Welcome to Pragmatic.
Pragmatic is a weekly discussion show contemplating the practical application of technology.
Exploring the real-world trade-offs, we look at how great ideas are transformed into products and services that can change our lives.
Nothing is as simple as it seems.
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I'm your host, John Chidjie, and I'm joined today by a special guest, Mr. Horace Dedu.
How are you, Horace?
I am very well.
I am on the other side of the world, but otherwise, you know, we're having a bit of, sort of a
a cold, dreary kind of day.
But it's…
You're really selling it there.
Yeah, well, Finland is not a place that prides itself on its weather.
So if you don't make it into a selling point, you might as well complain about it.
Just run with it.
No, some days are lovely, especially in the summer, but today wasn't.
So I'm just thinking in my mind that you're in the exact opposite type of climate and
season.
Yeah.
At the moment, it's just very mild.
I love the winters here.
It's currently about 18 degrees Celsius and that's at four in the morning.
So yeah, it's just lovely.
I love this time of year.
But I lived in Calgary, far more north, similar kind of latitude to where you are.
And yeah, the winters aren't necessarily the best, but the summers are lovely.
So anyway.
Calgary, yeah, Canada.
All right.
So, otherwise, how are things?
Very good.
I just wanted to get you on specifically to talk about a topic that has fascinated me
over the years, and I think with your background and experience that you might have some interesting
things to add about it.
And the topic is core business and I know that it means different things to different
people but what I try to do is I try to look at this from the angle of if I'm an individual
and I want to set out on an endeavor, I want to be a software developer, I want to be a
designer of some kind, I want to do engineering, I want to do statistical analysis, whatever.
If that becomes something bigger and I need to extend what I'm doing, how do I stay focused
on my core business. And one of the things that I think is fascinating is look at how
companies grow. They start off with one, two, three people, and then they grow and grow.
Well, the successful ones do anyway. And you have to start making tough choices. So that's
one of the things that I wanted to talk about today. So, sound interesting?
Well, yeah, it does. And I'm not really a good person to interview, but I also am a
I am a good person, so here's the reason why.
One thing is that when you talk to individuals who have gone through and been so to speak
in the trenches and they explain the world through their experience but they've had typically
a very narrow experience although deep one and they will tell you what they experienced
And some people take that and say, well, if I could just do it the same way, I too would
be successful.
Usually, the successful people get interviewed.
The problem is that they tend not to have, when you're in the trenches, you don't have
the view of the overall battlefield, the overall campaign, the overall strategic view.
And so in some ways that experience may be too narrow for most people and so the challenge
is that you know like a lot of business books amount to a person telling their story of
how they see things and their anecdotes.
But it isn't, it's like asking a scientist to explain the world based on what's in their
home.
It doesn't mean that you're going to get a good sample.
The problem is that also if you ask someone who's a generalist how to do things, they
tend to look at it from a very high level point of view and they're armchair strategists.
They're going to see things theoretically and sometimes theories can be very good.
You don't need to, if you have a great theory like for example the theory of gravity that
explains why things fall, you don't need to have that experience of falling to prove it.
And so there are questions about how good a certain theory might be in business.
So the question generally is, here's how I would answer this.
The path from small to large is a very, very difficult path
because in it, you're going to encounter
for your sort of splits in the road that
might be guided by data or events that are just imminent.
So you have to make a decision at that point.
And so there isn't the luxury usually
of sort of thinking what are the long term.
You're going to have a customer come to you and say,
here's a great, I want to buy this from you
and I'm going to place a large order.
And rarely do you stop and think,
is this a good customer to have long term?
You're so happy to have a customer in the first place
and you might say, well, there's nothing wrong
with taking on a big order.
And, but yet you'll see how much that will,
the ownership will be,
you think you own something, but they own something back.
And so your customers will become increasingly
things that control you.
And so here's my, that's,
so the pragmatic thing is like about
making the right decision on a given moment,
given the facts you have,
There's a bigger, broader question about strategy and I don't think strategy gets a bad reputation
because it's applied in like I said in a theoretical manner on a broad scale but actually it can
be applied by small companies in very narrow context.
So the strategy decision for a small company would be do I want to have large customers
Do I want to have small customers?
Do I want to have a certain investor versus another type of investor?
Whose money do I want to take because that money ends up controlling a lot of your decision
making?
So I'll give you a personal perspective.
When I started doing what I'm doing now which is a Simcoe which is a blogging venture, I
I have to ask myself do I want to have consulting work, advertising revenue or do I want to
refuse both of those and carry on doing essentially free work because it's actually felt better.
This is the type of thing.
If you're young and generally very hungry, you tend to accept whatever is biggest in
terms of revenue because you're starving, but it's like saying again the difference
between accepting a free meal when you're starving and sort of deciding to be picky
because your health would be better off by eating a proper meal or a healthy meal or
nutritious food.
So I can't give you a specific advice but I can tell you that in my way of thinking
that what felt right was more important to me at that point in my life than doing what
looked right on paper and a consulting type of work.
I tried it a little bit but I had luxury of being able to also say I enjoy that other
stuff more and I'm going to do that.
It turned out that the stuff that I enjoyed doing had a broader scope eventually and actually
probably led to a "better business" meaning that it led me to doing things like podcasting,
publishing, doing more things like speaking events, coming and doing things like Airshow
which is my own mix of education and data presentation and ultimately might lead to
yet more things down the road that I can't envision yet.
Whereas had I become a consultant, it's likely that I would have ended up with one or two
large clients taking all of my time and I wouldn't have done any more publishing or
or at least without much enthusiasm and therefore the quality of that product would have gone
downhill and those new opportunities that eventually came my way would have never shown
up.
So maybe I would have felt some people have a predisposition to be good consultants but
I was a pretty bad one because I really would have spent my time daydreaming of the data
that I could give away for free instead.
The second alternative I mentioned was being a consultant or an advertising driven business.
So at the time, there were a couple of companies in 2011 or so, 10 and 11, who were being acquired
by larger blogging aggregators.
So you had Mashable and the Verge was spun out but before the Verge, there were a couple
of big brand names that were acquired.
Huffington Post was a huge phenomenon and there were things like Gizmodo and a lot of
the people said you ought to do what they do.
You ought to become a big brand in online business inside or do more stuff.
At the time, the hot area was actually the financial advice area, things like seeking
alpha and blogging sites where people gave each other stock tips essentially.
So that was really pulling at me because here's an opportunity to do exactly the way I was
doing things, working in my own environment, my own home.
So it wouldn't be for a boss in that sense, even if that boss is a client, but you would
be still a slave or a, not the right word, but you would be having to observe the dynamics
the advertising business which you quickly realize involves actually getting a lot of
page views or getting a lot of measurements that are appropriate to whomever pays the
bill and what I noticed is that again if you chase down that road of page views, you end
up actually diluting the quality of your content because it was a simple test to make.
you could just make a sensational article.
And I noticed that even when I allowed myself
to be a little bit sensationalist,
sometimes by mistake.
So it was simply because I wrote the wrong headline
and I would write a headline like.
- Did you write a headline with a question mark at the end?
- Yeah, one of them I think was like,
why was so and so fired?
And it was like, because the CEO had just been changed
and I would write this question,
but it was a rhetorical question
because I wanted to answer it in a certain way.
But it turned out that those were getting a huge number of page views and people began
to see it in the comment section how essentially the article didn't matter as an opportunity
for people to actually have essentially a bar fight and so you just acted as the bar
and provided a forum for that to happen.
So it kind of like really left me with a bad taste and I realized though, I'm sure advertisers
would love this.
The other thing that I realized was that if you were to reach out to the CEO of a company
that was in that business, let's say Huffington Post or something like that, you'd realize
very quickly also I had some communication with some of the writers in those groups and
I realized that actually the writers and the people who create the content are actually
very low down the power structure there.
So that's a reflection of the fact that the content didn't matter.
The content was actually the least valuable component of the business.
The people in charge were really focused on the advertising and the aggregation of eyeballs
and deal making with distribution deals.
I also got the clue from talking to other fairly good bloggers like for example Philip
Almodovit who is still at Fortune and CNN and he would tell me how the business worked
and what mattered in that business.
And the writers were, I wouldn't say least valuable, but many times they were like interns.
They were people who weren't almost paid anything at all.
And you could see that also in the pay structure of like, "Oh, we love articles.
We are at Huffington Post or whatever.
We'd love to have an article and here's like $2 or whatever ridiculous amount of money
to be paid for the very thing that people came to read."
That shocked me a lot.
- But the focus, as you're saying,
sorry to interrupt just quickly,
but the point is that their core business
therefore is driven more by advertising
than it is actually by the content that they create.
- Yes.
- Yeah.
- Yeah, so these two data points that,
look, I see consulting and I understand that fundamentally,
but I also realize that that eats your time
and you end up with having really
the same types of relationships that you have
if you're employed for a large company,
but it just, there's a boundary of kind of employment
contract between you that's different
from a consulting contract.
But then the advertising business
also was unpalatable to me.
So I just said, no, I'm not gonna freeze my,
the way, what I do, or chase down that road
because it just doesn't feel right to me.
There was this point in my life,
I was at that point in my life where I said,
What matters to me is that I enjoy getting the word out
and I wanna make the best possible analysis
and give it to as many people
because those people are gonna give me
a lot of great feedback.
And the whole focus became quality, number one,
in terms of output, but also creating a quality experience
or quality forum where people could feel comfortable giving back.
And so the key became comments, the key became creating an atmosphere of mutual respect between
presenter, writer and audience and between audience members and each other.
And so when you realize then that by building up a brand which people thought was resonant
with quality and community, then suddenly things started to click and it was instinctive
at the beginning and I didn't realize what I was doing.
I was just doing what felt right but over time, I realized that the formula was there
that you create as best content as you can, you make sure lots of people can get to it,
you don't compromise on, you know, one thing I would do is, for example, I wouldn't promote
myself, I wouldn't, in a way, toot my own horn or wave my own flag, whatever is appropriate
here, but I would essentially, once in a while, I might, you know, of course I wouldn't tell
people I just wrote something but I wouldn't bang on about it.
And also, the rule I had in mind was essentially as far as marketing and sales was don't ask
people to reach out or something like that.
Let them come if they feel compelled to do so and also you'll soon realize that if you
don't promote yourself and you do good work, then others will promote for you because they'll
actually say, "Nobody knows about this guy. This is great stuff. Nobody knows about this
product. Let me tell you about it." So people who are fans of the product will actually
become your best salespeople because they'll see that no one else is. If they see you actively
promoting then they'll say, "Well, he's doing a good job. I'm not going to need to do that
job. He's probably better at it than I am." But if you see the vacuum of promotion, you'll
sort of want to step in and just do your best because you think that it's just a
ninja. And that's one thing by the way, it's only doable if you do
great work because then people saying, "Well this is crazy, great work,
unpromoted, I've got to fix it." So that's why I want to
advertise, I don't know what to call it, the phrase that came up with it. If you do
good work and you promote it, then you'll have one promoter. If you do
great work and don't promote it, you'll have a million promoters.
And so that's another marketing theory that I came up with because of what I was doing
and I realized that was working that if I said nothing, then I'll get a lot more people
to step up and say it for me.
And that's the one of the things about it.
That by the way I think is very much personality driven because actually I'm uncomfortable
promoting anything and I just wouldn't do it myself and it just kind of happened that
way that I'm self-effacing or whatever is the right word.
So anyway, a few anecdotes.
Main thing though I think if I just answer your question is to do what feels right to
you because at some point even very short down the road, you'll find out that doing
what doesn't feel right will not be optimal.
You might think you're making a short-term optimal decision by taking the biggest "opportunity"
but in fact, if it doesn't feel right, you'll regret it.
And that's true in a lot of episodes of life, choosing who your partner might be and so
on and that's all I have on this.
- Okay, cool.
Well, you've said a whole,
there's a whole bunch of things
I really wanna just quickly touch on that you mentioned.
So thank you.
That was really very, very, an interesting way.
I hadn't actually thought about it quite from that angle.
The, in my own experience,
I haven't started my own endeavor exactly,
unless you count this podcast and my website,
Tech Distortion as being such a thing,
but it's not how I make a living.
So I don't think it falls into the same category as Simcoe.
So I've been more on the corporate side,
watching corporations and so on,
the likes of Boeing and Nortel,
and more recently some consultancies and so on.
So my perspective is slightly different,
but for the majority of our listeners,
they're not going to be in control of large companies.
So I think everything that you've just said
is probably gonna be more relevant
to the vast majority of the listeners.
So one of the things that I wanted to talk
a little bit more about was that,
one of the things you mentioned
was that you made a conscious decision
to take your focus away from consulting type of work
and not to focus on that specific area.
And one of the things that you come across in business
is omission statements.
And sometimes these mission statements are rubbish,
but good mission statements will say things
along those lines.
They'll say, you know,
I'm going to focus on this specifically.
And it sounds a bit to me like,
although you didn't actually write it down
as a mission statement, it was essentially still
at that guiding direction, it was a mission statement
that you actually followed, and that drove your focus
and drove some of your success.
Do you think that's reasonable?
- Well, it turned out there was a mission,
I just didn't know it until I was well along in it.
And that's the trouble with mission statements,
is in some way, they actually freeze you into doing that
If you will. I think one mission statement that would be lovely to hear would be, "We
don't have a clue what our mission is." Because it's not a, you know, it's in a facetious
way, but I would say maybe appropriate, more appropriately, like, "Our mission is to learn
what our mission is." And that would be a more of a, rather, there are two camps of
thought, one is that you should be deliberate in your actions.
How many times you've heard you're not going to start down the road until you have a plan
and some people live their lives this way.
You make a plan when you're 20 and then you execute on it.
I know one fellow who left Nokia and he wanted to start his own business and his wife said
I don't think you should do that until you worked out what the plan is and she would
be the one to review that plan and so they were very careful about making sure they donít
act irresponsibly here.
So thereís that train of thought but the other train of thought is that you realize
that whenever plans are made, actually the first time you take a step in the direction
of executing the plan, that actually you learn something and the plan becomes obsolete.
So this is again why our militaries will do all kinds of planning and war gaming and exercises
and then realize that the first contact with the enemy means that it all is for nothing.
One of the most common phrases a real soldier will tell you is that we didn't train for
this.
So when you interview a soldier after some battle and says we got into all these difficult
situations for which we didn't train for and they were led to believe that their training,
which they went through in such an arduous way for such a long time, was exactly what
they needed to do because otherwise, why would you do it?
Why would you go through this painful process of learning all this and doing all these exercises
if you weren't going to actually apply them?
So that's the problem in general is that the deliberate plans are often destroyed by the
first contact with the enemy.
The alternative though is one where you're essentially saying, "Well, we're going to
have a learning plan."
That's very rare because people never want to admit that they don't know what they're
doing.
In most Western cultures, even perhaps Eastern ones, admitting that you don't know what you're
doing is a gross faux pas or admission of incompetence.
In fact, when you look at really what made successful companies successful is that they
modeled along and they stumbled and they made errors and they learned.
When you look at the way the scientific process works, it's a continuous process of experimentation.
What is an experiment but a failure and then a retest?
So you're constantly trying to work it out by trial and error.
And that's one thing that I would say, I don't know why it would be fashionable to have a
mission statement.
I guess because some people feel they have no guidance.
But the mission statement also forces you to sometimes become more rigid than you need
to be.
Again, on the other hand, maybe mission statements
are things which are thrown away.
I think more important in the statement though
is that there must be a cultural,
and that's not usually written down,
culture is rarely codified,
but a cultural, a company culture.
And here's the thing about culture is that,
it's like I said, firstly, it's unwritten.
Secondly, it's how it's pervasive and powerful.
And it passed along and it disseminated between employees
in a very, very powerful way.
Culture is one of these instruments of society
or civilization or humanity or what have you
that is astonishingly powerful.
And this is where leadership needs to be very careful.
So if you're in a position to make a decision
or to lead people, you have to be very conscious of culture.
And over and over again, when you boil leadership
down to its core elements, it usually
comes down to the leader was able to establish
a certain culture.
And so that's why I would say what you need generally
is to have the principle that you're always learning.
So maybe that's hard to write down, I don't know.
But also to have the notion that,
the humility aspect of it is that you need to know,
you need to accept that there are things you don't know.
Be careful with the behavior.
Your behavior is gonna set examples
and that's gonna probably create
all kinds of cultural consequences.
- One of the things that you brought up
just about company culture and how it's passed on
from not from a mission statement typically,
but from people to people as they are hired
and as they come and go from a company.
One of the things that I've observed
which can stray the focus of a company
is the boom to bust cyclic nature of most industries.
to the point at which if you're during a boom cycle,
you bring on a lot of people very quickly.
And if you don't have a good, strong culture in place,
that doesn't often get disseminated well
to all the new employees,
and you get a dilution of the direction of the company,
where you wanna go, what the core business is,
what the core direction is of the group,
it tends to get diluted.
And I find that working in companies during boom cycle,
boom time, boom, boom, boom,
the point of the cycle that's in boom
can become more difficult because of that.
Have you ever come across that situation?
- Yeah, the trouble is that we are such weak
biological creatures that--
- Yeah, well. - We tend to be easily
dissuaded by our emotions.
And the tendency is that when things are good,
that you have arrogance and then when things are bad that you have panic and
and you know inflexibility and these are
opposite to what what our need the world needs the
case in point is that when someone really uh is in trouble
uh they panic and that's a very strange thing to do
right and you know some species they don't do that
um in some species when when when uh when an animal is threatened
They might just freeze up and then not move and that actually makes them harder to spot
by a predator.
The opposite is the animal that freaks out, runs around in circles, then become actually
an easier target.
This is the weird thing about human behavior is that often at moments of crisis, they need
to behave the opposite way of the way they actually behave and moments of success, they
also need to behave the opposite and that's the tragedy.
We don't even have a mechanism to guide us at all.
The classic example is when a company starts to have success, like I said, arrogance and
hubris comes over them and then they think they are unbeatable but in fact, usually the
the times of great success is when you ought to be planning the worst scenarios.
This is the fable of the squirrel or whatever these animals, one would store nuts during
the summer and the other one would freely eat things and not plan for the winter.
So you got to be out of phase by 180 degrees so you've got to try to work it out so that
when you're prosperous, you're planning for a darker future and when things are dark,
you're actually with the contrarian view and again, some people use the contrarian method
when investing in the stock market, when everybody is panicking.
Famously, it was Warren Buffett who said, "Be fearful when others are greedy and be
greedy when others are fearful."
This is true in many cases in business and it's very hard because the problem with business
in general, even if the individual is wise in this regard, it's very hard when the organization
around her is just so caught up in the emotion of the moment and their voice will stand alone
and that is why large organizations have a hard time dealing with dramatic change because
you don't have to just convince the one person.
Even if that person is the CEO, the leader, they have to somehow get by in quote unquote,
that's the problem with large companies is that you have to somehow get everybody agreeing
and pulling in the same direction and it's so hard to do.
And again, this comes back to culture and whether you can infuse in people the right
behavior.
So one thing by the way, back to your first question, one of the decision points that
you have as you grow as a business is whether you preserve a certain organizational structure
and this sounds a little bit mundane but this notion of being in a functional organization
or being in a divisional organization or something broken up into separate sub-businesses.
This actually comes to the core like for example when you look at Apple versus other companies
is that they internally are organized functionally and yet they're very large which is an uncommon
combination.
I think that I've had this argument with some people who actually suggested that it's not
causative to say that functional organizations are better equipped to deal with dramatic
change and shift, that they're not necessarily more agile.
But at the same time, the only data I have is that, at least in the space where Apple
is it's able to succeed and self-disrupt more easily because of the way it's organized.
So what happens whenever the business grows and transitions from small to big is that
they have to decide can they maintain a command and control structure and by the way that
sounds a little bit too dramatic but can they create an incentive system, right?
That's the euphemism for command and control.
can create the incentives and motivations that would work even though everyone is in
a functional silo.
And I can go on and on about this, but it's one of these real issues about managing the
business and how to deal with technical talent.
Yeah, and one of the things that you mentioned is the two different perspectives of structures,
organizational structures for business.
And that is something that I did want to touch on actually.
So I'm glad you brought that up because what I've found based on my experience is that
it seems to me that whatever structure you tend to start with, it tends to be the one
you're stuck with in the long term, going from 10 years to 20 years and so on out.
And changing that structure because getting all that buy-in and driving that cultural
change, it's like no longer, for example, am I trying to keep my particular budget under
control now I have a different set of priorities and a different set of reporting that I need
to, different managers I need to report to.
And that sort of structural churn in an organization can set an organization's back significantly
And sometimes I think there's a big, a huge impact.
And people just, it's like,
"Oh, let's change our structure to be more like company blah."
Whoever's successful at the moment, and you know, you mentioned Apple,
so they qualify.
So let's be more like Apple, and suddenly everything will work out.
And it worries me when people, when organizations say,
"All we have to do is change the structure and suddenly everything will be fine."
I think that's a gross simplification.
Yeah, no, it's so true because organizational change is almost as if it's some sort of religion
that happened in New York, New York, New York.
And I went through this, it was a ritual at Nokia where there was a New York every year,
sometimes more often than that.
It was announced usually right around the summer holidays, which are in Finland are
in July.
And so everybody goes off for about a month out in the woods in the countryside or somewhere
for that's very, very, not an exaggeration or literally that happens.
And if you're in the office in July, it's, it's, it's absolutely a desert desert.
But it's it was such that there would be a summer party.
And so this was a company white thing.
and then everybody would go to some open field
where there would be a few announcements made.
And usually, I think the announcements were made
after the holiday was over,
so people could enjoy their holidays
and then they'd come back and then there'd be a reorg,
the announced in a specific reorg.
And it kind of was comical in a way,
because why do you need to actually reorganize so often?
And it was a way, I think the logic of it was that
you had a weak control system overall.
You couldn't align people and get them to keep working
in that direction for a long time.
So in order to get anything done,
you would have to shake things up.
And so it's as if you literally,
you rattled the cage to get the animal agitated.
And then if they slow down during the year,
you rattle the cage again.
And that's just a really lousy control system, right?
Instead of getting the animal out of the cage,
letting them whatever, give them some reward system
and then give them a task to do.
So that's the trouble is that again,
it's symptomatic of something deeper,
of a failure to create the right motivation for the company.
Now, the thing about motivation and often people equate money with motivation and so
many studies have been done or show that money is partially motivating.
It's actually sort of hygienic in a way.
It's one component.
There are a lot more ways of doing it and the curious thing is how again if you have
an organization where money is actually difficult to attach to a task and again I have to go
back to Apple because Apple has got this weird structure where there is only one profit and
loss statement and that's for the whole company and if you apply a profit and loss to a division
then you can get people aligned and we're marching in a direction but they also tend
to over optimize along that dimension and they also end up competing with other divisions
And it may not be in the interest of the company for that to happen.
So this is why in fact they're more vulnerable to disruption because the dominant P&L would
actually stifle the emergent P&L which might actually be the one that needs to happen.
And so case in point, Windows.
I mean Windows is such a dominant P&L.
Microsoft, they couldn't allow a, let's say a Unix or Linux or something internal that
will be more mobile friendly to emerge and actually take root onto a device direction
and that's just what's not permitted.
If you control things at the top in one person or in one office or in one department, all
the decisions are made for the whole company and that would allow these things.
One day you say, "I think we got to deprecate this and we got to boost that."
It's fine, it gets done.
But the problem is to get the people at the bottom to get motivated because they don't
see the big picture.
They don't get a chance to say, "I see an opportunity to improve."
Or they don't have that visibility.
Right, they don't have a visibility.
Whereas when you created this trickle-down incentive system around one P&L that's more
divisional, people are saying, "You know, I think we should attack this market," or
"I think we should optimize it by being more in Czechoslovakia," or something like that,
Czech Republic.
And so you get into this idea that people suddenly have the means by which they can
optimize, but they're not just a lowly soldier in the trench.
So that's where the reason you get the lowly soldier in the trench motivated to fight.
This is the question, right?
He might fight because he thinks that he's going to get a reward or he might fight that
he thinks he's going to save himself from death or he might fight because he thinks
that there's a greater cause.
And this is where I think where again culture comes into play.
I think the only way Apple could operate the way it operates is because most people who
work there actually feel like they're on a mission and that they're on a mission that
the founder instilled in the company.
And that's weird.
It really is weird.
I think actually that's why a lot of Apple has a lot of detractors because they just think that that is weird and they don't want
They are repulsed by it. It's so unusual that I think the feeling is how could that work and yet it works?
Yeah, well, but it's also creepy in a way because it's like who wants to be in a cult and and and and
It extends beyond the people inside to actually the users and so on and so on but you see there's two sides
There's two points of view.
There's this point of view that Apple is this maniacal focus and vision.
It may not be for everybody, but there's a whole lot of people who really treasure it.
That means that it's not a mass market phenomenon, but it might actually be a very good business
model and it's a very good operational model even though they may never be able to become
as efficient as other companies are, as agile as other companies are or as optimal as other
companies are.
But that doesn't matter because you see every time that comes up and saying, "Why aren't
we doing more in the Czech Republic?"
People would say, "That's not our mission.
Our mission is to make insanely great products."
And so that's again one of these decisions you have to make and this is a fundamental
decision.
which are so weak that they don't even understand that the decision is necessary to be made.
They're just moving completely randomly without guidance. They're just pulled. It's like, you know,
like what is the word, the Ouija board? It's some, you know, people whose hands are on this thing
that they're trying to move it. Ouija board or, you know, like in a scrum in rugby or something
like that. It's like all these people pushing at the same time and somehow some, the whole mob
goes in some random direction. That's how most companies feel and all that a
manager does is you know he's standing on top of them cracking the whip trying
to get them to move maybe in some direction but he or she doesn't know
what the right direction is. They're actually as important to the mob as
any one element in it. So that's this is where you have this this whole notion in
many companies actually because they know that they actually hire strategy
people as if somehow these are the these are the the magicians that are going to
help them figure out which way to go but they tend to only throw out a lot of
data and then that people look at the data and say they don't know what
questions to ask about the data you see. That's the other thing is
big data doesn't offer you answers. Big or small data, many times the
sample you need is of n equals 1. The one anomaly to the whole data is the
really the important clue as to what the breakthrough should be. So there
There is no panacea, there's no answer in business that comes from the process or I
would say either the data is nothing more than an instance of a way of solving complexity
and you know the ones who you hire, you know, process or management consultants will preach
a certain process and they'll say well this is the best way to move forward and it turns
out that none of them really have the answer because if they did they wouldn't be consultants.
Yeah well that's exactly.
Operating managers.
Absolutely. And the data to me is essentially, it's a photograph. This is what it currently
looks like. But what it can't do is it can't tell you where you need to go. And it can't
tell you where you need to focus. It can tell you where you've been and maybe where you
are now. But the direction that you set, where you want to go.
I'll give one example, which actually was brought to me. If you look at Google, and
Google is probably the company that thinks mostly that it can solve the world through
the scientific method.
The scientific method being that you collect enough data, you do the correlative analysis,
perhaps causal analysis and then you identify what you need to do.
If that were the case and they think that can certainly improve a lot of things like
I think their breakthrough in advertising shows that there's more value to doing analysis
on behavior of users than it is just by throwing a dart but in the case of strategy, notice
the trouble that Google has had.
Google needed to move from search to several new places and one of the places, you think
of Android as a great success but there was not a move into a direction that said like
we're going to create a new business because Android does not generate business.
It only sustained their current business and protected them against being bumped off the
devices that would be most popular in the world.
Potentially it could have been Windows devices in which case they could have been essentially
out of the business of providing search on mobile devices.
It was definitely a protective measure.
So what really new pies that new markets developed around social media and that's Facebook.
So why didn't Google move and become the next big thing?
If Google had been doing a strategic planning correctly, they would have initially seen
social media as the next big thing and the next source of revenue and the next source
of usage, the next source of engagement and everything else.
They would have done it early enough so that Facebook wouldn't have gotten the traction
they did.
It's too late now.
They've figured it out but they figured it out after someone proved to them that that
was a great business.
Here's one important data point.
They were watching the search terms.
They were watching every single thing that people were doing online.
They had the data.
They had all the data about the importance of social media to people's lives.
They knew how Facebook was rising.
They knew everything and what people were doing with it.
So why didn't they act?
Because again, the management didn't have the taste in terms of understanding the problems
or the questions to be asked.
If someone would have come to them with like, "Here's the trends we're observing," they
would still need to pull the trigger and say, "I think social is going to be big.
We need to go there."
And they didn't have that instinct to go in that direction.
I always say that it's harder to ask questions than answer them.
You have to know what questions to ask of the big data, right?
And that's an example where having all the information in the world didn't help Google.
And I think also the question of did they anticipate how maybe Android would evolve
over time because they were starting to lose control over Android to the point where the
fastest growing variants of Android don't have any Google services on them.
And that's another really, really interesting problem.
Hang on, these are the smartest guys in the world.
They have all the data in the world and they're inventing things all the time.
Why can't they see what others find obvious?
So that's where you ask yourself about where they're counting too much on the silver bullet
of big data, giving them the answers they wanted.
And there's been other examples where data has led people astray.
But that's just one example.
That is a very good example.
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Now, one of the other things I want to talk about, Horace,
is to do with, in your own experience with a SimCo,
there's always going to be a subset of tasks
that you decide for whatever reason,
because either A, they're not your area of expertise,
or B, perhaps the tasks are certainly administrative enough
in nature that you can outsource that,
and so that you're not burdened with doing all of it.
And common examples of things like that are
things like accounting.
Some people will manage their own books
with MyObb or QuickBooks,
or there's a whole bunch of different software out there.
And it's things like, if I'm gonna make business cards,
I'm not gonna buy a pack of a hundred pieces of card
and feed them one by one into my printer.
So I'm gonna outsource that as well.
I mean, those are pretty simple examples,
but I'm curious, because one of the things that I think
that's critical in getting our heads around
what core business really is,
is defining what parts of your business you can carve out
and subcontract and give to other people.
So I'm curious about your thoughts on that.
- Yeah, that's a great question.
What is core and what isn't?
In fact, that is often a moving target
because we've seen fashions in this regard come and go.
We've had for a while, companies were conglomerates.
In 1970s, it was very common that companies would do all kinds of unrelated things.
In retrospect, it sounds insane.
Why would one company be a hotel company and then at the same time own a division that
manufactured ceiling tiles and another one that built curtains and another one that built
on the underwater cables.
It's crazy but that indeed was very common and then the trend was violently swung in
the other direction to companies saying, "No, no, no.
You need to find your core competency and just outsource everything else."
and outsourcing was a huge process, a revolution and many companies made a lot of money supposedly
outsourcing everything.
In some ways, actually now we're seeing a big move in the other direction where at least
amongst technology companies, we're seeing a lot more insourcing happening for crazy
things like just today we were hearing about Google cars.
Here's Google, a search company building cars, not just prototype building the systems for
car but the actual car itself and we'll see whether they go into mass production or not
but you know on Microsoft buying Nokia is crazy.
That would have been unheard of buying any hardware company unheard of and even before
they bought it, they were making their own tablets in competition with their licensees.
So there's a lot of back and forth in that and the same company one decade will be doing
core and the next decade will be doing vertical integration.
I think it's partly driven by conditions outside the control of the company like I think in
the 70s, a lot of the conglomerate stuff had to do with it was a slow growth time, there
were certain issues with interest rates or regulation or whatever and it just seemed
like that was the right idea and those conditions may change.
Now what we're seeing with technology is that again we're seeing more reintegration and
that companies need to have in-house skills to do a lot of things.
For example, I found this out recently that Google even has its in-house, have brought
in-house advertising people so that it has its own essentially its own ad agency that
does its own TV spots.
I didn't know that.
That's amazing because not even Apple does that.
Apple still uses outside talent for outside agencies for advertising.
So whenever you see a video done or Google commercial, it's actually done in-house.
And so there are these questions.
Why would you do that?
I don't know if there's a right or wrong answer.
I find that in most cases, companies do these things purely on a tactical reasoning.
So they would say, "I just didn't like the result of using an outsourced company and
so we're going to just do it ourselves."
The alternative is like, "We have all these people who seem not to be pulling their weight.
Why wouldn't it be more efficient and wouldn't we save money if we pushed that job outside?
So these are decisions which are made on almost like whimsical reasons.
Hang on.
It's not a really good way of running your business though surely.
Yeah exactly.
But because we don't have a theory you see.
That's the reason.
We don't have a great theory that explains to us that the causes of success and failure
in a particular work.
So let's say if we're looking at advertising, we don't have a great theory to understand
how advertising works.
So let's say you're Google and you're trying to make commercials and you're confused because
of a lot of things.
Firstly, your product is different than anybody else's.
Your market position is different than everybody else's.
No one knows how to advertise or promote your particular idea because no one even understands
it.
So you can't go outside and spend all your time explaining to someone, "This is what
we're trying to achieve."
In fact, you probably don't even know yourself what you're trying to achieve.
Most ad agency people will tell you that the client doesn't know what they want.
In this case, it's not even the deepest need that you can uncover because you don't have
deep needs.
You don't know what they are.
So there's this whole discussion of, but look, so you could develop a theory that says that
in general advertising is about uncovering the core job to be done, presenting it to
the audience in such a way that they connect with it emotionally plus intellectually plus
logically and so on.
And so you're trying to convey the principles of Aristotle in terms of rhetoric and blah,
blah, you could do all that. And then, and then, you know, it just doesn't exist. That
theory cannot be specifically applied broadly. And, and, and so this is why I think it when
you get to a theory that's actually pretty valid, like, let's say, there is a job of
designing, let's say logos, you just mentioned that one job.
That is a simple enough problem to define, right?
It's not a simple thing to do, but I'm just saying to say we need a logo is a simple enough
concept and saying we need that logo once.
We don't need a logo every month.
Therefore, it doesn't make sense to have an internal logo designer.
So we need a logo once maybe every decade and so it's clear that that's a job for an
outside person to do and they get the chance to do hundreds of pieces of work and they
get better at it as they do it and therefore it makes sense to have that be an outside
function.
It's not so clear when things are in the middle that you do commercials.
You don't do them every day, but you might need to have a creative team on the inside.
So I'm, again, I wish I could give an answer to this.
Generally it comes down to simply people asking the economic question, does it make sense
from a cost structure basis?
But it's not ideal.
Yeah, absolutely.
And, but you've raised a very good point, is that how often those people will actually
be effectively generating revenue, well not generating revenue I suppose, but being effective
and useful. I mean if a person's idle time is 30 days out of every 31 days in a month
then that's not a good utilization of that resource. So why would you bring on that person
to do advertising if you only need them to do one person days worth of work every month?
That economically doesn't make sense. So that's definitely where I think you have to start,
But one of the other things that I've noticed,
'cause I've been dealing, looking at this for years,
is I think a lot of it is driven by the need for control
and perhaps more of a perceived need for control.
And the issue that a lot of companies face
is as soon as you outsource a certain capability
to someone else, then the money that you pay them
gives them the ability to build up their own capability
that they can then on-sell to other people.
And in theory, that sounds fine,
because that means that then they're refining
their capabilities and that will make them better
at what they do and hence in theory,
better at serving you because you're not,
hopefully, their only client.
But there's an interesting case recently
that involves Apple where that's sort of,
to some extent, a little bit backfired with Samsung.
Because I see that from the outside looking in, of course,
I haven't worked for either company,
but based on everything that I can tell,
and there's a prevailing theory out there that I've read,
that Apple, because Samsung are a primary supplier
and have been for years, perhaps less so recently,
that Samsung learned a lot about what they're doing
by doing work for Apple to Apple standards and so on.
And that that's given them a leg up, as it were,
for them to build their own smartphone ecosystem
with the Galaxy series and so on.
Yeah, in fact, one of James Allworth and I have this discussion a while back about, and
then there's a theory that suggests that as you outsource more and more, not just your
assets, but also your processes are transferred to someone else and they simply learn all
the things they need to do, except what you consider to be core and eventually they'll
get that too. Or, you know, they'll finally jump and become your biggest competitor. And
often they'll actually beat you. And that has been a process. The outsourcing process
has been nothing more than this asset and knowledge transfer from the incumbents to
the entrance. And so that's been, that is indeed a disruption by outsourcing, if you
It is a dangerous road to follow and in fact in the latest discussions about capitalist
dilemma which is just talked about it recently on my podcast, Critical Path and also on my
blog.
But the tendency is that once you are successful that you tend to optimize and that means shedding
a lot of things that you think are dead weight but actually they turn out to be the real
core.
And again, it would be easy to suggest that simply don't do that and just stick to doing
exactly the same things the way you've always done them, that also doesn't seem to work
because you are rigid and you are not actually able to move into the next opportunity comfortably
if you have so much baggage around.
So there is always this tug of war between saying, "Well, are you losing the things which
make you valuable while at the same time, if you didn't lose those things, do you have
the agility to create the new things that are actually moving toward the goal or the
puck is going to be.
So I think there isn't a simple answer.
There are loads of examples in both cases and I think the example in the Apple case
and Samsung is that, yes, Samsung has taken on some of the core value of smartphones because
they were a supplier and the thing that they were missing, the operating system and essentially
the ecosystem is now Google's thing.
Now will Samsung take that for itself at some point in the future and actually become a
fully integrated player that offers the same, truly the same, not just the look and familiarity
with an iPhone, but rather actually becoming a complete system solution?
And that is a crucial question because on one hand, software is actually very distinct
different than everything else and by the time you do tool up in that area, you might
actually be facing a completely new world in terms of where the value lies and you got
system software but that doesn't mean that that's where the value is going to be used.
You don't have services or you don't have the data that Google is able to accumulate.
So it's a moving target and I don't know if I have a good answer to this.
I myself, I think I'm pretty conflicted about it.
I think on the other hand, Apple, you see how Apple has done a lot of vertical integration.
They got into retail, which normally you would think is an obvious thing to outsource.
Why would you want to be in the sale and distribution of your products?
But they felt they needed to do that because they needed the customer interaction and the
discovery process to happen on their controlled environment so that the customer could be
presented this product in the best way possible.
And also the brand and all that other stuff.
So it was a brilliant move to go into retail, very asymmetric, zigging when everybody else
was zagging.
At the same time, they spent loads of money in capital equipment and manufacturing, which
they don't own per se, the factories, but they own a lot of the equipment that goes
into those factories to the tune of $10 to $12 billion a year, which is on the level
of what an Intel might spend on capital equipment, which is a very, very expensive type of equipment.
are billion dollar facilities.
And then you have, so Apple is in a way moving into selected areas outside of its core which
is engineering and design and going into retail, going into manufacturing, going into distribution
and also going into being a service company with iTunes and services like iCloud and so
on.
They're actually a weird company that they don't make their own microprocessors, but
they have a microprocessor design facility in-house.
They don't make their own products, but they have designers who are basically geniuses
about material and process of manufacturing that they think about every single piece of
that manufacturing process while they design the product.
came out when you listen to Johnny Ive all the time that they were like obsessive about
how the thing is built as much as they are about how it looks.
So that is a very high level in the organization and so in some ways what Apple does is that
they know the touch points in all of this matrix of things that functions and things
that need to get done where they need to control and then where they don't need to control
And sometimes they make a switch and they say, "Okay, that is an area where we should
control."
And I think that this is the case in point and the pain point for them, for example,
is maps.
Now, maps is under-analyzed.
People just have judgments on it.
They say it's good or it's bad.
But it turns out that maps and big data of that kind, these geolocation data, it's a
process of constant improvement because the data, you realize that one thing I learned,
example is that both companies probably source from thousands of suppliers.
There are lots of people who put out some pieces of that data and then you layer it
over on top of each other so you may not get very good data if you're an apple about the
neighborhood you're in India.
But if they were to somehow be able to source that data locally, they might be able to catch
up but the problem might be that that local suppliers has an exclusive deal
and so Google is locked in and so the other thing that might happen for
example is that I once read how the data was available but it needed to be
massaged in a way to make it fit so it had to be it had to be tagged and
cleaned and error corrected and all that other stuff and that was done in a
hugely manual process, hugely labor intensive process in India, where literally like thousands
of people were involved in cleaning data for Google.
And so Google made the commitment that they needed to be, you know, you'd think of Google
as like, well, they're just algorithms people, but they decided that the maps were so important
that they needed to be in the data collection, data filter, and you know, not just collecting
like these Google cars but actually being able to or synthesizing the data if you will
but actually pulling all these sources and suppliers together and getting the data cleaned
up and in order to do that it was very labor intensive so you needed huge numbers of people
employed to do it.
And you don't think that maps is sort of a sweatshop problem and it turns out that maps
is a sweatshop problem.
So you make that decision about being in that business, which by the way, Nokia got into
by buying Navtech for $8 billion.
And at the time when they did that in 2007, Google was nowhere in Maps.
Google didn't have a great business.
And now when Apple would be attacked for its failure to have great Maps, well, they went
from zero to having a map system within a couple, you know, like a year.
And they probably did what normally would have taken five years in one year.
And still they're far behind because Google has had seven, eight years.
So the question is, can you even measure?
And no one can because really this system is so big that everybody's experiences are
different so you're just getting a couple of anecdotes.
So Google is a moving target.
They're getting better all the time.
But Apple is getting better all the time.
So everybody's wondering, well, what's the real gap between them?
And so when you're at, one is at 90% and you're at 60%, then there's a big gap.
But what if you're there at 99 and you're at 90?
Is that a significant delta?
And that's how difficult this becomes.
It's an arms race.
the commitment level needed, I think it's like on the billions of dollars a year scale.
Yeah, and Google decided that they were going to put that money up front and they decided
this is a core of what we want to deliver as an experience to our users because navigation
is a massive, massive part of daily lives, especially in city environments where the
city is always growing and changing and people need to get around.
Whereas Apple I think was more of a case we want to evolve our maps but Google has hamstrung
us so we can't therefore we're going to have to develop our own solutions.
So the decision to go into maps actually goes back and I think when Steve Jobs actually
thought about it back in 2005, 6, 7 when they were launching the iPhone he probably thought
first we got to get a great experience on the phone, second we got to get a good battery
third we got to get a good screen, fourth, you know probably maps was like 20th on his
list.
And so he would say you know we can't worry about it, we'll worry about maps later and
so and especially when at the same year that that was happening by the way, NAFTA got bought
by Apple and there were a couple other companies like TomTom and others who were in the map
space, but they were basically, it was a data business and Google was nowhere really.
So actually Apple doing a deal with Google was a mutually beneficial thing to do.
But fast forward a couple of years and then Google says look we're not going to give you
the navigation part of Google Maps which is turn by turn navigation.
Apple must have been like you got to be kidding me right?
And so their hand was forced in a way and what they did to respond was reasonable I
think sort of well, what did they do, buy it from Nokia or you know like Microsoft did
and then you still don't have as good a product as you think you might be able to do on your
own.
So they turned it over to their own team and they worked their asses off and I think they
for given knowing how hard it is, it's kind of I respect what they did but at the same
time you have to say that it's not as good as what people became accustomed to having
and then so they got dinged a lot for the quality of the product.
I got to say though having, if you have Apple Maps and nothing else as an alternative, it's
an amazing system.
If you have Apple Maps versus Google Maps, you might sort of scratch your head but still
it might, you know, it depends where you are but in my experience actually, Apple Maps
has turned out to be very useful and I find some of the latest parts of Google Maps to
be its user interface and so on are actually a bit cumbersome and who knows, my opinion
counts for nothing but it's just that this is the kind of thinking you have to do.
This is I think much more of a tactical decision about how to improve the product but it's
It's like the core decision is almost what Jobs did, really.
I think that was the right decision is that you prioritize in the beginning having a great
experience whereas Nokia at the same time, remember, that they were buying this asset
for $7, $8 billion, the NFTIC asset.
They were not paying attention to the user experience.
They said, "We need to control the data in the map system because that's a great business."
They were right about that, but being wrong about the user experience on the device, which
jobs prioritizes number one, caused the whole business to implode.
You got to have great maps, but the phone business is gone.
In a way, you could say, "Well, Apple is a great phone business now.
It's the core of the business and they have a mediocre or let's say not ideal maps thing."
It can always improve maps because you've got so much profit from the phone business
that you can actually nurture the maps.
It's another thing that's weird about maps.
If it could be solved with money alone, Apple has more money than anybody.
So why don't they fix that?
It turns out, it's partly not a priority but it's a matter of time and the fact that you
can't always get the data that you need, that somebody's locked it up.
It's kind of like content business in a way.
So anyway, there's a lot of this stuff about discussion and I think most commentators will
jump on one or two little threads of thinking and you have to understand that it's a complex
system and there are many, many threads.
Causality is hard to prove and most people simply observe correlations and that's really
where the trouble I guess is.
Who is it?
I forget who said this, the trouble with the world is that fools are sure of themselves
and wise men are so uncertain.
So it's kind of like you need to be one of the wise people because ultimately they'll
make things happen and they'll be the ones who get rewarded but still it may feel uncomfortable
and not very popular when you do it.
- Absolutely.
There's one more thing I wanna circle back to
before we wrap up.
And it's, you mentioned Apple retail,
and I think that that is a perfect example
of a decision to change the focus
of what the core business was for Apple.
And it wasn't so much, I think, a change in,
suddenly we see this differently.
It was more of an extension of their existing philosophy
of wanting to create the best possible experience.
So one of the aspects of that best possible experience
is the purchasing and support experience.
And that's something that was being,
they felt that they were being let down in
by third-party external retailers.
So they decided to take control
and that's that desire to be in control.
But they chose something that was in alignment,
although as it was an extension of their existing,
their existing focus. So the way I tend to look at it when you've got to make a decision
like that is thinking about the consequence of putting an investment into something like
a retail chain. That's an enormous investment. I mean, I think there's about half of Apple's
employees actually in retail. Yeah, it's quite significant. So that's a massive investment
and that's not to mention the physical infrastructure.
So it's, if I make an investment,
do I get significant reward?
And of course, the converse of that is,
if I choose not to, if there's a lack of investment,
then what is the penalty for doing that?
And I think that what Apple observed was that
by not investing in the retail side of things
and tailoring the experience
the way they wanted to tailor it
and providing great support,
And they were leaving that up to a random group of different companies and for those
that were around before Apple stores will know that it was a tiny little nook and cranny
down the back of a computer shop that was usually covered in a layer of dust.
So yeah, that's that's this was an act of absolute, you know, incredible vision, I think
for them to do this, although I'm sure at the time they were thinking that it was it
It was an intuitive decision that it was almost a necessary decision because I don't think
they did the numbers.
If they had done the numbers in 2001 or so when they launched the stores, I'm sure they
all would have been appalling and that's why they got criticized so much because those
who knew the numbers said this is not going to work.
Because again they thought the logic of the store was about providing, it's the core of
the business.
They realized that these products they make are so wonderful but people can't discover
them.
If they can't discover them, they can't buy them.
Why can't they discover them?
Because they're not featured in the right prominent position and there's no one there
who can explain the product.
So you just have this conversation and it sort of follows a logical causal link.
You know it's like asking five whys, at least five whys.
So you won't get to the cause of something, the foundational cause, until you've asked
the final why question.
And sometimes the path of whys may be wrong and you have to know which path to take.
So this is why, this is a method for example to analyze, like you observe an anomaly, you
observe something unusual let's say and so you ask why and then somebody gives you a
simple answer.
I was just reminded of an example just today, it was on my Twitter feed, I'm trying to see
if I can remember it.
But, yeah.
Sorry, I can't see it just now.
Yeah, so, yeah, there it is.
So I asked the question of this Eddie Q thing and Craig Federici about why Apple TV, why
you can't use Apple TV to play apps, to run apps.
And so it seems like a simple question and the answer might be simple, thought of as
a simple thing.
So somebody tweeted back and said it's easy because there's no UI for Apple TV and there's
no controller.
But that doesn't satisfy so the question ought to be deeper then.
Well why isn't there a UI?
Because you have the right hardware, you have the connection to the internet, you have a
a connection to an app store or content store at least.
Then you have all the ingredients there.
You know you can build a different UI.
You know you can build a different controller,
and you know you can build a different receiver on the device,
either Bluetooth or infrared that it can
capture some of the interaction of the human body.
You know that because it exists.
It exists in the form of Connect from Microsoft.
It exists with the new game consoles.
So why didn't Apple do this?
And then the answer would be well because I believe that the product could be sold at
a certain price point.
So then you ask the question, why couldn't you give the product away and have it be linked
to content in terms like the Kindle is.
And so why don't you build a business model that's more appropriate for that environment.
So this question and answer process repeatedly gets to some root causality and saying fundamentally
let's say for the Apple TV, just for the sake of argument, the Apple TV you reach the end
determinist, the end point of your discussion where it says essentially that look TV is
fundamentally broken as a business because you have content creators who are high cost,
who need therefore high revenue from advertising and distribution deals and because those distributors
don't want to release control for syndication to the digital distributors, then the content
will never show up.
So you realize you come down to this core problem and then you realize that to solve
that problem, you need to actually go to the content creators directly and ask them, "Please
make content for our digital channel and abandon completely working with the current network
and then you realize that those people who are already established and vested in the
current system cannot hop to your invitation but those who maybe are not vested yet might
because they have a long process to join the vested system and so you start to reach out
to those individuals and find out what motivates them and so on and so on.
So you start with a simple question, why doesn't Apple TV run apps and then you end up with
a discussion of how to motivate talented young filmmakers.
That's why I think that this discussion when you came at the core of what Apple had to
solve as a company in 2001, it said firstly we're in the computer business but we might
get into the device business because look what's happening to Moore's Law, look what's
happening to devices that we see possible.
It was already the 90s had proven that devices were going to come up, not just as phones
but as PDAs and tablets already there were some of these in the marketplace at the time
and Apple would have had them in their labs and they knew what they were facing in terms
of the technology roadmaps.
And so as they see the world shaping up into a more device business, so then Steve Jobs
would realize that there's no way to sell device, there's no way to sell devices through
the dusty corner in an existing store and that device would need to be showcased in
his own vision of that interaction.
And so that led him to think that we need to build our own stores probably five to seven
years before actually those devices would reach the market.
That was the crucial, that was the leap that he took is that even though in the beginning
it helped sell Macs, the long term play was about devices.
It was Ron Johnson who was running Apple stores at the time.
One time when the iPad launched, he said, "This device is why we built the Apple stores."
Or I think he put it that the Apple stores were designed primarily to sell this very
same thing here that you're seeing now.
That was in 2010 and that was already nine years after the store process, building process
began.
Then you also have to realize the other magical thing is that you realize that you can't get
stores out in the tens of thousands.
You've got to get stores out in the hundreds and slowly and you've got to get the right
locations and even now they're still deeply unpenetrated outside of the United States.
So, they're barely scratching the surface of what retail needs to be and that's I think
why they brought in this new person.
So you see how long term that thinking went but at the same time it's so I think obvious
if you have the right conversation early on about hang on what do we need to do here because
we know ourselves what our core strengths are and that leads us to this picture.
So anyway long story.
Tyrone:
Yeah well it's an interesting, it's a fascinating topic and I'm really glad you're able to come
on the show and talk about, talk through all your thoughts on it. And it's been really
great having you on. I just want to say thank you again. And I think we should probably
wrap up there. It's getting on.
So if you'd like to talk more about this, you can reach me on Twitter @johnchidjie and
check out my writing at techdistortion.com. If you'd like to send any feedback, please
use the feedback form on the website. And that's where you also find show notes under
the episode for the episode under podcasts and pragmatic. You can follow Pragmatic Show
on Twitter and you'll see show announcement other related materials. And again, thank
you so much Horace for joining me. What's the best way for people to get in touch with
you if they want to? Okay. I'm on Twitter at a Asymco, A S Y M C O. And also that's
my blog, asymco.com and my Critical Path podcast on 5x5 is also a place you can hear me.
And it's absolutely required listening. I've been listening to every episode from the beginning
so if you haven't tried it out, you should be listening to that. And a sim car also I
think bears name?
A sim car is a hobby, just in the same vein as the Apple TV but it's a hobby because we
We started it some time ago thinking that this is one of those industries that makes
a great thing to study as another lens, but also because we think it's probably ripe for
a big change and we're seeing that happening.
Yeah, I love listening to it.
I've learned quite a lot from listening to a sim car, so another one I highly recommend.
So absolutely please listen to those if you have some time.
And again, I'd like to personally thank Wet Frog Studios for sponsoring Pragmatic.
If you're looking to add some curb appeal to your product or company, remember to specifically
visit this URL, wetfrogstudios.com/pragmatic to get a great result at half the normal price.
Thank you everyone for listening and thank you Horace.
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