Entrepreneur

On The Everything Store

I recently finished reading The Everything Store – Jeff Bezos and the Age of Amazon – by Brad Stone.

Below are key excerpts from the book that I found particularly insightful:

There is so much stuff that has yet to he invented. There’s so much new that’s going to happen. People don’t have any idea yet how impactful the Internet is going to be and that this is still Day 1 in such a big way.

“If you want to get to the truth about what makes us different, it’s this,” Bezos says, veering into a familiar Jeffism: “We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different. Very few companies have all of those three elements.

So looking back on life’s important junctures was on Bezos’s mind when he came up with what he calls “the regret-minimization framework” to decide the next step to take at this juncture in his career.

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate direct! to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital. Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.

Jeff Bezos embodied the qualities Sam Walton wrote about. He was constitutionally unwilling to watch Amazon succumb to any kind of institutional torpor, and he generated a nonstop flood of ideas on how to improve the experience of the website, make it more compelling for customers, and keep it one step ahead of rivals.

Bezos was obsessed with the customer experience, and anyone who didn’t have the same single-minded focus or who he felt wasn’t demonstrating a capacity for thinking big bore the brunt of his considerable temper.

“My approach has always been that value trumps everything,” Sinegal continued. “The reason people are prepared to come to our strange places to shop is that we have value. We deliver on that value constantly. There are no annuities in this business.” A decade later and finally preparing to retire, Sinegal remembers that conversation well. “I think Jeff looked at it and thought that was something that would apply to his business as well,” he says.

“I understand what you’re saying, but you are completely wrong,’ he said. “Communication is a sign of dysfunction. It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other. not more.”

That was a typical interaction with Jeff. He had this unbelievable ability to be incredibly intelligent about things he had nothing to do with, and he was totally ruthless about communicating it.

If Amazon wanted to stimulate creativity among its developers, it shouldn’t try to guess what kind of services they might want; such guesses would be based on patterns of the past. Instead, it should be creating primitives—the building blocks of computing—and then getting out of the way. In other words, it needed to break its infrastructure down into the smallest, simplest atomic components and allow developers to freely access them with as much flexibility as possible.

‘Jeff does a couple of things better than anyone I’ve ever worked for,” Dalzell says. “He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around the best truth at the time. “The second thing is that he is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.”

On a closing note:

Amazon may be the most beguiling company that ever existed. and it is just getting started. It is both missionary and mercenary. and throughout the history of business and other human affairs, that has always been a potent combination. “We don’t have a single big advantage,” he once told an old adversary, publisher Tim O’Reilly, back when they were arguing over Amazon protecting its patented 1-Click ordering method from rivals like Barnes & Noble. “So we have to weave a rope of many small advantages.” Amazon is still weaving that rope. That is its future, to keep weaving and growing, manifesting the constitutional relentlessness of its founder and his vision. And it will continue to expand until either Jeff Bezos exits the scene or no one is left to stand in his way.

A recommended read in the areas of technology and corporate history.

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On Confessions of an Advertising Man

I recently finished reading Confessions of an Advertising Man by David Ogilvy.

Below are key excerpts from the book that I found to be particularly insightful:

Today, the world of advertising faces four problems of crisis dimensions. The first problem is that manufacturers of package-goods products, which have always been the mainstay of advertising, are spending twice as much on price-off deals as on advertising…The second problem is that advertising agencies, notably in Britain, France, and the United States, are now infested with people who regard advertising as an avant-garde art form…The third problem is the emergence of megalomaniacs whose mind-set is more financial than creative. They are building empires by buying up other agencies, to the consternation of their clients.  The fourth problem is that advertising agencies still waste their clients’ money repeating the same mistakes.

(1) Creating successful advertising is a craft, part inspiration but mostly know-how and hard work. If you have a modicum of mostly know–how and hard work. If you have a modicum of talent, and know which techniques work at the cash register, you will go a long way. (2) The temptation to entertain instead of selling is contagious. (3) The difference between one advertisement and another. when measured in terms of sales, can be as much as nineteen to one. (4) It pays to study the product before writing your advertisements. (5) The key to success is to promise the consumer a benefit – like better flavor, whiter wash, more miles per gallon, a better complexion. (6) The function of most advertising is not to persuade people to try your product, but to persuade them to use it more often than other brands in their repertoire. (Thank you, Andrew Ehrenberg.) (7) What works in one country almost always works in other countries.

(1) I admire people who work hard, who bite the bullet. I dislike passengers who don’t pull their weight in the boat…(2) I admire people with first-class brains, because you cannot run a great advertising agency without brainy people. But brains are not enough unless they are combined with intellectual honesty…(4) I admire people who work with gusto. If you don’t enjoy what you are doing, I beg you to find another job…(6) I admire self-confident professionals, the craftsmen who do their jobs with superlative excellence. They always seem to respect the expertise of their colleagues. They don’t poach. (7) I admire people who hire subordinates who are good enough to succeed them. I pity people who are so insecure that they feel compelled to hire inferiors as their subordinates.

(1) I try to be fair and to be firm, to make unpopular decisions without cowardice, to create an atmosphere of stability, and to listen more than I talk. (2) I try to sustain the momentum of the agency – its ferment, its vitality, its forward thrust. (7) I try to recruit people of the highest quality at all levels, to build the hottest staff in the agency business. (8) I try to get the best out of every man and woman in the agency.

The agencies which are most successful in new business are those whose spokesmen show the most sensitive insight into the psychological make-up of the prospective client. Rigidity and salesmanship do not combine.

Some agencies pander to the craze for doing everything in committee. They boast about “teamwork” and decry the role of the individual. But no team can write an advertisement, and I doubt whether there is a single agency of any consequence which is not the lengthened shadow of one man.

(1) What You Say Is More Important Than How You Say It. (2) Unless Your Campaign Is Built Around a Great Idea, it Will Flop. (3) Give the Facts. (4) You Cannot Bore People into Buying. (5) Be Well-Mannered, But Don’t Clown. (6) Make Your Advertising Contemporary. (7) Committees Can Criticize Advertisements, But They Cannot Write Them. (8) If You Are Lucky Enough To Write a Good Advertisement, Repeat It Until It Stops Pulling. (9) Never Write an Advertisement Which You Wouldn’t Want Your Own Family To Read. (10) The Image and the Brand. (11) Don’t Be a Copy-Cat.

On a concluding note, “a collection of Ogilvy-isms”:

We prefer the discipline of knowledge to the anarchy of ignorance. Tell the truth, but make the truth fascinating. In the best establishments, promises are always kept. whatever it may cost in agony and overtime. Change is our lifeblood. It is important to admit your mistakes and to do so before you are charged with them.

A recommended concise and perceptive read in the areas of advertising, and influence.

 

On Benjamin Franklin

I recently finished reading Benjamin Franklin – An American Life – by Walter Isaacson.

Below are key excerpts from the book that I found particularly insightful:

But the most interesting thing that Franklin invented, and continually reinvented, was himself. Americas first great publicist, he was. in his life and in his writings, consciously trying to create a new American archetype. In the process, he carefully crafted his own persona. portrayed it in public, and polished it for posterity.

Franklin has a particular resonance in twenty-first-century America. A successful publisher and consummate networker with an inventive curiosity, he would have felt right at home in the information revolution, and his unabashed striving to be part of an upwardly mobile meritocracy made him, in social critic David Brooks’s phrase, “our founding Yuppie.” We can easily imagine having a beer with him after work, showing him how to use the latest digital device, sharing the business plan for a new venture, and discussing the most recent political scandals or policy ideas. He would laugh at the latest joke about a priest and a rabbi, or about a farmer s daughter. We would admire both his earnestness and his self-aware irony. And we would relate to the way he tried to balance, sometimes uneasily, the pursuit of reputation. wealth, earthly virtues, and spiritual values.

This appreciation of books was one of the traits shared by the Puritanism of Mather and the Enlightenment of Locke, worlds that would combine in the character of Benjamin Franklin.

The primary value of his “Dissertation” He’s in what it reveals about Franklins fitful willingness to abandon Puritan theology. As a young man, he had read John Locke, Lord Shaftesbury, Joseph Addison, and others who embraced the freethinking religion and Enlightenment philosophy of deism, which held that each individual could best discover the truth about God through reason and studying nature, rather than through blind faith in received doctrines and divine revelation.

There were four rules: 1. It is necessary for me to be extremely frugal for some time, till I have paid what I owe. 2. To endeavor to speak truth in every instance; to give nobody expectations that are not likely to be answered, but aim at sincerity in every word and action—the most amiable excellence in a rational being. 3. To apply myself industriously to whatever business I take in hand, and not divert my mind from my business by any foolish project of suddenly growing rich; for industry and patience are the surest means of plenty. 4. I resolve to speak ill of no man whatever.

The other sins on his list were, in order: seeming uninterested. speaking too much about your own life, prying for personal secrets (“an unpardonable rudeness”), telling long and pointless stories (“old folks are most subject to this error, which is one chief reason their company is so often shunned”), contradicting or disputing someone directly, ridiculing or railing against things except in small witty doses (“it’s like salt, a little of which in some cases gives relish, but if thrown on by handfuls spoils all”), and spreading scandal (though he would later write lighthearted defenses of gossip).

First he made a list of twelve virtues he thought desirable, and to each he appended a short definition: Temperance: Eat not to dullness; drink not to elevation. Silence: Speak not but what may benefit others or yourself; avoid trifling conversation. Order: Let all your things have their places; let each part of your business have its time. Resolution: Resolve to perform what you ought; perform without fail what you resolve. Frugality: Make no expense but to do good to others or yourself; (i.e., waste nothing). Industry: Lose no time; be always employed in something useful; cut off all unnecessary actions. Sincerity: Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly. Justice: Wrong none by doing injuries, or omitting the benefits that are your duty. Moderation: Avoid extremes; forbear resenting injuries so much as you think they deserve. Cleanliness: Tolerate no uncleanliness in body, clothes, or habitation. Tranquility: Be not disturbed at trifles, or at accidents common or unavoidable. Chastity: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation.

This attitude, and his lack of grounding in theoretical math and physics, is why Franklin, ingenious as he was, was no Galileo or Newton. He was a practical experimenter more than a systematic theorist. As with his moral and religious philosophy, Franklin’s scientific work was distinguished less for its abstract theoretical sophistication than for its focus on finding out facts and putting them to use.

But as much as he loved his scientific pursuits, Franklin felt that they were no more worthy than endeavors in the field of public affairs. Around this time, his friend the politician and naturalist Cadwallader Colden also retired and declared his intention to devote himself full-time to “philosophical amusements,” the term used in the eighteenth century for scientific experiments. “Let not your love of philosophical amusements have more than its due weight with you,” Franklin urged in response. “Had Newton been pilot but of a single common ship, the finest of his discoveries would scarce have excused or atoned for his abandoning the helm one hour in time of danger; how much less if she had carried the fate of the Commonwealth.” So Franklin would soon apply his scientific style of reasoning— experimental, pragmatic—not only to nature but also to public affairs. These political pursuits would be enhanced by the fame he had gained as a scientist. The scientist and statesman would henceforth be interwoven, each strand reinforcing the other, until it could be said of him. in the two-part epigram that the French statesman Turgot composed, “He snatched lightning from the sky and the scepter from tyrants.”

Among Franklin’s cards was his fame, and he was among a long line of statesmen, from Richelieu to Metternich to Kissinger, to realize that with celebrity came cachet, and with that came influence.

“Franklin had won,” writes Carl Van Doren, “a diplomatic campaign equal in results to Saratoga.” The Yale historian Edmund Morgan goes even further, calling it “the greatest diplomatic victory the United States has ever achieved.” With the possible exception of the creation of the NATO alliance, that assessment maybe true, though it partly points up the paucity of American successes over the years at bargaining tables, whether in Versailles after World War I or in Paris at the end of the Vietnam War. At the very least, it can be said that Franklin’s triumph permitted America the possibility of an outright victory in its war for independence while conceding no lasting entanglements that would encumber it as a new nation.

First, he was far more comfortable with democracy than most of the delegates, who tended to regard the word and concept as dangerous rather than desirable…Second, he was, by far, the most traveled of the delegates, and he knew not only the nations of Europe but the thirteen states, appreciating both what they had in common and how they differed…Third, and what would prove most important of all, he embodied a spirit of Enlightenment tolerance and pragmatic compromise.

There are two passions which have a powerful influence in the affairs of men. These are ambition and avarice; the love of power and the love of money Separately, each of these has great force in prompting men to action; but, when united in view of the same object, they have in many minds the most violent effects,.. And of what kind are the men that will strive for this profitable preeminence, through all the bustle of cabal, the heat of contention, the infinite mutual abuse of parties, tearing to pieces the best of characters? It will not be the wise and moderate, the lovers of peace and good order, the men fittest for the trust. It will be the bold and the violent, the men of strong passions and indefatigable activity in their selfish pursuits.

At times, Adams charged, Franklin was hypocritical, a poor negotiator, and a misguided politician. But his essay also included some of the most nuanced words of appreciation written by any contemporary: Franklin had a great genius, original, sagacious and inventive, capable of discoveries in science no less than of improvement in the fine arts and the mechanical arts. He had a vast imagination … He had with at will. He had a humor that, when he pleased, was delicate and delightful. He had a satire that was good-natured or caustic, Horace or Juvenal, Swift or Rabelais, at his pleasure. He had talents for irony, allegory and fable that he could adapt with great skill to the promotion of moral and political truth. He was a master of that infantile simplicity which the French call naivete, which never fails to charm.

Franklin’s belief that he could best serve God by serving his fellow man may strike some as mundane, but it was in truth a worthy creed that he deeply believed and faithfully followed. He was remarkably versatile in this service. He devised legislatures and lightning rods, lotteries and lending libraries. He sought practical ways to make stoves less smoky and commonwealths less corrupt. He organized neighborhood constabularies and international alliances. He combined two types of lenses to create bifocals and two concepts of representation to foster the nation’s federal compromise. As his friend the French statesman Turgot said in his famous epigram, Eripuit coelo fulmen sceptrumque tyrannis, he snatched lightning from the sky and the scepter from tyrants. All of this made him the most accomplished American of his age and the most influential in inventing the type of society America would become. Indeed, the roots of much of what distinguishes the nation can be found in Franklin: its cracker-barrel humor and wisdom; its technological ingenuity; its pluralistic tolerance; its ability to weave together individualism and community cooperation; its philosophical pragmatism; its celebration of meritocratic mobility; the idealistic streak ingrained in its foreign policy; and the Main Street (or Market Street) virtues that serve as the foundation for its civic values. He was egalitarian in what became the American sense: he approved of individuals making their way to wealth through diligence and talent, but opposed giving special privileges to people based on their birth. His focus tended to be on how ordinary issues affect everyday lives, and on how ordinary people could build a better society But that did not make him an ordinary man. Nor did it reflect a shallowness. On the contrary, his vision of how to build a new type of nation was both revolutionary and profound. Although he did not embody each and every transcendent or poetic ideal, he did embody the most practical and useful ones. That was his goal, and a worthy one it was. Through it all, he trusted the hearts and minds of his fellow leather-aprons more than he did those of any inbred elite. He saw middle-class values as a source of social strength, not as something to be derided. His guiding principle was a “dislike of everything that tended to debase the spirit of the common people.” Few of his fellow founders felt this comfort with democracy so fully, and none so intuitively. From the age of 21, when he first gathered his Junto, he held true to a fundamental ideal with unwavering and at times heroic fortitude: a faith in the wisdom of the common citizen that was manifest in an appreciation for democracy and an opposition to all forms of tyranny It was a noble ideal, one that was transcendent and poetic in its own way. And it turned out to be, as history proved, a practical and useful one as well.

A highly recommended read in the areas of leadership, history, politics, and humanity at large.

 

 

On The Lean Startup

I recently finished reading The Lean Startup – How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses – by Eric Ries. This book has been in my to-read list for quite some time, and has been recommended to me by several friends over the past few years. I am very glad that I was finally able to read this gem in entrepreneurship and management.

Below are key excerpts from the book that I found to be particularly insightful:

After more than ten years as an entrepreneur, I came to reject that line of thinking. I have learned from both my own successes and failures and those of many others that it’s the boring stuff hat matters the most. Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught. Entrepreneurship is a kind of management. No, you didn’t read that wrong. We have wildly divergent associations with these two words, entrepreneurship and management.

This is a book for entrepreneurs and the people who hold them accountable. The five principles of the Lean Startup, which inform all three parts of this book, are as follows: 1. Entrepreneurs are everywhere. 2. Entrepreneurship is management. 3. Validated learning. 4. Build-Measure-Learn. 5. Innovation accounting.

The Lean Startup method, in contrast, is designed to teach you how to drive a startup. Instead of making complex plans that are based on a lot of assumptions, you can make constant adjustments with a steering wheel called the Build-Measure-Learn feedback loop. Through this process of steering, we can learn when and if it’s time to make a sharp turn called a pivot or whether we should persevere along our current path. Once we have an engine that’s revved up, the Lean Startup offers methods to scale and grow the business with maximum acceleration.

Mark explained, “Traditionally, the product manager says, ‘I just want this.’ In response, the engineer says, ‘I’m going to build it.’ Instead, I try to push my team to first answer four questions: 1. Do consumers recognize that they have the problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution for that problem?”

What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.

Thus, for startups, I believe in the following quality principle: If we do not know who the customer is, we do not know what quality is.

These examples from Grockit demonstrate each of the three A’s of metrics: actionable, accessible, and auditable.

My goal in advocating a scientific approach to the creation of startups is to channel human creativity into its most productive form, and there is no bigger destroyer of creative potential than the misguided decision to persevere. Companies that cannot bring themselves to pivot to a new direction on the basis of feedback from the marketplace can get stuck in the land of the living dead, neither growing enough nor dying, consuming resources and commitment from employees and other stakeholders but not moving ahead.

For the Five Whys to work properly, there are rules that must be followed. For example, the Five Whys requires an environment of mutual trust and empowerment. In situations in which this is lacking, the complexity of Five Whys can be overwhelming. In such situations, I’ve often used a simplified version that still allows teams to focus on analyzing root causes while developing the muscles they’ll need later to tackle the full-blown method. I ask teams to adopt these simple rules: L Be tolerant of all mistakes the first time. 2. Never allow the same mistake to be made twice.

I highly recommend this book!

The Happiness of Pursuit

I recently had the pleasure of reading The Happiness of Pursuit by Chris Guillebau, and meet the author while on tour in Houston. I am a big fan of Chris – an entrepreneur, traveler and NYT bestselling author – and his blog The Art of Non-Conformity. Below are my key takeaways from this inspiring and enjoyable read:

So what is a quest?

After much consideration, here are the criteria we settled on…A quest has a clear goal and a specific end point…A quest presents a clear challenge…A quest requires sacrifice of some kind…A quest is often driven by a calling or sense of mission…A quest requires a series of small steps and incremental progress toward the goal.

What is common among people who undertake quests?

Their quests—and in many cases, their accomplishments were extraordinary, but for the most part these individuals were successful not because of innate talent, but because of their choices and dedication. Much of the time, the goals grew in proportion with time and experience. Those I interviewed often spoke of their perceived feebleness, or of their belief that “anyone” could do what they did—but as you’ll see, few would have the resolve to persist as they did.

Why did Chris write this book?

In addition to satisfying my own curiosity I wrote this book to inspire you to attempt something remarkable of your own. Look closely here and you’ll see a path you can follow, no matter your goal. Everyone who pursues a quest learns many lessons along the way. Some relate to accomplishment, disillusionment, joy and sacrifice—others to the specific project at hand. But what if you could learn these lessons earlier? What if you could study with others who we invested years sometimes decades—in the relentless pursuit of their dreams”? That learning opportunity is what this book is about.

What drives people to undertake quests?

Discontent : is a powerful spark. When you’re filled with a sense of dissatisfaction that isn’t easily resolved, you may start wondering about making some changes. On its own, however, discontent is not sufficient to start a fire—or inspire a quest…If you want to get the embers burning, you have to blend dissatisfaction with inspiration, and then you have to connect the dissatisfaction to a greater purpose…Metaphorically, discontent is the match and inspiration is the kindling. When discontent leads to excitement, that’s when you know you’ve found your pursuit.

On The Calling:

Embracing a calling is about being the best at something, or doing something that you feel no one else can do. Not necessarily in a competitive manner, where you have to beat someone else, but according to your own standard of what you know is true. Some of us discover a quest, and sometimes the quest discovers us. Whichever is the case with you, once you identify your calling, don’t lose sight of it.

On Self-Reliance:

Judgments about whether a quest is brave or stupid tend to be relative. While authorities can play a role in setting conditions for a quest that serve to protect the fearless from themselves, ultimately assessments of a quest’s worthiness depend on the result. Sometimes life itself is risky. There are few goals worth pursuing that are totally risk free.

Finale:

Hundreds of pages earlier, I said that this book wasn’t just a study of what other people have done. The core message is that a quest can bring purpose and meaning to your life, too. Why pursue a quest? Because each of us in our lives is writing our own story, and we only have one chance to get it right.

Lessons from the Journey:

Unhappiness can lead to new beginnings…Adventure is for everyone…Everyone has a calling. Follow your passion…Every day matters…do…Before beginning a quest, count the cost…We are motivated by progress and achievement..We can’t always opt out of monotony, but we can choose which form it takes…The effort is the reward…Some adventures should be shared…Misadventures produce confidence..As you make progress toward a small goal, the bigger vision expands..Quests do not always tie up well.

A recommended read on personal leadership and gamification.

The Innovator’s Solution

It is hard to read any business article, blog, journal or magazine without coming across the word innovation. And while the profile of this topic has risen to prominence in the last few years, it is one that has been thoroughly studied particularly by professor Clayton M. Christensen. He is considered by many as “the architect of and the world’s foremost authority on disruptive innovation.” A few years ago, I read his seminal book in that area – The Innovator’s Dilemma, and recently I finished reading his second – The Innovator’s Solution which he co-authored with Michael E. Raynor.

Below are the key lessons from it that I wanted to share with you.

On the premise of the book:

If I wanted to start a company that could become significant and successful and ultimately topple the firms that now lead an industry, how could I do it? If indeed there are predictable reasons why businesses stumble, we might then help managers avoid those causes of failure and help them make decisions that predictably lead to successful growth. This is The Innovator’s Solution.

This is a book about how to create new growth in business. Growth is important because companies create shareholder value through profitable growth. Yet there is powerful evidence that once a company’s core business has matured, the pursuit of new platforms for growth entails daunting risk. Roughly one company in ten is able to sustain the kind of growth that translates into an above-average increase in shareholder returns over more than a few years. Too often the very attempt to grow causes the entire corporation to crash. Consequently, most executives are in a no-win situation: equity markets demand that they grow, but it’s hard to know how to grow. Pursuing growth the wrong way can be worse than no growth at all.

Can innovation be made predictable? Can it be turned into a process?

What can make the process of innovation more predictable? It does not entail learning to predict what individuals might do. Rather, it comes from understanding the forces that act upon the individuals involved in building businesses—forces that powerfully influence what managers choose and cannot choose to do. Rarely does an idea for a new-growth business emerge fully formed from an innovative employee’s head. No matter how well articulated a concept or insight might be, it must be shaped and modified, often significantly, as it gets fleshed out into a business plan that can win funding from the corporation. Along the way, it encounters a number of highly predictable forces. Managers as individuals might indeed be idiosyncratic and unpredictable, but they all face forces that are similar in their mechanism of action, their timing, and their impact on the character of the product and business plan that the company ultimately attempts to implement. Understanding and managing these forces can make innovation more predictable.

We often admire the intuition that successful entrepreneurs seem to have for building growth businesses. When they exercise their intuition about what actions will lead to the desired results, they really are employing theories that give them a sense of the right thing to do in various circumstances. These theories were not there at birth; They were learned through a set of experiences and mentors earlier in life. If some people have learned the theories that we call intuition, then it is our hope that these theories also can be taught to others. This is our aspiration for this book. We hope to help managers who are trying to create new-growth businesses use the best research we have been able to assemble to learn how to match their actions to the circumstances in order to get the results they need. As our readers use these ways of thinking over and over, we hope that the thought processes inherent in these theories can become part of their intuition as well.

On the difference between sustaining innovation and disruptive innovation and the associate strategies associated with each:

We must emphasize that we do not argue against the aggressive pursuit of sustaining innovation…Almost always a host of similar companies enters an industry in its early years, and getting ahead of that crowd—moving up the sustaining-innovation trajectory more decisively than the others—is critical to the successful exploitation of the disruptive opportunity. But this is the source of the dilemma: Sustaining innovations are so important and attractive, relative to disruptive ones, that the very best sustaining companies systematically ignore disruptive threats and opportunities until the game is over. Sustaining innovation essentially entails making a better mousetrap. Starting a new company with a sustaining innovation isn’t necessarily a bad idea: Focused companies sometimes can develop new products more rapidly than larger firms because of the conflicts and distractions that broad scope often creates. The theory of disruption suggests, however, that once they have developed and established the viability of their superior product, entrepreneurs who have entered on a sustaining trajectory should turn around and sell out to one of the industry leaders behind them. If executed successfully, getting ahead of the leaders on the sustaining curve and then selling out quickly can be a straightforward way to make an attractive financial return…A sustaining-technology strategy is not a viable way to build new-growth businesses, however. If you create and attempt to sell a better product into an established market to capture established competitors’ best customers, the competitors will be motivated to fight rather than to flee. This advice holds even when the entrant is a huge corporation with ostensibly deeper pockets than the incumbent.

On where disruptive innovation occurs:

Because new-market disruptions compete against nonconsumption, the incumbent leaders feel no pain and little threat until the disruption is in its final stages. In fact, when the disruptors begin pulling customers out of the low-end of the original value network, it actually feels good to the leading firms, because as they move up-market in their own world, for a time they are replacing the low-margin revenues that disruptors steal, with higher-margin revenues from sustaining innovations.

We call disruptions that take root at the low-end of the original or mainstream value network low-end disruptions…New-market disruptions induce incumbents to ignore the attackers, and low-end disruptions motivate the incumbents to flee the attack.

And why do executives of existing companies segment markets counterproductively?

There are at least four reasons or countervailing forces in established companies that cause managers to target innovations at attribute-based market segments that are not aligned with the way that customers live their lives. The first two reasons—the fear of focus and the demand for crisp quantification—reside in companies’ resource allocation processes. The third reason is that the structure of many retail channels is attribute focused, and the fourth is that advertising economics influence companies to target products at customers rather than circumstances.

How can this be resolved?

Identifying disruptive footholds means connecting with specific jobs that people—your future customers—are trying to get done in their lives. The problem is that in an attempt to build convincing business cases for new products, managers are compelled to quantify the opportunities they perceive, and the data available to do this are typically cast in terms of product attributes or the demographic and psychographic profiles of a given population of potential consumers. This mismatch between the true needs of consumers and the data that shape most product development efforts leads most companies to aim their innovations at nonexistent targets. The importance of identifying these jobs to be done goes beyond simply finding a foothold. Only by staying connected with a given job as improvements are made, and by creating a purpose brand so that customers know what to hire, can a disruptive product stay on its growth trajectory.

On extracting growth from nonconsumption (new-market disruption pattern):

1. The target customers are trying to get a job done, but because they lack the money or skill, a simple, inexpensive solution has been beyond reach.

2. These customers will compare the disruptive product to having nothing at all. As a result, they are delighted to buy it even though it may not be as good as other products available at high prices to current users with deeper expertise in the original value network. The performance hurdle required to delight such new-market customers is quite modest.

3. The technology that enables the disruption might be quite sophisticated, but disruptors deploy it to make the purchase and use of the product simple, convenient, and foolproof. It is the “foolproofedness” that creates new growth by enabling people with less money and training to begin consuming.

4. The disruptive innovation creates a whole new value network. The new consumers typically purchase the product through new channels and use the product in new venues.

On what makes competing against nonconsumption so hard for existing companies?

In a very insightful stream of research, Harvard Business School Professor Clark Gilbert has helped us understand the fundamental mechanism that causes the established competitors in an industry to consistently cram the disruptive technology into the mainstream market. With that understanding, Gilbert also provides guidance to established company executives on how to avoid this trap, and capture the growth created by disruption instead. Gilbert’s work, fortunately, not only defines an innovator’s dilemma but suggests a way out. The solution is twofold: First, get top-level commitment by framing an innovation as a threat during the resource allocation process. Later, shift responsibility for the project to an autonomous organization that can frame it as an opportunity.

On determining the right scope for the business:

When the functionality and reliability of a product are not good enough to meet customers’ needs, then the companies that will enjoy significant competitive advantage are those whose product architectures are proprietary and that are integrated across the performance-limiting interfaces in the value chain. When functionality and reliability become more than adequate, so that speed and responsiveness are the dimensions of competition that are not now good enough, then the opposite is true. A population of non-integrated, specialized companies whose rules of interaction are defined by modular architectures and industry standards holds the upper hand. At the beginning of a wave of new-market disruption, the companies that initially will be the most successful will be integrated firms whose architectures are proprietary because the product isn’t yet good enough. After a few years of success in performance improvement, those disruptive pioneers themselves become susceptible to hybrid disruption by a faster and more flexible population of non-integrated companies whose focus gives them lower overhead costs.

On how to avoid commoditization:

1. The low-cost strategy of modular product assemblers is only viable as long as they are competing against higher-cost opponents. This means that as soon as they drive the high-cost suppliers of proprietary products out of a tier of the market, they must move up-market to take them on again in order to continue to earn attractive profits.

2. Because the mechanisms that constrain or determine how rapidly they can move up-market are the performance-defining subsystems, these elements become not good enough and are flipped to the left side of the disruption diagram.

3. Competition among subsystem suppliers causes their engineers to devise designs that are increasingly proprietary and interdependent. They must do this as they strive to enable their customers to deliver better performance in their end-use products than the customers could if they used competitors’ subsystems.

4. The leading providers of these subsystems therefore find themselves selling differentiated, proprietary products with attractive profitability.

5. This creation of a profitable, proprietary product is the beginning, of course, of the next cycle of commoditization and de-commoditization.

A reminder that integrated companies possess a strategic advantage in their ability to respond to changes of value across the value chain:

To the extent that an integrated company such as IBM can flexibly couple and decouple its operations, rather than irrevocably sell off operations, it has greater potential to thrive profitably for an extended period than does a nonintegrated firm such as Compaq. This is because the processes of commoditization and de-commoditization are continuously at work, causing the place where the money will be to shift across the value chain over time.

The concept of core competency, which is often used to determine which part of the value chain to keep in-house, is misguiding:

Core competence, as it is used by many managers, is a dangerously inward-looking notion. Competitiveness is far more about doing what customers value than doing what you think you’re good at. And staying competitive as the basis of competition shifts necessarily requires a willingness and ability to learn new things rather than clinging hopefully to the sources of past glory. The challenge for incumbent companies is to rebuild their ships while at sea, rather than dismantling themselves plank by plank while someone else builds a new. faster boat with what they cast overboard as detritus.

To successfully build and manage growth businesses you need the right people, processes and values:

Executives who are building new-growth businesses therefore need to do more than assign managers who have been to the right schools of experience to the problem. They must ensure that responsibility for making the venture successful is given to an organization whose processes will facilitate what needs to be done and whose values can prioritize those activities. The theory is that the requirements of an innovation need to fit with the host organization’s processes and values, or the innovation will not succeed.

On managing the strategy development process:

In every company there are two simultaneous processes through which strategy comes to be defined. Figure 8-1 suggests that both of these strategy-making processes—deliberate and emergent—are always operating in every company. The deliberate strategy-making process is conscious and analytical. It is often based on rigorous analysis of data on market growth, segment size, customer needs, competitors’ strengths and weaknesses, and technology trajectories. Strategy in this process typically is formulated in a project with a discrete beginning and end, and then implemented “top down.”…Emergent strategy, which as depicted in figure 8-1 bubbles up from within the organization, is the cumulative effect of day-to-day prioritization and investment decisions made by middle managers, engineers, salespeople, and financial staff. These tend to be tactical, day-to-day operating decisions that are made by people who are not in a visionary, futuristic, or strategic state of mind…When the efficacy of a strategy that was developed through an emergent process is recognized, it is possible to formalize it, improve it, and exploit it, thus transforming an emergent strategy into a deliberate one. Emergent processes should dominate in circumstances in which the future is hard to read and in which it is not clear what the right strategy should be. This is almost always the case during the early phases of a company’s life. However, the need for emergent strategy arises whenever a change in circumstances portends that the formula that worked in the past may not be as effective in the future. On the other hand, the deliberate strategy process should be dominant once a winning strategy has become clear, because in those circumstances effective execution often spells the difference between success and failure.

On the execution of the strategy, three points of leverage:

1. Carefully control the initial cost structure of a new-growth business, because this quickly will determine the values that will drive the critical resource allocation decisions in that business.

2. Actively accelerate the process by which a viable strategy emerges by ensuring that business plans are designed to test and confirm critical assumptions using tools such as discovery-driven planning.

3. Personally and repeatedly intervene, business by business, exercising judgment about whether the circumstance is such that the business needs to follow an emergent or deliberate strategy-making process. CEOs must not leave the choice about strategy process to policy, habit, or culture.

General rules of thumbs relating to the financial management of growth businesses:

  • Launch new-growth businesses regularly when the core is still healthy —when it can still be patient for growth—not when financial results signal the need.
  • Keep dividing business units so that as the corporation becomes increasingly large, decisions to launch growth ventures continue to be made within organizational units that can be patient for growth because they are small enough to benefit from investing in small opportunities.
  • Minimize the use of profit from established businesses to subsidize losses in new-growth businesses. Be impatient for profit: There is nothing like profitability to ensure that a high-potential business can continue to garner the funding it needs, even when the corporation’s core businesses turn sour.

On a concluding note:

Many successful companies have disrupted once. A few, including IBM, Intel, Microsoft, Hewlett-Packard, Johnson & Johnson, Kodak, Cisco, and Intuit, have disrupted several times. Sony did it repeatedly between 1955 and 1982, before its engine of disruption got shut down. To our knowledge, no company has been able to build an engine of disruptive growth and keep it running and running. That reality has made this a risky book for us to write: Few business books say “Do this; no one’s ever done it before.” But there is little choice. Creating and sustaining successful growth has, historically speaking, vexed some great managers. Given the existence of principles but no precedent, we have simply done our best to suggest how successful growth can be created and sustained. We have offered an integrated body of theory derived from the successes and the failures of hundreds of different companies, each of which has illuminated a different aspect of the innovator’s dilemma. And so we now pass the baton to you, in the hope that you will find our efforts to be a valuable foundation upon which to build your own innovator’s solution.

I highly recommend this book, as a follow-on to Clayton’s earlier work.

 

Titan – The Life of John D. Rockefeller, Sr.

The name Rockefeller is ingrained within both American History and Business, but why so? This is the question that set me on the quest to read the National Bestseller, Titan – The Life Of John D. Rockefeller, Sr. by Ron Chernow.

Below are key highlights from this masterpiece that I wanted to share.

John D. Rockefeller’s began displaying and developing his business acumen at a young age:

Though only dimly aware of such distant developments, John D. Rockefeller already seemed a perfect specimen of homo economicus. Even as a boy, he bought candy by the pound, divided it into small portions, then sold it at a tidy profit to his siblings. By age seven, encouraged by his mother, he was dropping gold, silver, and copper coins that he earned into a blue china bowl on the mantel. John’s first business coup came at age seven when he shadowed a turkey hen as it waddled off into the woods, raided its nest, and raised the chicks for sale. To spur his enterprise, Eliza gave him milk curds to feed the turkeys, and the next year he raised an even larger brood. As an old man. Rockefeller said, “To this day, I enjoy the sight of a flock of turkeys, and never miss an opportunity of studying them.”

The same was also true for his attachment to his religious beliefs:

John D. Rockefeller was drawn to the church, not as some nagging duty or obligation but as something deeply refreshing to the soul. The Baptist church of his boyhood provides many clues to the secrets of his character. As a young man. he was raised on a steady diet of maxims, grounded in evangelical Protestantism, that guided his conduct. Many of his puritanical attitudes, which may seem antiquated to a later generation, were merely the religious commonplaces of his boyhood. Indeed, the saga of his monumental business feats is inseparable from the fire-and-brimstone atmosphere that engulfed upstate New York in his childhood.

These two elements formed the two pillars of his life:

He possessed a sense of calling in both religion and business, with Christianity and capitalism forming the twin pillars of his life…When challenges to orthodoxy arose in later decades, he stuck by the spiritual certainties of his boyhood…The church gave Rockefeller the community of friends he craved and the respect and affection he needed.

The role he had to play within his family, tough him responsibility:

Of course, this boyhood responsibility took its toll on John D., who experienced little of the spontaneous joy or levity of youth. Growing up as a miniature adult, burdened with duties. He developed an exaggerated sense of responsibility that would be evident throughout his life. He learned to see himself as a reluctant savior, taking charge of troubled situations that needed to be remedied.

On his entry to the Oil sector:

Tramping the banks. Rockefeller beheld the satanic new world bequeathed by the oil boom, an idyllic valley blackened with derricks and tanks, engine houses and ramshackle huts, thickly crowded together in a crazy-quilt pattern…Rockefeller represented the second, more rational stage of capitalist development, when the colorful daredevils and pioneering speculators give way, as Max Weber wrote, to the “men who had grown up in the hard school of life. calculating and daring at the same time, above all temperate and reliable, shrewd and completely devoted to their business, with strictly bourgeois opinions and principles.”

One of the keys to his business success was that he kept cash on hand, and allies in the banking sectors – which were essential particularly during the times of crisis:

It is impossible to comprehend Rockefeller’s breathtaking ascent without realizing that he always moved into battle backed by abundant cash. Whether riding out downturns or coasting on booms, he kept plentiful reserves and won many bidding contests simply because his war chest was deeper…To have orchestrated such a rapid campaign required a long relationship of trust with the banks.

Rockefeller believed in the importance of balanced work ethic:

Rockefeller bridled at the notion that he was a business-obsessed drudge, a slave to the office. “I know of nothing more despicable and pathetic than a man who devotes all the waking hours of the day to making money for money’s sake,” he recorded in his memoirs. He worked at a more leisurely pace than many other executives, napping daily after lunch and often dozing in a lounge chair after dinner. To explain his extraordinary longevity he later said, doubtless overstating the matter, “I’m here because I shirked: did less work, lived more in the open air, enjoyed the open air, sunshine and exercise.”

On his skillful negotiation skills:

One of Rockefeller’s strengths in bargaining situations was that he figured out what he wanted and what the other party wanted and then crafted mutually advantageous terms. Instead of ruining the railroads, Rockefeller tried to help them prosper, albeit in a way that fortified his own position.

One of his shortcomings was that he remained silent in the face of criticism, which haunted him particularly during the public relation battles he fought:

Only in the twilight of life did Rockefeller realize how poorly his taciturnity had served him in business battles. This was especially true during the SIC furor, which evolved into a political and public-relations battle. By remaining silent in the face of criticism, he thought he would seem confident and secure in his integrity—in fact, he seemed guilty and arrogantly evasive. Throughout his career. Rockefeller endured abuse with so much equanimity that Flagler once shook his head and said, “John, you have a hide like a rhinoceros! “

On his view of capitalism, and how he linked it to his religious beliefs:

In a critical distinction, he viewed competitive capitalism—and not capitalism per se—as producing a vulgar materialism and rapacious business practices that dissolved the bonds of human brotherhood. In a state of ungoverned competition, selfish individuals tried to maximize their profits and thereby impoverished the entire industry What the American economy needed instead were new cooperative forms (trusts, pools, monopolies) that would restrain grasping individuals for the general good. Rockefeller thus tried to reconcile trusts with Christianity, claiming that cooperation would end the egotism and materialism abhorrent to Christian values. It was an ingenious rationalization. While religion did not lead him to the concept of trusts, it did enable him to invest his vision of cooperation with a powerful moral imperative.

On his leadership skills and beliefs:

Even as a young man, Rockefeller was extremely composed in a crisis. In this respect, he was a natural leader: The more agitated others became, the calmer he grew.

Far more than a technocrat, Rockefeller was an inspirational leader who exerted a magnetic power over workers and especially prized executives with social skills.

Few outsiders knew that one of Rockefeller’s greatest talents was to manage and motivate his diverse associates. As he said, “It is chiefly to my confidence in men and my ability to inspire their confidence in me that I owe my success in life.” He liked to note that Napoleon could not have succeeded without his marshals. Free of an autocratic temperament. Rockefeller was quick to delegate authority and presided lightly, genially, over his empire, exerting his will in unseen ways. At meetings. Rockefeller had a negative capability: The quieter he was, the more forceful his presence seemed, and he played on his mystique the resident genius immune to petty concerns.

Rockefeller placed a premium on internal harmony and tried to reconcile his contending chieftains. A laconic man, he liked to canvass everyone’s opinion before expressing his own and then often crafted a compromise to maintain cohesion. He was always careful to couch his decisions as suggestions or questions.

On philanthropy:

Yet by the 1880s, Rockefeller had already formulated certain core principles for his bequests many of them stemming from beliefs he had long entertained as a businessman. For instance, like other industrialists he worried that charity fostered dependence and pauperized recipients…The most important concept Rockefeller bequeathed to philanthropy was that of wholesale giving, as opposed to small, scattershot contributions…Another cardinal principle of Rockefeller philanthropy was to rely upon expert opinion.

On Standard Oils’, the set of companies he started:

In a sense, John D. Rockefeller simplified life for the authors of antitrust legislation. His career began in the infancy of the industrial boom, when the economy was still raw and unregulated. Since the rules of the game had not yet been encoded into law, Rockefeller and his fellow industrialists had forged them in the heat of combat. With his customary thoroughness, Rockefeller had devised an encyclopedic stock of anti-competitive weapons. Since he had figured out every conceivable way to restrain trade, rig markets, and suppress competition, all reform-minded legislators had to do was study his career to draw up a comprehensive antitrust agenda.

Standard Oil had taught the American public an important but paradoxical lesson: Free markets, if left completely to their own devices, can wind up terribly unfree. Competitive capitalism did not exist in a state of nature but had to be defined or restrained by law. Unfettered markets tended frequently toward monopoly or, at least, toward unhealthy levels of concentration, and government sometimes needed to intervene to ensure the full benefits of competition. This was particularly true in the early stages of industrial development. This notion is now so deeply embedded in our laws that it has become all but invisible to us. replaced by secondary debates over the precise nature or extent of antitrust enforcement.

If Tarbell gave an oversimplified account of Standard Oil’s rise, her indictment was perhaps the more forceful for it. In the trust’s collusion with the railroads, the intricate system of rebates and drawbacks, she found her smoking gun, the irrefutable proof that Rockefeller’s empire was built by devious means. She was at pains to refute Rockefeller’s defense that everybody did it. “Everybody did not do it,” she protested indignantly “In the nature of the offense everybody could not do it. The strong wrested from the railroads the privilege of preying upon the weak, and the railroads never dared give the privilege save under the promise of secrecy.”

The following two excerpts summarize Rockefeller’s life and contributions:

The loftiest encomium to Rockefeller’s impact in this field came from Winston Churchill, who wrote shortly before Rockefeller’s death: When history passes its final verdict on John D. Rockefeller, it may well be that his endowment of research will be recognized as a milestone in the progress of the race. For the first time, science was given its head: longer term experiment on a large scale has been made practicable, and those who undertake it are freed from the shadow of financial disaster. Science today owes as much to the rich men of generosity and discernment as the art of the Renaissance owes to the patronage of Popes and Princes. Of these rich men, John D. Rockefeller is the supreme type.

The fiercest robber baron had turned out to be the foremost philanthropist Rockefeller accelerated the shift from the personal, ad-hoc charity that had traditionally been the province of the rich to something both more powerful and more impersonal. He established the promotion of knowledge, especially scientific knowledge, as a task no less important than giving alms to the poor or building schools, hospitals, and museums. He showed the value of expert opinion, thorough planning, and competent administration in nonprofit work, setting a benchmark for professionalism in the emerging foundation field. By the time Rockefeller died, in fact, so much good had unexpectedly flowered from so much evil that God might even have greeted him on the other side, as the titan had so confidently expected all along.

On a concluding note:

Although Junior moved into Kykuit after Rockefeller’s death, he knew that his father was inimitable, and so he decided to retain the Jr. after his name. As he was often heard to say in later years, “There was only one John D. Rockefeller.”

Attorney Samuel Untermver issued this paean to the elusive witness he had interrogated: “Next to our beloved President, he was our country’s biggest citizen. It was he who visualized as did no other man the use to which great wealth could wisely be put. Because of him the world is a better place in which to live. Blessed be the memory of World Citizen No. 1.”

After reading this book, I can definitely say that the question I had has been answered. A highly recommended read from a historical, humanitarian and business perspectives. If you are looking to learn more about the Oil/Energy side of the story, I strongly recommend reading The Prize: The Epic Quest for Oil, Money and Power by Daniel Yergin.

On Steve Jobs

I recently finished reading Steve Jobs by Walter Isaacson.

Below are key excerpts from the book that I found particularly insightful:

1- “I always thought of myself as a humanities person as a kid, but I liked electronics,” he said. “Then I read something that one of my heroes, Edwin Land of Polaroid, said about the importance of people who could stand at the intersection of humanities and sciences, and I decided that’s what I wanted to do.” It was as if he were suggesting themes for his biography (and in this instance, at least, the theme turned out to be valid). The creativity that can occur where both the humanities and the sciences combine in one strong personality was the topic that most interested me in my biographies of Franklin and Einstein, and I believe that it will be a key to creating innovative economies in the twenty-first century.”

2- “His wife also did not request restrictions or control, nor did she ask to see in advance what I would publish. In fact she strongly encouraged me to be honest about his failings as well as his strengths. She is one of the smartest and most grounded people I have ever met. “There are parts of his life and personality that are extremely messy. and that’s the truth,” she told me early on. “You shouldn’t whitewash it. He’s good at spin, but he also has a remarkable story, and I’d like to see that it’s all told truthfully” I leave it to the reader to assess whether I have succeeded in this mission. I’m sure there are players in this drama who will remember some of the events differently or think that I sometimes got trapped in Jobs’s distortion field.”

3- “Jobs said that his appreciation for Eichler homes instilled in him a passion for making nicely designed products for the mass market. I Jove it when you can bring really great design and simple capability to something that doesn’t cost much,” he said as he pointed out the clean elegance of the houses. “It was the original vision for Apple. That’s what we tried to do with the first Mac. That’s what we did with the iPod.””

4- “The Blue Box adventure established a template for a partnership that would soon be born. Wozniak would be the gentle wizard coming up with a neat invention that he would have been happy just to give away. and Jobs would figure out how to make it user-friendly, put it together in a package, market it, and make a few bucks.”

5- “Coming back to America was, for me, much more of a cultural shock than going to India. The people in the Indian countryside don’t use their intellect like we do, they use their intuition instead, and their intuition is far more developed than in the rest of the world. Intuition is a very powerful thing, more powerful than intellect, in my opinion. That’s had a big impact on my work.”

6- “Jobs is a complex person, he said, and being manipulative is just the darker facet of the traits that make him successful. Wozniak would never have been that way, but as he points out, he also could never have built Apple. “I would rather let it pass,” he said when I pressed the point. “It’s not something I want to judge Steve by.””

7- “Apple. It was a smart choice. The word instantly signaled friendliness and simplicity. It managed to be both slightly off-beat and as normal as a slice of pie. There was a whiff of counterculture, back-to-nature earthiness to it, yet nothing could be more American. And the two words together—Apple Computer—provided an amusing disjuncture. ”

8- “Jobs’s father had once taught him that a drive for perfection meant caring about the craftsmanship even of the parts unseen. Jobs applied that to the layout of the circuit board inside the Apple II. He rejected the initial design because the lines were not straight enough. This passion for perfection led him to indulge his instinct to control. Most hackers and hobbyists liked to customize, modify, and jack various things into their computers. To Jobs, this was a threat to a seamless end-to-end user experience.”

9- “Markkula would become a father figure to Jobs. Like Jobs’s adoptive father, he would indulge Jobs’s strong will, and like his biological father, he would end up abandoning him. “Markkula was as much a father-son relationship as Steve ever had,” said the venture capitalist Arthur Rock. He began to teach Jobs about marketing and sales. “Mike really took me under his wing,” Jobs recalled. “His values were much aligned with mine. He emphasized that you should never start a company with the goal of getting rich. Your goal should be making something you believe in and making a company that will last.””

10- “Was Jobs’s unfiltered behavior caused by a lack of emotional sensitivity? No. Almost the opposite. He was very emotionally attuned. able to read people and know their psychological strengths and vulnerabilities. He could stun an unsuspecting: victim with an emotional towel-snap, perfectly aimed. He intuitively knew when someone was faking it or truly knew something. This made him masterful at cajoling, stroking, persuading, flattering, and intimidating people.”

11- “But even though Jobs’s style could be demoralizing, it could also be oddly inspiring. It infused Apple employees with an abiding passion to create groundbreaking products and a belief that they could accomplish what seemed impossible.”

12- “The best products, he believed, were “whole widgets” that were designed end-to-end, with the software closely tailored to the hardware and vice versa. This is what would distinguish the Macintosh, which had an operating system that worked only on its own hardware, from the environment that Microsoft was creating, in which its operating system could be used on hardware made by many different companies.”

13- “Their differences in personality and character would lead them to opposite sides of what would become the fundamental divide in the digital age. Jobs was a perfectionist who craved control and indulged in the uncompromising temperament of an artist; he and Apple became the exemplars of a digital strategy that tightly integrated hardware. software, and content into a seamless package. Gates was a smart, calculating, and pragmatic analyst of business and technology; he was )pen to licensing Microsoft’s operating system and software to a variety of manufacturers.”

14- “I’ll always stay connected with Apple. I hope that throughout my life I’ll sort of have the thread of my life and the thread of Apple weave in and out of each other, like a tapestry. There may be a few years when I’m not there, but I’U always come back. If you want to live your life in a creative way, as an artist, you have to not look back too much. You have to be willing to take whatever you’ve done and whoever you were and throw them away. The more the outside world tries to reinforce an image of you, the harder it is to continue to be an artist, which is why a lot of times. artists have to say. “Bye. I have to go now. I’m going crazy and I’m getting out of here.” And they go and hibernate somewhere. Maybe later they re-emerge a little differently.”

15- “Jobs sometimes avoided the truth. Helmut Sonnenfeldt once said of Henry Kissinger, “He lies not because it’s in his interest. he lies because it’s in his nature.” It was in Jobs’s nature to mislead or be secretive when he felt it was warranted. But he also indulged in being brutally honest at times, telling the truths that most of us sugarcoat or suppress. Both the dissembling and the truth-telling were simply different aspects of his Nietzschean attitude that ordinary rules didn’t apply to him.”

16- “For all of his willfulness and insatiable desire to control things. Jobs was indecisive and reticent when he felt unsure about something. He craved perfection, and he was not always good at figuring out how to settle for something less. He did not like to wrestle with complexity or make accommodations. This was true in products, design, and furnishings for the house. It was also true when it came to personal for the house. It was also true when it came to personal commitments. If he knew for sure a course of action was right. he was unstoppable. But if he had doubts, he sometimes withdrew, preferring not to think about things that did not perfectly suit him.”

17- “Ever since he left the apple commune, Jobs had defined himself and by extension Apple, as a child of the counterculture. In ads such as “Think Different” and “1984,” he positioned the Apple brand so that it reaffirmed his own rebel streak, even after he became a billionaire, and it allowed other baby boomers and their kids to do the same. “From when I first met him as a young guy, he’s had the greatest of the impact he wants his brand to have on people,” said Clow. Very few other companies or corporate leaders—perhaps none— could have gotten away with the brilliant audacity of associating their brand with Gandhi, Einstein, Picasso, and the Dalai Lama. Jobs was able to encourage people to define themselves as anti-corporate, creative. innovative rebels simply by the computer they used. “Steve created the only lifestyle brand in the tech industry,” Larry Ellison said. “There are cars people are proud to have—Porsche, Ferrari, Prius—because what I drive says something about me. People feel the same way about an Apple product.”

18- “One of his motivating passions was to build a lasting company. At age twelve, when he got a summer job at Hewlett-Packard, he learned that a properly run company could spawn innovation far more than any single creative individual. “I discovered that the best innovation is sometimes the company, the way you organize a company,” he recalled. “The whole notion of how you build a company is fascinating. When I got the chance to come back to Apple, I realized that I would be useless without the company, and that’s why I decided to stay and rebuild it.”

19- “Why do we assume that simple is good? Because with physical products. we have to feel we can dominate them. As you bring order to complexity, you find a way to make the product defer to you. Simplicity isn’t just a -visual style. It’s not just minimalism or the absence of clutter. X involves digging through the depth of the complexity. To be truly simple, you have to go really deep. For example, to have no screws on something, you can end up having a product that is so convoluted and so complex. The better way is to go deeper with the simplicity, to understand everything about it and how it’s manufactured. You have to deeply understand the essence of a product in order to be able to get rid of the parts that are not essential.”

20- “Despite his autocratic nature—he never worshiped at the altar of consensus—Jobs worked hard to foster a culture of collaboration at Apple. Many companies pride themselves on having few meetings. Jobs had many.”

21- “”From the earliest days at Apple, I realized that we thrived when we created intellectual property. If people copied or stole our software, we’d be out of business. If it weren’t protected, there’d be no incentive for us to make new software or product designs. If protection of intellectual property begins to disappear, creative companies will disappear or never get Started. But there’s a simpler reason: It’s wrong to steal. It hurts other people. And it hurts your own character.” He knew, however, that the best way to stop piracy—in fact the only way—was to offer an alternative that was more attractive than the brain-dead services that music companies were concocting.”

22- “But Sony couldn’t. It had pioneered portable music with the Walkman, it had a great record company, and it had a long history of making beautiful consumer devices. It had all of the assets to compete with Jobs’s Strategy of integration of hardware, software, devices, and content sales. Why did it fail? Partly because it was a company, like AOL Time Warner that was organized into divisions (that word itself was ominous) with their own bottom lines; the goal of achieving synergy in such companies by prodding the divisions to work together was usually elusive. Jobs did not organize Apple into semi-autonomous divisions; he closely controlled all of his teams and pushed them to work as one cohesive and flexible company, with one profit-and-loss bottom fine. “We don’t have ‘divisions’ with their own P&L,” said Tim Cook. “We run one P&L for the company.””

23- “Despite being- a denizen of the digital world, or maybe because he knew all too well its isolating potential, Jobs was a strong believer in face-to-face meetings. “There’s a temptation in our networked age to think that ideas can be developed by email and iChat,” he said. “That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say ‘Wow,’ and soon you’re cooking up all sorts of ideas.” So he had the Pixar building- designed to promote encounters and unplanned collaborations. “If a building doesn’t encourage that, you’ll lose a lot of innovation and the magic that’s sparked by serendipity,” he said. “So we designed the building to make people get out of their offices and mingle in the central atrium with people they might not otherwise see.””

24- “Jobs insisted that Apple focus on just two or three priorities at a time. “There is no one better at turning off the noise that is going on around him,” Cook said. “That allows him to focus on a few things and say no to many things. Few people are really good at that.” In order to institutionalize the lessons that he and his team were learning. Jobs started an in-house center called Apple University. He hired Joel Podolny, who was dean of the Yale School of Management, to compile a series of case studies analyzing important decisions the company had made, including the switch to the Intel microprocessor and the decision to open the Apple Stores. Top executives spent time teaching the cases to new employees, so that the Apple style of decision making would be embedded in the culture.”

25- “”Steve has a particular way that he wants to run Apple, and it’s the same as it was twenty years ago, which is that Apple is a brilliant innovator of closed systems.” Schmidt later told me. “They don’t want people to be on their platform without permission. The benefits of a closed platform is control. But Google has a specific belief that open is the better approach, because it leads to more options and competition and consumer choice.””

26- “The nasty edge to his personality was not necessary. It hindered him more than it helped him. But it did, at times, serve a purpose. Polite and velvety leaders, who take care to avoid bruising others, are generally not as effective at forcing change. Dozens of the colleagues whom Jobs most abused ended their litany of horror stories by saying that he got them to do things they never dreamed possible. And he created a corporation crammed with A players.”

27- “The saga of Steve Jobs is the Silicon Valley creation myth writ large: launching a start-up in his parents’ garage and building it into the world’s most valuable company. He didn’t invent many things outright. but he was a master at putting together ideas, art, and technology in ways that invented the feature. He designed the Mac after appreciating the power of graphical interfaces in a way that Xerox was unable to do. and he created the iPod after grasping the joy of having a thousand in your pocket in a way that Sony, which had all the assets and heritage, never could accomplish. Some leaders push innovations by being good at the big picture. Others do so by mastering details. Jobs did both, relentlessly. As a result he launched a series of products over three decades that transformed whole industries…”

28- “Was he smart? No, not exceptionally. Instead, he was a genius. His imaginative leaps were instinctive, unexpected, and at times magical. He was, indeed, an example of what the mathematician Mark Kac called a magician genius, someone whose insights come out of the blue and require intuition more than mere mental processing power. Like a pathfinder, he could absorb information, sniff the winds, and sense what lay ahead. Steve Jobs thus became the greatest business executive of our era, the one most certain to be remembered a century from now. History will place him in the pantheon right next to Edison and Ford. More than anyone else of his time, he made products that were completely innovative, combining the power of poetry and processors. With a ferocity that could make working with him as unsettling as it was inspiring, he also built the world’s most creative company. And he was able to infuse into its DNA the design sensibilities, perfectionism, and imagination that make it likely to be, even decades from now. the company that thrives best at the intersection of artistry and technology.”

Regards,

Omar Halabieh

Steve Jobs

On Made In Japan

I recently finished reading Made In Japan – Akio Morita and SONY – by Akio Morito with Edwin M. Reingold and Mitsuko Shumomura.

Below are key excerpts from the book that I found particularly insightful:

1- “I have always believed that a trademark is the life of an enterprise and that it must be protected boldly. A trademark and a company name are not just clever gimmicks—they carry responsibility and guarantee the quality of the product. If someone tries to get a free ride on the reputation and i the ability of another who has worked to build up public trust.”

2- “In the beginning, when our track record for success was not established, our competitors would take a very cautious wait-and-see attitude while we marketed and developed a new product. In the early days, we would often have the market to ourselves for a year or more before the other companies would be convinced that the product would be a success. And we made a lot of money, having the market all to ourselves. But as we became more successful and our track record became clearer, the others waited a shorter and shorter time before jumping in. Now we barely get a three-month head start on some products before the others enter the market to compete with us with their own version of the product we innovated. It is flattering in a way, but it is expensive. We have to keep a premium on innovation.”

3- “My point in digressing to tell this story is simple: I do not believe that any amount of market research could have told us that the Sony Walkman sensational hit that would spawn many imitators. And yet this small item has literally changed the music-listening habits of millions of people all around the world.”

4- “It was this kind of innovation that Ibuka had in mind when we wrote a kind of prospectus and philosophical statement for our company in the very beginning: “If it were possible to establish conditions where persons could become united with a firm spirit of teamwork and exercise to their hearts’ desire their technological capacity,” he wrote, “then such an organization could bring untold pleasure and untold benefits.” He was thinking about industrial creativity, something that is done with teamwork to create new and worthwhile products. Machines and computers cannot be creative in themselves, because creativity requires something more than the processing of existing information. It requires human thought, spontaneous intuition, and a lot of courage, and we had plenty of that in our early days and still do.”

5- “My view was that you must first learn the market.. learn how to sell to it, and build up your corporate confidence before you commit yourself. And when you have confidence, you should commit yourself wholeheartedly.”

6- “…no matter how good or successful you are or how clever or crafty, your business and its future are in the hands of the people you hire. To put it a bit more dramatically, the fate of your business is actually in the hands of the youngest recruit on the staff.”

7- “When most Japanese companies talk about cooperation or consensus, it usually means the elimination of individuality. At our company we are challenged to bring our ideas out into the open. If they clash with others, so much the better, because out of it may come something good at a higher level. Many Japanese companies like to use the words cooperation and consensus because they dislike individualistic employees. When I am asked, and sometimes when I am not, I say that a manager who talks too much about cooperation is one who is saying he doesn’t have the ability to utilize excellent individuals and their ideas and put their ideas in harmony. If my company is successful, it is largely because our managers do have that ability.”

8- “Management officers, knowing that the company’s ordinary business is being done by energetic and enthusiastic younger employees, can devote their energy and effort to planning the future of the company. With is in mind, we think it is unwise and unnecessary to define individual responsibility too clearly, because everyone is taught to act like a family member ready to do what is necessary. If something goes wrong it is considered bad taste for management to inquire who made the mistake. That may seem dangerous, if not silly, but it makes sense to us.”

9- “I cannot understand why there is anything good in laying off people. If management takes the risk and responsibility of hiring personnel, then it is management’s ongoing responsibility to keep them employed. The employee does not have the prime responsibility in this decision, so when a recession comes. why should the employee have to suffer for the management decision to hire him? Therefore, in times of boom we are very careful about increasing our personnel. Once we have hired people, we try to make them understand our concept of a fate-sharing body and how if a recession comes the company is willing to sacrifice profit to keep them in the company.”

10- “What you are showing to your employees is not that you are an artist who performs by himself on the high wire, but you are showing them how you are attempting to attract a large number of people to follow you willingly and with enthusiasm to contribute to the success of the company. If you can do that, the bottom line will take  care of itself.”

11- “It may sound curious, but I learned that an enemy of this innovation could be your own sales organization if it has too much power, because very often these organizations discourage innovation. When you make innovative new products, you must re-educate the sales force about them so the salesmen can educate and sell the public. This is expensive; it means investing sufficient money in R&D and new facilities and advertising and promotion. And it also means making some popular and profitable items obsolete, often the items you can make the most profit on because your development costs are paid for and these products have become easy for your salesmen to sell.”

12- “The primary function of management is decision-making and that means professional knowledge of technology and the ability to foresee the future direction or trends of technology. I believe a manager must have a wide range of general knowledge covering his own business field. It also helps to have a special sense, generated by knowledge and experience—a feel for the business that goes beyond the facts and figures—and this intuitiveness is a gift only human beings can have.”

13- “Next to lawyers, I think these people are the most overused and misused businessmen on the scene in the United States and Japan. I use consultants selectively and have found the best ones can do valuable information gathering and market analysis. But their use can be brought to ridiculous extremes, and it has been.”

14- “I think one of the main advantages of the Japanese system of management over the American or the Western system in general is this sense of corporate philosophy. Even if a new executive takes over he cannot change that. In Japan the long-range planning system and the junior management proposal system guarantee that the relationship between top management and junior management remains very close and that over the years they can formulate a specific program of action that the years they can formulate a specific program of action that will maintain the philosophy of the company. It also may explain why in the initial stages progress is very slow in a Japanese company. But once the company communicates its philosophy to all employees, the company has great strength and flexibility.”

15- “My point is that it is unwise merely to do something different and then rest on your laurels. You have to do something to make a business out of a new development, and that requires that you keep updating the product and staying ahead of the market.”

16- “My prediction is that we can enjoy our lives with less energy, less of the old materials, fewer resources, more recycling, and have more of the essentials for a happy and productive life than ever. Some people in the world, especially the Americans, will have  to learn something of the meaning and spirit of mottainai and conserve more. Step by step, year by year, we must all learn how to be more skillful and efficient in using our resources economically. We must recycle more. As to the expanding populations, that will be a challenge to everyone, for they will have to be fed. clothed, and educated. But as the standard of living of a people increases, the population tends to level off, people live a different way, acquire different tastes and preferences, and develop their own technologies for survival.”

17- “I believe there is a bright future ahead for mankind, and that future holds exciting technological advances that will enrich the lives of everybody on the planet. Only by expanding world trade and stimulating more production can we take advantage of the possibilities that lie before us. We in the free world can do great things. We proved it in Japan by changing the image of the words “Made in Japan” from something shoddy to something fine. But for a single nation or a few nations to have accomplished this is not enough. My vision of the future is of an exciting world of superior goods and services, where every nation’s stamp of origin is a symbol of quality, and where all are competing for the consumers’ hard-earned money at fair prices that reflect appropriate rates of exchange. I believe such a world is within our grasp. The challenge is great; success depends only on the strength of our will.”

Regards,

Omar Halabieh

Made In Japan

On Guerrilla Marketing

I recently finished reading Guerrilla Marketing – Easy and Inexpensive Strategies for Making Big Profits from Your Small Business – by Jay Conrad Levinson.

Below are key excerpts from the book that I found particularly insightful:

1- “Marketing is every hit of contact your company has with anyone in the outside world. Every bit of contact. That means a lot of marketing opportunities. It does not mean investing a lot of money.”

2- “Marketing is the art of getting people to change their minds or to maintain their mindsets if they re already inclined to do business with you. People must either switch brands or purchase a type of product or service that has never existed before.”

3- “Guerrilla marketers do not rely on the brute force of an outsized marketing budget. Instead, they rely on the brute force of a vivid imagination. Today, they are different from traditional marketers in twenty ways. I used to compare guerrilla marketing with textbook marketing, but now that this book is a textbook in so many universities, I must compare it with traditional marketing.”

4- “The Sixteen Monumental Secrets of Guerrilla Marketing: 1. You must have commitment to your marketing program. 2. Think of that program as an investment. 3. See to it that your program is consistent. 4. Make your prospects confident in your firm. 5. You must be patient in order to keep a commitment. 6. You must see that marketing is an assortment of weapons. 7. You must know that profits come subsequent to the sale. 8. You must aim to run your firm in a way that makes it convenient for your customers. 9. Put an element oi amazement in your marketing. 10. Use measurement to judge the effectiveness of your weapons. 10. Use measurement to judge the effectiveness of your weapons. 11. Prove your involvement with customers and prospects by your regular follow-up with them. 12. Learn to become dependent on other businesses and they on you. 13. You must be skilled with the armament of guerrillas, which means technology. 14. Use marketing to gain consent from prospects, and then broaden that consent so that it leads to the sale 15. Sell the content of your offering rather than the style; sell the steak and the sizzle, because people are too sophisticated to merely buy that sizzle. 16. After you have a full-fledged marketing program, work to augment it rather than rest on your laurels.”

5- “Creativity comes from knowledge. You must have knowledge of your own product or service, your competition, your target audience, your marketing area, the economy, current events, and the trends of the time. With this knowledge, you’ll have what it takes to develop a creative marketing program, and you’ll produce creative marketing materials.”

6- “Market primarily to customers, not to prospects. It costs one-sixth as much to sell something to a customer than to a prospect. Some experts now peg that fraction as one-tenth. Direct your marketing funds toward follow-up, surpassing customer expectations, gaining repeat business, earning referral business, and enlarging the size of your transactions. Your growth will pay off in profits even more impressive than the money you’ll save by the inward, rather than outward, thrust in your marketing.”

7- “Marketing is part science and part art — and the art part is very subjective. The artistic end of marketing is not limited to words and pictures; it involves timing and media selection and ad size.”

8- “Unless you really keep track of all your media responses, you are not a guerrilla. If you run your ads and keep selecting media on blind faith, you are closer to a lemming. You’ve got to make your marketing as scientific as possible. This is one of those rare instances in which you can measure the effectiveness of your media scientifically. Avail yourself of it.”

9- “As you know, guerrillas give things away. Giving and receiving are two sides of the same coin. The coin is called business. Guerrillas have learned. though they may have always suspected it in their bones, that the more they give, the more they receive. They are extremely imaginative about what they can give, shifting their generosity into high gear and seeing the world through the eyes of their customers. That’s where to start when determining what to give away.”

10- “You can delegate the marketing tasks, delegate the marketing details, and delegate the marketing assignments. But you can’t delegate the passion or the vision. Those have to come from you.”

11- “No matter what you think you do for a living, you’re really in four businesses at once. The first is the business you think you’re in — the one mentioned on your business card. The second is the marketing business. Whatever you offer must be marketed…The third business you’re in is the service business. Customers must be served and helped from the moment you meet them…The fourth business you’re in is the people business. Your products are made by people, marketed by people, sold by people, and offered to people. There’s a close correlation between your interest in people and your ability to convince and motivate them.”

12- “Whatever you think or thought service was, let me give you a new definition — a definition for guerrillas, a definition for a time when small businesses d all the help they can get and every possible competitive advantage. Service is anything the customer wants it to be. Service is not what it says in your service manual, not what you’ve rendered in the past, and not what customers dread it will be. Instead, it’s what they pray it will be. If you can  ive up to this definition of service, you’ll be practicing one of the most powerful marketing tactics in history — and also one of the very newest.”

Regards,

Omar Halabieh

Guerrilla Marketing