like sweet unsuspecting daffy duck! The fact is, neither do I believe in my own statement above, nor do I care a hoot about the answer. But I care a billion hoots about ensuring people read my editorials. And if that factor is the critical measure of my performance, I, dear Angelina, have succeeded like nobody’s business. Controversy begets performance! Reputation has no correlation with success.

Shocked? Gulp down the air stuck in your pipe, for indisputable research from across the globe proves this a thousand times over. Check it out! The most path breaking research globally was the one by noted Professors Chung, Eneroth and Schneeweis of the reputed University of Massachusetts. In their paper titled Corporate Reputation and Investment Performance, the stalwarts prove, “There exists little relationship between high corporate reputation rankings and a firm’s equity performance. It is primarily a firm’s equity market performance...that affects published reputation ranking, and ranking has no impact on the firm’s future returns.” To that effect, even Professor Hungtao Tan of Southwestern University of Finance and Economics, in 2007, thumpingly concluded in his report Corporate Reputation & Earnings Quality, “I find no evidence to support that companies with good reputation share superior earnings relative to the corresponding industry levels.”

To the utter consternation of doubting Thomases, global authorities S. Brammer (University of Bath), C. Brooks (Cass Business School) and S. Pavelin (University of Reading), in their classic international December 2005 report, Corporate Reputation and Stock Returns, electrifyingly state, “There is no such thing as bad publicity. We find that those firm’s whose [reputation] scores have fallen substantially still exhibit positive abnormal [stock] returns in both the short and long run!” Famed Doctors Rajiv Sarin and Brit Grosskopf from the Department of Economics, Texas A&M University, in their world class August 2006 thesis, Is Reputation Good or Bad? An Experiment, ruthlessly devastate past notions and establish, “Reputation is not bad, but neither is it as good as previously thought... as long run players are able to do equally well without having reputations.”

And it’s not just about controversies or reputations per se, but even about the pathetically manipulated agendas that ranking agencies globally have. In their universally published covenant (The Reputation Quotient), Dr. Charles J. Fombrun, professor of management at Stern School of Business, and Dr. Christopher B. Foss, Associate Director of the Reputation Institute, state, “Measures of reputation proliferate, encouraging chaos and confusion... Some are arbitrarily performed by private panels... Some are carried out with private information and are unverifiable.” And now, report after report [NYSE CEO Report 2008, SMU Cox CEO Sentiment Survey 2007, PwC Global CEO Survey] proves that CEOs don’t give priority anymore to reputation or to published rankings, but only to performance. Moving ahead, Authorities G. Chen and Dean Tjosvold of Tsinghua University, Beijing, in June 2006, analysed that “participation and people values, coupled with constructive controversy, provide a foundation for effective CEO leadership!”

And why not! The most successful of global CEOs – Steve Jobs, Jack Welch, Steven Ballmer, Larry Ellison, Lee Scott – have been those who have been most controversial. The most successful of global companies – WalMart, Chevron, GE, BoA, Citigroup – have been the most controversial. If you thought the amazingly successful movie, Erin Brockovich, ran full house because Julia Roberts ‘controversially’ revealed more than her usual self, you perhaps forget, 30 sickening million gallons of oil spilt in Brooklyn, New York, that led to a historic never-before seen $58 billion class action suit, was targeted at a company that is now the world’s most profitable company ever, Exxon-Mobil (with 2007 sales of $373 billion and profits of $41 billion)! Quick, answer my questions. Most controversial book? You said Da Vinci Code, did you? Or The Satanic Verses? Both historic best sellers. Most controversial brand? Coke? It’s the most valued brand ever! And of course, most controversial group of people? Ah, women, obviously! Aren’t they the very best!!! :-) And don’t we love them like crazy :-)

The end of the dream

No matter how it works out in the long run, the purchase of Symbian by Nokia marks the end of a dream -- the creation of a new independent OS company to be the mobile equivalent of Microsoft. Put a few beers into former Symbian employees and they'll get a little wistful about it, but the company they talk about most often is Psion, the PDA company that spawned Symbian.

Psion never got much attention in the US, but it was a pioneer in the PDA market in the UK, and even to this day I think the Psion Revo is one of the two coolest-looking PDAs ever made (the Palm V is the other one).


The Revo

Psion explored many ideas that eventually turned into major new consumer electronics categories, but it failed to follow up on them. The company was effectively dismembered when Symbian was formed, and many of its best people drifted off to other companies. Now Symbian itself is transitioning to something very different, with most of its people absorbed into Nokia. What the Psion veterans talk about wistfully is how many smart people worked at Psion, how many great ideas the company fumbled, and how successful many of the people have been in the tech industry post-Psion. In this sense, Psion is similar to many other tech pioneer companies that assembled staffs of very bright people, taught them how to work together, and then blew apart like exploding stars, scattering the elements of new companies across the industry. This process dates back at least to Fairchild Semiconductor, which trained the founders of many of the most prominent semiconductor companies (link). You can find similar networks of former employees from places like Apple, Netscape, and Palm. I think Yahoo is in the process of forming a network now, and some day there's going to be a dandy one made of former Googlers.

What makes the Psion story different is that many of the Psion veterans had to leave the UK, or join non-UK companies, in order to become successful. Some are in other parts of Europe, some are in the US, and some are in London but working for foreign companies. This is a source of intense frustration to the Psion folks I've talked with. They feel like not only their company failed, but their country failed to take advantage of the expertise they had built.

There's a big body of academic research on why Silicon Valley has been successful in sustaining itself, and part of the reason is that the Valley recycles companies very efficiently. Failing companies do not last long, but in the process the brightest people and ideas are rarely lost, they are just shuffled around into new configurations.

About a year ago, Andrew Orlowski of the Register wrote an amazing article on the history of Psion, and how company culture and government philosophy failed to take advantage of it to grow a new industry. It's the longest piece I've ever seen in the Register, almost the nucleus of a book, and it's well worth reading. It didn't get enough attention when it was published, and I'm embarrassed to say that I never posted a link to it. So I'm glad to remedy that now. If you want to understand the context what happened to Symbian, and learn a bit about how the tech industry works, go read it here.

If you want to hear more about what Symbian is morphing into, two of its executives have just started personal weblogs in which they are commenting on the migration to Symbian Foundation (among other things). It's an interesting move, and it seems symbolic of the transition they're trying to make into the open source world. Previously Symbian had a company blog that several execs contributed to; now the execs have personal blogs where they talk directly to the industry.

David Wood (Symbian's EVP of Research) link.
John Forsyth (Symbian's Strategy VP) link.