Yahoo: Bet Big, or Die

Recently Yahoo appointed a new CEO (Tim Morse).  Here are some suggestions to Yahoo from Knowledge@Wharton  in The ‘Morse Code’ at Yahoo: Bet Big, or Die: “

Hosanagar suggests that Yahoo should go back to its roots in media products. “It needs to come out with a new compelling product that is not an effort to catch up with Google or Facebook or anyone else, but instead is revolutionary. It should think about how to create that culture of innovation within and find that spark that resulted in Yahoo being formed in the first place.” Efforts to catch up or beat Google at search or email, or to compete with Facebook in social marketing, “will be misguided,” he notes. ” Just like Nokia, the challenge is in developing new products.

Interesting! Just like Nokia, the answer to Yahoo’s trouble is also in getting innovation to market through effective R&D.

Hosanagar notes that Bartz seemed focused on financial and organizational re-engineering. That “was fine to an extent … but she never successfully positioned herself as an innovative CEO who is seeking to bring new products and services to consumers.”

Furthermore, just as in case of Nokia, the resources and R&D teams are in place. Effective R&D management remains the most important challenge.

Morse has sufficient momentum to build on, says Werbach, pointing to Yahoo’s “valuable assets, lots of users and some very talented people.”

The mangers need to come up with a vision and challenge the R& D team to innovate.

Yahoo needs to find a strong future strategy if it wants to remain an independent company, he adds. “The very few large tech companies that have successfully turned around [such as IBM and Apple] had long-term visions that played to their unique strengths.”

However, this is very hard to do.  I wish them luck…

Nokia’s troubles continue

To centralize or not to centralize?

McKinsey Quarterly had an interesting article on whether To centralize or not to centralize?:

The chief executive of a European equipment manufacturer recently faced a tough centralization decision: should he combine product management for the company’s two business units—cutting and welding—which operated largely independently of each other but shared the same brand? His technical leader believed that an integrated product range would make the company’s offerings more appealing to businesses that bought both types of equipment. These customers accounted for more than 70 percent of the market but less than 40 percent of the company’s sales. “You cut before you weld,” he explained. “You get a better weld at lower cost if the cutting is done with the welding in mind.” Managers in both divisions, though, resisted fiercely: product management, they believed, was central to their business, and they could not imagine losing control of it.

Clearly, centralization has many benefits – from leveraging synergies between product lines to reducing overhead costs.  However it can also add bureaucracy and reduce visibility into overall performance.  The article points out a three question discussion:

1. Is the centralization mandated by regulation?
2. If not, does centralization add significant value?
3. If not, are risks of centralization low?

Pretty useful.

Global race on to match U.S. drone capabilities

A quick post for today.  The article Global race on to match U.S. drone capabilities in The Washington Post has quite a bit of interesting data:

More than 50 countries have purchased surveillance drones, and many have started in-country development programs for armed versions because no nation is currently exporting weaponized drones beyond a handful of sales between the United States and its closest allies.

And here is some evidence:

“In an animated video and map, the thin, sleek drone locates what appears to be a U.S. aircraft carrier group near an island with a striking resemblance to Taiwan and sends targeting information back to shore, triggering a devastating barrage of cruise missiles toward the formation of ships.”

Drones or Unmanned Aerial Vehicles (UAV) are popular because of low cost and low risks:

Military planners worldwide now see drones as relatively cheap weapons and highly effective reconnaissance tools. Hand-launched ones used by ground troops can cost in the tens of thousands of dollars. Near the top of the line, the Predator B, or MQ9-Reaper, manufactured by General Atomics Aeronautical Systems, costs about $10.5 million. By comparison, a single F-22 fighter jet costs about $150 million.

Efforts are underway to extend UAV beyond land:

In recent conflicts, the United States has primarily used land-based drones, but it is developing an aircraft carrier-based version to deploy in the Pacific. Defense analysts say the new drone is partly intended to counter the long-range “carrier killer” missile China is developing.

Here is how arms races start:

China’s rapid development has pushed its neighbors into action. After a diplomatic clash with China last fall over disputed territories in the South China Sea, Japan announced that it planned to send military officials to the United States to study how it operates and maintains its Global Hawk high-altitude surveillance drones. In South Korea, lawmakers this year accused China of hacking into military computers to learn about the country’s plans to acquire Global Hawk, which could peer into not only North Korea but also parts of China and other neighboring countries.

Here is an example of arms proliferation (through resale of technology):

In 2009, the United States also objected to an Israeli sale of sophisticated drones to Russia, according to diplomatic cables released by the anti-secrecy group WikiLeaks. A smaller co-production deal was later brokered with the Russians, who bristled when Georgia deployed Israeli surveillance drones against its forces during the 2008 war between the two countries.

Here is another path for proliferation: From low cost producers / trailing players to defray costs of accelerated development:

“The United States doesn’t export many attack drones, so we’re taking advantage of that hole in the market,” said Zhang Qiaoliang, a representative of the Chengdu Aircraft Design and Research Institute, which manufactures many of the People’s Liberation Army’s most advanced military aircraft. “The main reason is the amazing demand in the market for drones after 9/11.”

And as a response, US also has to start exporting its technologies:

Vice Adm. William E. Landay III, director of the Defense Security Cooperation Agency overseeing foreign military sales, said at a Pentagon briefing last month that his agency is working on pre-approved lists of countries that would qualify to purchase drones with certain capabilities. “If industry understands where they might have an opportunity to sell, and where they won’t, that’s useful for them,” Landay said.

3 V’s for a successful new Venture

I have seen many a new ventures flounder because of a lack of focus, a clear plan and a cohesive culture.  In the battle to get revenues and become cash flow positives, many entrepreneurs get far away from what they intended to build.

Here are three V’s to keep ourselves on track and help us succeed:

• Vision: Define your vision of where the venture will go.
• Vantage: Define your beliefs and view points of what will make the vision a reality.
• Values: Define your organization’s culture and values that will help you get to the vision. 

Is a realistic, credible, attractive future for [an] organization. A clear vision has many advantages (described below).  You can change the vision as many times as you like – but not having one will mean you will chase every opportunity however irrelevant to your vision or how much it might take you away from your goal.  The most critical commodity in a new venture is the founder’s time and energy.  A clear vision will help you ensure that resource is used wisely.

Here are some of the benefits of having a clear vision:

• It attracts commitment and energizes people. 
• A vision allows people to feel like they are part of a greater whole, and hence provides meaning for their work. 
• It establishes a standard of excellence. 
• It bridges the present and the future. 

A great example of a leader with a vision is Steve Jobs.  His vision was that there would be convergence between phones and music players.  It took him seven years from the development of iPod to get to iPhone.  However, the vision guided product development iterations and experimentation till the right solution was developed.


Vantage:
Having a vision is necessary, but not sufficient.  There are many ways to get to the desired vision.  It is important to define a few guiding principles that you are going to follow to achieve your vision.  These guiding principles will help you decide what not to do – probably even more important than deciding what to do.  These guiding principles will help you prioritize between conflicting priorities.  

Research shows that vantage and mindset defines how an organization develops its products.  It is best to think about vantage from an example.  Apple’s vantage is user centric design and on exquisite industrial design.   So when it comes deciding on how to achieve the vision of a converged device, it clear to everyone on the team that the device has to have the absolute best user interface possible.  In fact, the focus is so sharp if there is a conflict between user experience and industrial design, user experience wins.  It is important to remember that whether you define it or not, there is always a set of beliefs that are guiding your actions.  Defining them helps the entire organization drive coherently towards the vision.  
Choosing the right vantage is extremely important.  As the recent article in Arstechica pointed out, Apple’s focus on user experience drove them towards total control of the product solution (hardware, software (OS), and service (iTunes)).  This worked well for most of the hardware centric products, but not so well for the cloud-centric services (such as iCloud).  Google on the other hand, is focused primarily on the internet and may have a better chance of succeeding with cloud services.


Values:
Once you have a set of guiding principles, define what cultural values you will inculcate in your organization.  Think about how will your vantage transfer from you into the entire organization.

There are no right or wrong values or cultures.  It is important to decide on what values are important to you and follow those consistently.  Organizations often take on the persona of their leaders.  It wills save you and everyone else a lot of trouble if you are aware of the values you are cherish.  Fun organizations have become a buzz word lately.   Should you spend your scarce resources to make your organization fun?  Are you going to want to control all aspects of the organization or do you prefer to be hands off?  How will the team be rewarded – for individual achievement or for team success?  A few minutes of thoughts along this will ensure you hire the right kinds of people to support you.

Article first published as 3 V’s for a successful new Venture on Technorati.

Apple R&D and Steve Jobs Methodology: Focus on your Niche

1. User centric design: The entire R&D process revolves around delivering an experience to the users
2. Long-term vision:  User centric design is supported by deep understanding of technology roadmaps
3. Engaged leader: R&D managers have to be personally engaged in R&D to make the vision of a user centric design practical.
4. Small focused R&D Team: High visibility and a lot of respect for key designers.

This goes back to Steve’s philosophy that the most important decisions are the things you decide NOT to do, not what you decide to do.

Again, I will be gleaning information from several sources to see if we can build a better picture.  Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley and see what we can learn…
Just to recap, the strategic niche for Apple was the absolute best user interface (or at least what Jobs would consider the best) and an industrial design to go with it:

Here’s someone who starts with the user experience, who believes that industrial design shouldn’t be compared to what other people were doing with technology products but it should be compared to people were doing with jewelry… Go back to my lock example, and hinges and a door with beautiful brass, finely machined, mechanical devices. And I think that reflects everything that I have ever seen that Steve has touched.

This strategic choice forces many decisions along the way.  Some of them might not be popular, but Jobs clearly made them to stay true to the strategic niche:

Steve believed that if you opened the system up people would start to make little changes and those changes would be compromises in the experience and he would not be able to deliver the kind of experience that he wanted.

The strategic niche is a thread that tied EVERY aspect of Apple’s business together:

Absolutely. The user experience has to go through the whole end-to-end system, whether it’s desktop publishing or iTunes. It is all part of the end-to-end system. It is also the manufacturing. The supply chain. The marketing. The stores. I remember I was brought in because I had a design background and because I was a marketer. I had product marketing experience. Not because I knew anything about computers.

As we all know, Apple has a unique way to do its marketing that is tied in with the overall user interface focused strategic niche:

Steve loved those ideas. A lot of the stuff we were doing and our marketing was focused on when we bring the Mac to market. It has to be done at such a high level of perception of expectation that he will sort of tease people to want to find out what the product is capable of.

The same goes for advertising:

Most big companies delegate it way down in the organization. The CEO rarely knows anything about the advertising except when it’s presented, when it’s all done. That’s not how we did it at Pepsi, not how we did it at Apple, and I’m sure it’s not how Steve does it now. He always adamantly involved in the advertising, the design and everything.

He brought one of the top retailers in the world on his board to learn about retail ( Mickey Drexler from The Gap, who advised Jobs to build a prototype store before launch). Not only did he learn about retail, I’ve never been in a better store than an Apple store. It has the highest revenue per square foot of any store in the world but it’s not just the revenue, it’s the experience.
Apple stores are packed. You can go to the Sony center — go in the San Francisco center at the Moscone. There’s nobody there. You can go into the Nokia store, they have one in New York on 57th St. There’s nobody there.

It is also critical to emphasize the strategic niche in every aspect of the company’s business:

Once you realize that Apple leads through design, than you can start to see, that’s what makes it different. Look at the stores, at the stairs in the stores. They are made of some special glass that had to be fabricated. 

Or here is an example from tying the user centric design strategic niche to manufacturing:

He was fascinated by the Sony factories. We went through them. They would have different people in different colored uniforms. Some would have red uniforms, some green, some blue, depending on what their functions were. It was all carefully thought out and the factories were spotless. Those things made a huge impression on him.
The Mac factory was exactly like that. They didn’t have colored uniforms, but it was every bit as elegant as the early Sony factories that we saw. Steve’s point of reference was Sony at the time. He really wanted to be Sony. He didn’t want to be IBM. He didn’t want to be Microsoft. He wanted to be Sony.

However, this may not be easy at all times.  For example, Sony was an analog component focused company while Apple was focused on user experience.  Jobs had to modify the Sony manufacturing processes to better suit Apple’s culture.  The wired article The Untold Story: How the iPhone Blew Up the Wireless Industry shows us how following a strategic niche can be very expensive, but it can pay off if followed wisely:

The conversation about which operating system to use was at least one that all of Apple’s top executives were familiar with. They were less prepared to discuss the intricacies of the mobile phone world: things like antenna design, radio-frequency radiation, and network simulations. To ensure the iPhone’s tiny antenna could do its job effectively, Apple spent millions buying and assembling special robot-equipped testing rooms. To make sure the iPhone didn’t generate too much radiation, Apple built models of human heads — complete with goo to simulate brain density — and measured the effects. To predict the iPhone’s performance on a network, Apple engineers bought nearly a dozen server-sized radio-frequency simulators for millions of dollars apiece. Even Apple’s experience designing screens for iPods didn’t help the company design the iPhone screen, as Jobs discovered while toting a prototype in his pocket: To minimize scratching, the touchscreen needed to be made of glass, not hard plastic like on the iPod. One insider estimates that Apple spent roughly $150 million building the iPhone.

The question is what should an R&D manager do when different elements within the strategic niche conflict with each other.  For example, Jobs was focused on BOTH user experience and industrial design:

Because Steve’s design methodology was so correct even 25 years ago he was able to make a design methodology – his first principles — of user experience, focus on just a few things, look at the system, never compromise, compare yourself not to other electronic products but compare yourself to the finest pieces of jewelry — all those criteria — no one else was thinking about that.

What would happen when strategic choices pitted user experience vs. industrial design?  Apple selected user experience.  Here is an example.  This is what the Japanese engineers had to say about the original MacBook Air: No Waste Outside, Nothing but Waste Inside’

Can we say that the MacBook Air has a perfect, sophisticated external appearance, but its insides are full of waste?’ asked Mayuko Uno, a squad member, as if speaking for the engineers that had finished the teardown process.

Here is what the same publication had to say about the New MacBook Air:

“We were impressed by Apple’s commitment to good design while seeing the LED lamp that is located on the decorative laminate around the display and is lit when the camera is in use.”

So, if push came to shove, Apple was willing to compromise on everything but the user experience.  Jobs was also willing to spend resources and make unpopular decisions to maintain the strategic niche around user experience.  This is a pretty important lesson for all of us to learn.  That is the level at which we need to define a strategic niche to develop successful products.

Apple R&D and Steve Jobs Methodology: Long-term vision

Let us continue our discussion on the Steve Jobs methodology. We discussed user centric design as the fundamental tenet of new product development under Jobs. Let us now focus on the long-term vision. I will be gleaning information from several sources to see if we can build a better picture. Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley.

Steve had this perspective that always started with the user’s experience; and that industrial design was an incredibly important part of that user impression. And he recruited me to Apple because he believed that the computer was eventually going to become a consumer product. That was an outrageous idea back in the early 1980′s because people thought that personal computers were just smaller versions of bigger computers. That’s how IBM looked at it.
emphasis added

However, a long-term vision is not enough.  One has to break it down into manageable steps.  This is likely more art than science because many of the necessary technologies are not quite read at the time vision is generated.  So the idea is to have a clear vision in mind while working through the steps over the long-term.

He was a person of huge vision. But he was also a person that believed in the precise detail of every step. He was methodical and careful about everything — a perfectionist to the end.

The key capability for an R&D manager, then, is to look at roadmaps of different technologies required to achieve the long-term vision and identify what to invest in when.  Even when technologies do exist, they may not be implementable because of difficulty integrating into a user centric design.  So, R&D managers need to be able to combine a vision with technology roadmaps AND integrate them into a user-centric design:

On one level he is working at the “change the world,” the big concept. At the other level he is working down at the details of what it takes to actually build a product and design the software, the hardware, the systems design and eventually the applications, the peripheral products that connect to it.

Let us now use the Wired article The Untold Story: How the iPhone Blew Up the Wireless Industry to dig a bit deeper in to this concept of long-term vision aligned with technology plans and user experience.

In 2002, shortly after the first iPod was released, Jobs started thinking about developing a phone. He saw millions of Americans lugging separate phones, BlackBerrys, and — now — MP3 players; naturally, consumers would prefer just one device. He also saw a future in which cell phones and mobile email devices would amass ever more features, eventually challenging the iPod’s dominance as a music player. To protect his new product line, Jobs knew he would eventually need to venture into the wireless world.
emphasis added

Many people were talking about convergence back then.  But, vision is not enough.  It needs to be aligned with technology roadmaps.

If the idea was obvious, so were the obstacles. Data networks were sluggish and not ready for a full-blown handheld Internet device. An iPhone would require Apple to create a completely new operating system; the iPod’s OS wasn’t sophisticated enough to manage complicated networking or graphics, and even a scaled-down version of OS X would be too much for a cell phone chip to handle. Apple would be facing strong competition, too: In 2003, consumers had flocked to the Palm Treo 600, which merged a phone, PDA, and BlackBerry into one slick package. That proved there was demand for a so-called convergence device, but it also raised the bar for Apple’s engineers.

One way to explore a vision as complex as a convergence device is to experiment.  It is not enough to just trust the gut feeling about the vision, it is important to take small steps.

So that summer, while he publicly denied he would build an Apple phone, Jobs was working on his entry into the mobile phone industry. In an effort to bypass the carriers, he approached Motorola. It seemed like an easy fix: The handset maker had released the wildly popular RAZR, and Jobs knew Ed Zander, Motorola’s CEO at the time, from Zander’s days as an executive at Sun Microsystems. A deal would allow Apple to concentrate on developing the music software, while Motorola and the carrier, Cingular, could hash out the complicated hardware details.

However, results on experiments may not be as successful as hoped.

Of course, Jobs’ plan assumed that Motorola would produce a successor worthy of the RAZR, but it soon became clear that wasn’t going to happen. The three companies dickered over pretty much everything — how songs would get into the phone, how much music could be stored there, even how each company’s name would be displayed. And when the first prototypes showed up at the end of 2004, there was another problem: The gadget itself was ugly.

R&D managers need to have the faith in their long-term vision to learn from failures and continue.  As we have discussed, Nokia had a prototype touch-screen smart phone in 2004 as well, but chose not to pursue it any further.  Here is what Jobs did:

Jobs delivered a three-part message to Cingular: Apple had the technology to build something truly revolutionary, “light-years ahead of anything else.” Apple was prepared to consider an exclusive arrangement to get that deal done. But Apple was also prepared to buy wireless minutes wholesale and become a de facto carrier itself.

But the faith in the vision should always be supported by robust technology plans (or R&D plans in general):

Jobs had reason to be confident. Apple’s hardware engineers had spent about a year working on touchscreen technology for a tablet PC and had convinced him that they could build a similar interface for a phone. Plus, thanks to the release of the ARM11 chip, cell phone processors were finally fast and efficient enough to power a device that combined the functionality of a phone, a computer, and an iPod. And wireless minutes had become cheap enough that Apple could resell them to customers; companies like Virgin were already doing so.

Even a robust technology plan is not enough.  One has to bring it together into a user centric design.  Finally, may be we could use a process like spiral development to support this endeavor.

They built a prototype of a phone, embedded on an iPod, that used the clickwheel as a dialer, but it could only select and dial numbers — not surf the Net. So, in early 2006, just as Apple engineers were finishing their yearlong effort to revise OS X to work with Intel chips, Apple began the process of rewriting OS X again for the iPhone.

For more, please continue on to the next component of Steve Jobs methodology: Engaged leader: