Jim Dalrymple:

I sat last night reading reviews of the RIM PlayBook and wondered what the hell the company was thinking releasing this product. I’d email the company, but they wouldn’t get it, since the PlayBook doesn’t have an email client.

Yes, you read that right. The mobile company that built its name on being the email company doesn’t have an email client on its tablet. That is one of the most asinine decisions I’ve seen of any tech company in a long time.

They’re flailing.

Amazon will sell an ad-supported Kindle for $114, $25 less than the ad-free WiFi Kindle.

Bizarre; $114 is an odd price to choose and $25 isn’t much of a price reduction for looking at ads every day on a device whose entire point is to be a quiet, distraction-free way to read books.

The only thing I can figure is this is a half-hearted experiment on Amazon’s part—an experiment with a lower price-point for the Kindle and an experiment with an ad-supported model. Perhaps the WiFi-only model’s margins are already too thin (or non-existent) so they couldn’t justify cutting the ad-supported model’s price down to $99.

Marcelo Somers:

But shouldn’t part of that initial proposal be what’s awesome about the product? What sets it apart? What is going to be amazing about what you’re doing? “What is the right reason for your profitable growth?” as Howard Schultz puts it.

Want an example of what I meant by “no strategy, no future”?

Here’s what Microsoft did to Courier, a promising (and original) tablet concept they were working on:

So when Robbie Bach, who led the company’s entertainment and devices division at the time, presented his idea to CEO Steve Ballmer and Microsoft’s senior leadership, he expected enthusiasm and additional funding for the project. There was just one problem: The Courier prototype borrowed from Windows, Microsoft’s vaunted computer operating systems, but had an operating system all its own. (That’s what Apple did with its iPhone and iPad — it built a new operating platform based on its existing Mac OS X.)

Bach learned a hard lesson about the power and might of Windows within Microsoft. Not only would Bach not receive the extra funding he sought, said Ballmer, who personally delivered the blow, but there would be no Courier because it was unnecessary. The best of Courier, where appropriate, would be folded into the next version of Windows, Windows 8, due at the end of 2011 or in 2012 — or maybe even Windows 9. Several months after its death, Bach announced his retirement.

The problem is very simple: they are so beholden to Windows that anything that might threaten it—whether it comes from outside the company or inside—has to be eliminated. Effectively, Microsoft is protecting Windows at the expense of the company’s long-term success. That’s not only a mistake. It’s absolute idiocy.

Microsoft has the potential to be successful in the mobile market; Windows Phone 7¹ is well designed and original. They have the talent. Their issue is management. Microsoft’s management refuses to threaten the company’s current business to be an important player in the mobile market. In other words, they would rather be irrelevant in the future than possibly—oh, no!—give up Windows.

Their tablet strategy is a perfect example of this. Microsoft thinks tablets should use the same operating system as PCs, with a user interface “optimized” for touch. Tablets, then, aren’t completely new devices, distinct from PCs, which would require a new use paradigm and thus a completely different user interface; instead, they are just a different form factor for using the same PC operating system we’ve been using, with the same basic use concept and user interface, just with a nice touch layer overlaid.

Why would Microsoft want tablets to be merely derivative of PCs? That’s easy: because it means what they’re currently doing, licensing a PC operating system and selling software for PCs can continue unchanged.

Microsoft’s management isn’t thinking about where computing is moving, how they can improve people’s lives and how they can capitalize on it. They’re thinking about how they can preserve their current business. And that’s a fantastic path toward irrelevancy.

1. Their phone operating system’s name is symptomatic of their inherent problem: they put “Windows” in the name of a mobile operating system that doesn’t even have windows. They are so dependent on Windows they are afraid even to name their mobile operating system something different. [↩]

What’s even more dangerous for a company than not being profitable is not understanding why they are successful. Success doesn’t beget success. Understanding the reasons for it does.

When a company has a hugely successful product, the human tendency is to stick to it—get all you can out of it before moving on. This makes some sense. Why would you move away from something that’s provided your company with huge profit margins and a beautiful bottom line? And shouldn’t you squeeze every dollar out of your investment in a product before moving on?

This tendency, whatever its origin, is a fantastic way to fade into irrelevance. While you’re still evolving your Walkman, refining it toward CD-playing perfection, someone else will sell the iPod.

Peter Drucker wrote in Management:

The root cause of nearly every one of these crises is not that things are being done poorly. It is not even that the wrong things are being done. Indeed, in most cases, the right things are being done—but fruitlessly. What accounts for this apparent paradox? The assumptions on which the organization has been built and is being run no longer fit reality. These are the assumptions that shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. … They are what I call a company’s theory of the business.

You shouldn’t just be thinking about how you can improve your current products—how you can make your horse-and-carriage a little lighter, a little cheaper, a little better. You must be thinking about whether your assumptions about the business you’re in are the same as they were yesterday. You should be thinking about what will make the horse-and-carriage irrelevant, and how you can be the one to do it.

To be successful in the long-term, you need to be willing to slaughter your own golden gooses.

It’s risky. You could guess wrong and release a new product that has no chance of succeeding. But sticking to what’s worked, because it worked for a while, has no risk: you will fail.

This is Color’s business model:

Advertising through the app. We’re going to build a intelligent system that allows businesses to participate with their customers. So when you walk into a restaurant and you use Color, and they’re also customers through a self-service Web interface — or actually a self-service iPad interface — every time you walk into the restaurant, your [first] name will show up with your picture. The maitre d’ or receptionist will know who you are, they’ll be able to welcome you, they’ll know the last time you were here, they’ll be able to see pictures if you took them here. They’ll be able to provide you better service than they’ve ever before, that’s going to drive up their revenue by increasing repeat business because we always want to go back where we feel welcome.

Let’s set aside privacy objections for a moment here.

This depends on a large, active user-base to work. A restaurant, or some other company, would only pay for this sort of service if a large number of their customers use the application, or would possibly use it. If they don’t, or can’t be encouraged to, there’s not much benefit.

But acquiring a large user-base requires Color to be a useful service all on its own, and at this point, it isn’t. There’s nothing for me to do with Color right now because for me to benefit from it, a large number of people around me need to be using it, too. There’s no immediate benefit to using Color, which makes it very difficult for the service to take off.

Instagram is immediately useful because users enjoyed taking photos and applying filters to them, whether they had any friends using the service or not. That stickiness gave Instagram the ability to gather users, because people didn’t stop using it after using it for the first time.

There is no equivalent feature in Color. It’s entirely dependent on others using it and those users being around you. It’s puzzling why Nguyen thinks Color will be the social network that makes this business model a reality when they don’t seem to even have a way of building up a respectable user-base.

Jean-Louis Gassée on RIM:

RIM reigned at a time when your Blackberry came with everything you needed.

RIM is a perfect example of what can happen to a dominant company that doesn’t attempt to cannibalize their own successful products. RIM was perfectly content to continue selling you email-sending, hardware-keyboard phones as long as you kept buying them—they had no intention of changing that basic formula very much. Why ditch something so profitable?

A dominant product, which drives a company’s profitability and makes them very, very successful, can also quickly become the very thing which destroys the company. RIM was content to keep selling Blackberries, and so before January 2007, they never thought to consider long-run trends in the mobile industry, nor potential opportunities for them. They didn’t see that smartphones could become mobile computers, nor did they see advances in touchscreen technology, because if they recognized these opportunities, they would need to throw out their current business. And because they weren’t willing to take that risk, they are faltering now.

For a business to be successful in the long-term, they must show no devotion to their current products. They must be willing to throw them out at any moment and start over. Their eyes should not be focused on their current profitability; rather, they should be dead-set on where things are going in their industry, what opportunities there are for them as a result, and even how they can apply their core competencies to new areas.

Chris Bowler:

At this moment I sit back and wonder two things: how does a large corporation like Apple do such a great job at getting the little things right. And so consistently. More importantly, for the love of all that is good in this world, why are other companies not WRITING THIS ALL DOWN AND EMULATING EVERYTHING APPLE DOES?

It’s amazing what treating your customers with respect can do.

Jack Dorsey isn’t pursuing the ephemeral. He’s trying to do something worth doing:

One recent town-square meeting, in fact, was devoted to the aesthetic virtues of the Golden Gate Bridge. “We’re the only payments company in the world that’s concerned with design,” the Prada-clad Dorsey begins. He shows a dramatic photo of the bridge taken from atop one of its towers. “This is what I want to build. This is classy. This is inspiring. This is limitless. Every single aspect of this is gorgeous. . . . So your homework this weekend is to cross this bridge, think about that, and also think about how we take those lessons into doing what we do, which is carry every single transaction in the world.”

He started a company that, fundamentally, does sale transactions, yet he’s talking about the Golden Gate Bridge as not just art—but something at once eternally beautiful and elegant, and perfectly functional, and that that’s what he wants to achieve.

This is what business, what creating, is about. Profit is not the goal, but a necessary condition for what you are trying to achieve. That is the purpose.

Horace Dediu:

The common adversary is the telecom industry. It’s an industry being undermined by the technological change of mobile computing and its profits are up for grabs. Apple and Google have different approaches in implementing this change but in the end they dismantle and absorb profits from the same target.

They are also benefiting each other. Apple benefits Google by creating user experience innovations which Google can rapidly copy. Google benefits Apple by increasing smartphone consumption–educating markets to the value of mobile computing and crippling the profitability (and thus the ability to innovate) of Apple’s direct competitors.

Using Frank Chimero’s book project, And Rutledge wrote a criticism of Kickstarter:

By taking the professional-to-client approach for what should be a merchant-to-customer context, Mr. Chimero has abdicated ownership of his idea/genius and the results that will come of it. Having bought and paid for it, the collective investors now own his genius in this project. By selling out first before he created the product he promises, he’s now working for the investors instead of working for himself.

Read the whole thing.

Rutledge’s argument is that, because supporters have invested in the project, rather than Chimero completing the book and then selling it to them (which they would have bought based on what it is), the investors now own his work. It is no longer his work—it is theirs, since they bought it—and thus, they have every right to direct it.

Rutledge’s critique, if considered generally, is spot-on, and is especially apt in application to venture capital-funded companies.

But his criticism is misplaced in this case. I’ve supported two projects on Kickstarter. The first project I supported was Pancake Breakfast’s first record, and the second was the Glif.

These were two very different projects. I had little idea what Pancake Breakfast’s record would sound like, or whether I would even like it. I supported them because, (1) I listened to a few live songs of theirs on YouTube and I enjoyed it and (2) they seemed like a great group of people. That’s not a lot to go on.

I supported the Glif project for very different reasons; I supported it because I saw the product, I saw precisely what it did, and I knew it would be useful for me. In effect, I wasn’t so much “supporting” them as pre-ordering it.

In both of these cases, however, the creators retained full creative control. I had no say in how Pancake Breakfast arranged their instrumentals or what manufacturing process the Glif team used. This wasn’t because they shirked a duty of theirs, though; this was because I wasn’t supporting them to receive some say over what they did, but because I wanted to support them in creating what they wanted to make.

That’s how Kickstarter works. I support very few projects, but the ones I choose to support are because I am interested in what they want to build and I want them to do so. I don’t want control; I just want to see them complete it and receive the finished product. That’s how supporting others should work: you only support projects and people you believe in enough to trust them to make something fantastic.

Brad Stone has a long piece in Business Week on Google’s evolution as Larry Page takes over as chief officer and the challenges he’s facing. It’s a great piece and worth reading.

One part, though, struck me as indicative of Google’s central problem:

To some, the Chrome OS project represents Google’s identity crisis—and the inability of its top decision-makers to marshal resources efficiently and kill redundant projects. After all, the company already has a successful operating system—Android—and the two projects don’t mesh. Andy Rubin’s software requires applications to be downloaded and run from a device’s local memory. Chrome, on the other hand, runs applications that sit in the cloud and use a new Web standard called HTML5. Rubin and Pichai “both have huge projects that are being propelled in part because Google values their talent,” says Danny Sullivan, editor of the blog Search Engine Land. “At this point, though, you’ve got to keep scratching your head. Why do they still have Chrome?”

Pichai sees no such conflict and says he’s not building software to suit the conventional wisdom. “Some things give you an easier way out of the door because you are doing something that fits into the hot category of the moment,” he says. “I want to know that we are building something that people will find useful.” While the upcoming range of tablets and set-top boxes all run Android, Pichai isn’t forfeiting that fight, either. “We are building a software layer which will work across every type of hardware over time,” he says.

You could argue this is an advantage; Google has two strong technologies developing and competing within their organization, they have the resources to develop both, and they can choose to back the winning horse.

That might be a convincing argument if Google hadn’t turned both Chrome and Android into shipping products, but they have. It might be a good thing to have this kind of competition within the company, but the products you release must be as a result of a concerted strategy. I don’t read Android and Chrome as indicating that Google has a huge amount of talent and potential; I read it as their executives are too afraid of making a decision because they don’t have a strategy for what they’re doing. Chrome and Android, rather than Google projects being directed by management, seem more like two separate businesses competing with each other that just happen to be under the Google banner.

If anything, Google’s strategy seems to be trying anything and everything and seeing what sticks. Google Buzz and Wave are the biggest examples, but all you need to do is look through Google Labs to see they aren’t the only ones. Having a huge number of projects, some that contradict others, isn’t a replacement for an actual, concerted strategy.

Larry Page’s biggest task is to do what Steve Jobs did for Apple when he came back—clear out the underbrush and give his company purpose again.

Eric Schmidt says that Larry Page will be taking over as CEO in April:

For the last 10 years, we have all been equally involved in making decisions. This triumvirate approach has real benefits in terms of shared wisdom, and we will continue to discuss the big decisions among the three of us. But we have also agreed to clarify our individual roles so there’s clear responsibility and accountability at the top of the company.

Larry will now lead product development and technology strategy, his greatest strengths, and starting from April 4 he will take charge of our day-to-day operations as Google’s Chief Executive Officer. In this new role I know he will merge Google’s technology and business vision brilliantly. I am enormously proud of my last decade as CEO, and I am certain that the next 10 years under Larry will be even better! Larry, in my clear opinion, is ready to lead.

Good news.

John August writes:

At Google board meetings, do they discuss whether they should aim for smaller market share? I doubt it, though if asked about any other industry, they would stress the importance of robust competition.

Narratively, that’s the story I find most interesting about Google. At a certain point, do you become so large and powerful that evil is unavoidable?

Google isn’t evil. Shrouding their business model in the cloak of “openness” might be dishonest, but they certainly aren’t evil.

There isn’t anything morally wrong with Google’s Android strategy. Their business is advertising, mobile is the next big growth market that’s going to define how we use computers for the next few decades, and so they’re trying to secure a place for themselves (a strategic place, at that) so they can remain successful.

There’s nothing wrong with that. When I wrote my piece explaining Google’s Android strategy, I wasn’t trying to vilify Google or explain why readers should abhor them; rather, I was trying to explain what they’re doing. I personally dislike their strategy (trying to commoditize your competition’s greatest advantage and then make money through advertising strikes me as lazy), and I think mobile devices will be better off if Apple’s paid market succeeds versus a web-like, advertising-based model, but that’s not evil. It’s just different than what I think is a good strategy and what will, in the end, be beneficial for users.

Dan Moren wrote this after Jobs’s last leave of absence:

But while Steve as the one-man prophet, priest, and king may be irreplaceable—and I brook no argument over the fact that he’s a Great Man—that doesn’t mean that he can’t be replaced at all. Over the years, Apple’s developed a solid roster of senior talent in a myriad of fields, all of them players brought to the majors with the approval of Jobs himself. As CEO, he’s built a team that subscribes to his ideology, who can ably steer the ship in his absence, whether it be temporary or permanent.

That’s right. Jobs didn’t build Apple to orbit around him; he built it as an organization that embodies his values—small, start-up teams; relentlessly making something as good as it possibly can be; focus on the company’s competencies; and only enter new markets that provide an opportunity for Apple to define them.

Whether this is when Jobs will retire or not, Apple will go on, and we’ll see what I think is his greatest achievement: building an organization that can succeed without one man.