The Unanswered Question About Apple Maps

I agree with almost everyone else that Tim Cook was right to quickly apologize for the problems with Apple Maps.  If you're in the US, you can contrast his handling of the situation to the National Football League's handling of its referee lockout.  The lesson: Deny a problem and the public will feed on you like wolves on a crippled buffalo.  Acknowledge the problem and people will give you a second chance.  The apology is especially effective if it comes from a person (not a corporate statement) and sounds sincere.  Most of us want to be nice to one another, and a personal apology taps into that reflex.

So fine, I'm sure Apple will fix the app eventually, and in six months this whole thing will probably be a distant memory.

What I'm wondering about is a much more serious problem that may not be solved in six months, and that (unlike the Maps app itself) threatens Apple's long-term prosperity.  The question:

How in the world did Apple make a mistake like this in the first place?

I'm not talking about shipping an unsatisfying app; that happens to any company.  I'm talking about making an obviously underwhelming and unfinished app a centerpiece in a critically important new product announcement.  If you have an app that isn't perfect yet, position it that way.  Tell people that it's just getting started and needs more work.  Instead, Apple execs gushed about Maps on stage.  Scott Forstall made it the first feature in his iOS 6 demo, and spent more than two and a half minutes talking about it (link).  This sort of mismatch between message and delivery is a sign that Apple's product management and review process failed utterly somewhere along the line.

It's a little bit like NASA launching the space shuttle Challenger when people in the organization knew it might blow up.  The issue is not that there were flaws, it's that they went ahead with the launch despite the flaws.

Of course nobody has been killed by Apple Maps, so it's a very different sort of problem.  But both are related to organizational culture and business practices.  Like NASA's culture of safety, Apple is supposed to have a culture of great product functionality.  It's the center of what makes the company special.  That process failed spectacularly in the case of Apple Maps, and speaking as somebody who spent years reporting into the product management organization at Apple, there is absolutely no excuse for what happened.

Apple's marketing machine is so powerful that any major failure in a marquee feature gets magnified enormously.  Even Google can probably get away with a big feature failure or two; you expect Android to be a bit loose around the edges, and lord knows Google backtracks on initiatives all the time.  But Apple claims that it will amaze and delight us with its new products, and so people naturally expect greatness.  It's what justifies the intense coverage of Apple's announcements.

There are several possible explanations for what went wrong, all of them bad.  Maybe:

--The product managers on Apple Maps knew it had problems but didn't think users would care.  Or

--The managers of Apple Maps knew there were problems, and reported the problems, but were ignored by middle management.  Or

--The middle managers reported the problems, but senior management ignored them.  Or

--Maybe Apple has become so insular and self-satisfied that no one there realized the difference between a good looking maps app and a usable one.

It comes down to this: are you incompetent, bureaucratic, or out of touch?

Screw-ups like this happened occasionally at Apple under Steve Jobs.  Someone once described to me the experience of being in a group that was pulled into a meeting with Steve where he said, "you let me down, and you let the company down."  My friend said it was one of the worst feelings ever, and it also resulted in job changes for the people responsible.  That may be something Tim Cook will need to do.  But he also needs to ask some deeper questions.  Is this just a failure of a particular manager or team, or is there a cultural or process problem that needs to be fixed?  That's a very tough question to answer.  You don't want to mess up the culture and practices that Steve left behind, but at the same time you can't permit this sort of mistake to become a routine event.

When I was at Apple back in the 1990s, before Steve returned, we had a joke we told on ourselves:

Q:  What's the difference between an Apple salesman and a used-car salesman?
A: The used car salesman knows when he's lying.

Apple needs to be sure it doesn't slip back into that old habit.

The final installment of the Oswald-Green debate on home-owning in The Economist

It is here.

The Oswald-Green Debate in the Economist: Rebuttals

Andrew says:

If high levels of home-ownership impair the efficiency of the labour market, then the costs are potentially huge. It is the job of economists to point that out.

I say:

Does home-ownership gum up labour markets? A number of papers sought to test Mr Oswald's conjecture and my takeaway is that the impact of tenure on labour markets is marginal.

[Note: as an American, I never myself would write "labour," so The Economist changed spellings to conform to their style].

Judging Apple: It's Really (Still) About Steve

It's been interesting to watch the passionate reactions flow back and forth about Apple's iPhone 5 announcement.  Most of them fall into two camps:

-Apple is failing.  The announcement was a boring disappointment, Apple is falling behind on features, and its execution is deteriorating.  Just look at the mapping app in iOS 6.

Or

-The Apple haters don't get it.  Look at the huge sales, Apple has always focused on functionality over feature list, and you have no idea how impressive it is that they packed that much circuitry into something so thin and elegant (link).  Oh, and that map thing is a tactical retreat to get a better long-term future.

Both sides have some valid points, but I think what's driving the peculiar energy in the debate is a question that almost no one's putting on the table, and that no one can answer yet: Can Apple without Steve Jobs still put lightning in a bottle?  Can it come up with that new category-busting product, like the iPhone and iPad, that overturns whole industries and makes us all nod our heads and say, "yes, of course, that's how the future should be"?

I think the Apple defenders generally believe that Apple can do it, and judge the current announcements as the normal incremental steps Apple takes between product revolutions.  The Apple critics don't take it for granted, and are studying each announcement for signs of bottled lightning.  When they don't get it, they feel uneasy, and that colors their comments.

The reality is that we don't know what the new Apple is capable of.  It's unfair (and unrealistic) to expect magic in every announcement.  The market can't absorb that much change, and no single company can produce it.  But until Apple rolls out a new category-changing product, we can't know if it is truly the same power it was before Steve died. 

Apple today is huge, rich company run by a bunch of middle-aged white guys who drive very expensive cars (link).  Like any company run by a homogenous team with low turnover, it makes them potentially vulnerable to getting out of touch with the real world.  That was also pretty much true before Steve died, but most people trusted that he had the mystical power of product design that enabled him to discern new product categories and make brilliant decisions about feature trade-offs.  We don't know if his acolytes can do that.  Is there a process for brilliance, or did that pass away with the founder?

When Apple made mistakes in the past, people trusted that it was an aberration that Steve would soon fix.  Now when there's a mistake, I think there's fear in many minds that this isn't an aberration, it's the new normal for Apple; that the company is turning into a big successful outfit that often does good incremental work but also makes big glaring errors because of inertia or internal politics, and is too self-absorbed to see them before they go splat in public -- like the abortive decision to withdraw from Epeat green certification (link), like the rescinded staffing changes in the Apple stores (link), and like the mapping situation.

Apple's success makes it a target for huge, powerful competitors: Samsung, Google, Microsoft, and others. Its ultimate defense has always been its ability to change the rules, to alter the competitive landscape in ways that put the other guys at a lasting disadvantage.  If Apple has lost its ability to change the world, the fear is that it'll become the business equivalent of the battleship Bismarck: a stationary target as more and more business firepower is concentrated against it.

We don't yet know what the new Apple can really do, and it'll take another two years or so to find out for sure.  Until then, we should expect the passionate debate between the faithful and the skeptics to be renewed every time Apple announces anything.  Just keep in mind that the debate won't really be about the products.  It'll really be about Steve.

Ed Glaeser weighs in

He advocates neutrality:

The government should neither encourage nor discourage home-ownership. Significant public interventions require evidence of significant market failure, and confidence that the costs of state action will be less than the costs of those market failures. These conditions are not met in the housing sector, whether we are contemplating pro or anti home-ownership policies. 

The case for home-ownership often begins with the view that home-owners are better citizens, who create social benefits by investing more in their communities and their governments. My work with Denise DiPasquale does find that home-owners are more likely to work to solve local problems, to vote and to know the names of local leaders. These effects reflect both home-owners' stake in their community and their tendency to live in one place longer. 

If Apple is so cool...

...why doesn't their new map ap give public transit directions?

Andrew Oswald and I debate the merits of homeownership in The Economist

Ryan Avent moderates:

The view of home-ownership as a pillar of economic and social welfare is deeply ingrained across much of the rich world. It seems natural to think a household that owns its home is invested in society in a way a renting family never could be. It is bound to be richer, thanks to the ability to accumulate equity. Its members are sure to take a greater interest in the health of their neighbourhood and the quality of local institutions, if only to help protect the value of their property. And because of that interest in property value, home-owners may be more politically active, to help secure sound and stable governance....

Andrew Oswald defends discouraging ownership:

Home-ownership has reached inefficiently high levels; it has become a distorting totem; modern generations have been brainwashed to believe there is something wrong with them if they rent. We do not want developing countries to mimic the West's post-war obsession with owner-occupation.

There are five reasons to discourage home-ownership. Let's call them: look at the data; efficiency of the labour market; macroeconomic stabilisation; sensible lifetime budgeting; entrepreneurial supply; the common sense of diversity...

I argue against discouraging homeownership:

The motion "Should home-ownership be discouraged?" takes a novel formulation. Generally, the question policymakers ask is whether home-ownership should be encouraged, which suggests that there are social benefits to owning a home. In this case, the affirmative position is that home-ownership should be discouraged. This implies that having people own their homes is socially costly. Thus, my task is to show that home-owning is not socially costly.

I can think of three potentially legitimate arguments for why home-owning might be socially costly; I do not think that any of them are straw men, but I also think that none of them is convincing.

Are ballots more democratic than markets?

I really don't know.  But Parris Glendening made an interesting point at a conference I participated in at GW last week: that in Los Angeles, people decided to tax themselves (via Measure R) to build a light rail system.  So while such systems fail to pass the cost-benefit test, and often worsen the bus service that low income riders rely on, they do, in the case of LA, reflect the will of the people.

I am guessing most people don't read the works of John Kain before they vote; they also don't read IEEE journals before buying PCs.  Los Angeles is implementing measure R in the manner described when it was on the ballot, which makes it very different from the high-speed rail initiative.  I think I need to make my peace with light rail in LA (although I sure wish the Expo line worked better).

Why doesn't cheap RAM hurt SAS?

I don't use SAS anymore because I can now fit large datasets in RAM using Stata.  But SAS sales are doing well.  I wonder why?

How life really has gotten better for researchers

The first non-thesis project I worked on as an assistant professor used the 1 in 1000 Public Use Microdata Sample of the US Census.  My recollection is that the sample had about 63,000 observations; I had to spin a tape to read data into a big iron VMS machine using SAS, and it took about 10 hours to do so.  The year was 1990.

Yesterday, I read five year ACS household data into my Macbook Pro using Stata.  It is broken into four files with about 1.5 million observations each.  Each file took about 2 minutes to read. This is really, really nice.

  

Chris Leinberger reels off a nice line

I was on a panel with him at GW on Tuesday, and he said something like, "when people think of New York, they think people live like Woody Allen Jerry Seinfeld, when in fact most people live like Tony Soprano."

My favorite National League team is the Dodgers....

...and my favorite American League team is whatever team has Billy Beane as its general manager--which is still the Oakland As.

The As have the same won-lost record as the Yankees with 1/4 the payroll.  That is the kind of austerity I can get behind, because it is austerity based on statistics.  But what is remarkable is that after Michael Lewis' Moneyball ( a terrific book) and Bennett Miller's Moneyball ( the highly enjoyable movie version of the book), what Beane is doing is no secret, and yet most other teams have not been able to figure it out, showing that information inefficiencies can stick around for a long time.

The Red Sox were able to combine money with moneyball for awhile to banish to curse of Ruth, but, well, not reason to dwell on others' misery.

(BTW, even though I have only lived in LA for four years, I have been a Dodger fan for much longer, because my wife, a native Angelino, grew up in a Dodger household.  Giving up the Cubs was not a hard thing to do).

On Labor Day, it is worth revisiting Lipsey and Lancaster (1956)

From The General Theory of Second Best, by R. G. Lipsey and Kelvin Lancaster, The Review of Economic Studies, Vol. 24, No. 1 (1956 - 1957), pp. 11-32

It is well known that the attainment of a Paretian optimum requires the simultaneous fulfillment of all the optimum conditions. The general theorem for the second best optimum states that if there is introduced into a general equilibrium system a constraint which prevents the attainment of one of the Paretian conditions, the other Paretian conditions, although still attainable, are, in general, no longer desirable. In other words, given that one of the Paretian optimum conditions cannot be fulfilled, then an optimum situation can be achieved only by departing from all the other Paretian conditions. The optimum situation finally attained may be termed a second best optimum because it is achieved subject to a constraint which, by definition, prevents the attainment of a Paretian optimum.

Everyone who takes Econ 1 (or its equivalent) learns this; it doesn't seem to me that people remember it very well.

A question for Joel Kotkin: What happened to choice?

Joel Kotkin, who often correctly defends auto-oriented suburbs as reflections of many people's preferences, has written that he opposes a new zoning code for Hollywood that would allow for it to become denser.

The code does nothing to force developers to build 50 story apartment buildings, it simply allows developers to build 50 story apartment buildings.  Hollywood is, as he notes, a bit scruffy, but it is also adjacent to  some very expensive real estate, with the Hollywood Hills to the north, Hancock Park to the south and West Hollywood to the west.  It also features two subway stops on a subway line that has pretty decent ridership.  It is entirely possible that market forces would lead developers to increase its density, were they allowed to do so.  These market forces also reflect preferences.