Mobile is exploding


We have talked about this before but more facts have come to light regarding the explosion of mobile data traffic, signaling a substantive change in how the world accesses information. In the Rise of mobile and the death of the rest the focus was on the business risks and opportunities coming from the rise of mobile computing.

Just yesterday, in an article in MIT’s Technology Review there was even more evidence of the rise of mobile.  The article, titled Four Charts That Illustrate the Transformation of Personal Computing was a summation of a Mary Meeker of KPCB presentation on the state of the internet (slide share embedded above).

The MIT article had one chart (see slide 15 above in Mary’s deck) that showed mobile internet traffic in November 2012 was 13% of all internet traffic which grew from a base level of ~1% in Dec 2009.  So in roughly 3 years, mobile traffic is consuming over 13X more internet bandwidth than any other type of device.

Just in case you needed more convincing, in another article in MIT Technical Review (this one on spectrum sharing) Cisco was quoted as saying that mobile traffic would grow 18X by 2016.

If mobile’s winning, who’s losing?

That has got to be desktop computing.  In fact, another chart (slide 16 in Mary’s deck) showed a comparison of India’s internet traffic tracking desktop vs mobile devices, from December 2008 to November 2012. In this chart India’s mobile internet exceeded desktop traffic sometime the middle of this year.

But I think the one chart that tells this better (see one slide 25) shows that smartphones and tablets shipments exceeded desktops and laptops in 2010.  The other interesting thing is that one can also see the gradual decline in desktops and laptop shipments since then.

Where’s the revenue streams?

The funny thing about Mary’s presentation is the fact that she was tracking mobile app and mobile advertising (see slide 17) as a rising revenue opportunity, expected to reach $19B in 2012.  In my post on the rise of Mobile, I assumed that mobile advertising would not be a successful model for mobile revenue streams – I was wrong.

Mary’s presentation also showed some of the impact of mobile on other markets and foretells the future impacts mobile will have. One telling example for this is standalone camera sales vs mobile camera shipments (see slide 32) which crossed over in 2008 where standalone camera sales peaked at~150M units. The same thing happened with standalone personal navigation devices (PND)  (see slide 34) that peaked 13M units in 2009 but where Waze unit (mobile navigation aid) exceeded PND unit shipments in Q1 2012.

The remainder of the presentation (at least what I read) seemed to define a new life-style option she called Asset-Light which was all about shedding physical assets like wallets, paperback books, TV and other screens, fixed LAN connectivity and moving to a completely mobile world where everything you need is on your tablet with access to the internet via WiFi or LTE.

Mobile is here, better get ready and figure out how to do business with it or consider this a great time to curtail your growth prospects.

Comments

VMworld first thoughts kickoff session

[Edited for readability. RLL] The drummer band was great at the start but we couldn’t tell if it was real or lipsynched. It turned out that each of the Big VMWORLD letters had a digital drum pad on them which meant it was live, in realtime.

Paul got a standing ovation as he left the stage introducing Pat the new CEO.  With Paul on the stage, there was much discussion of where VMware has come the last four years.  But IDC stats probably say it better than most in 2008 about 25% of Intel X86 apps were virtualized and in 2012 it’s about 60% and and Gartner says that VMware has about 80% of that activity.

Pat got up on stage and it was like nothing’s changed. VMware is still going down the path they believe is best for the world a virtual data center that spans private, on premises equipment and extrenal cloud service providers equipment.

There was much ink on software defined data center which is taking the vSphere world view and incorporating networking, more storage, more infrastructure to the already present virtualized management paradigm.

It’s a bit murky as to what’s changed, what’s acquired functionality and what’s new development but suffice it to say that VMware has been busy once again this year.

A single “monster vm” (has it’s own facebook page) now supports up to 64 vCPUs, 1TB of RAM, and can sustain more than a million IOPS. It seems that this should be enough for most mission critical apps out there today. No statement on latency the IOPS but with a million IOS a second and 64 vCPUs we are probably talking flash somewhere in the storage hierarchy.

Pat mentioned that the vRAM concept is now officially dead. And the pricing model is now based on physical CPUs and sockets. It no longer has a VM or vRAM component to it. Seemed like this got lots of applause.

There are now so many components to vCloud Suite that it’s almost hard to keep track of them all:  vCloud Director, vCloud Orchestrator, vFabric applications director, vCenter Operations Manager, of course vSphere and that’s not counting relatively recent acquisitions Dynamic Op’s a cloud dashboard and Nicira SDN services and I am probably missing some of them.

In addition to all that VMware has been working on Serengeti which is a layer added to vSphere to virtualize Hadoop clusters. In the demo they spun up and down a hadoop cluster with MapReduce operating to process log files.  (I want one of these for my home office environments).

Showed another demo of the vCloud suite in action spinning up a cloud data center and deploying applications to it in real time. Literally it took ~5minutes to start it up until they were deploying applications to it.  It was a bit hard to follow as it was going a lot into the WAN like networking environment configuration of load ballancing, firewalls and other edge security and workload characteristics but it all seemed pretty straightforward and took a short while but configured an actual cloud in minutes.

I missed the last part about social cast but apparently it builds a social network of around VMs?  [Need to listen better next time]

More to follow…

 

Roads to R&D success – part 2

This is the second part of a multi-part post.  In part one (found here) we spent some time going over some prime examples of corporations that generated outsize success from their R&D activities, highlighting AT&T with Bell Labs, IBM with IBM Research, and Apple.

I see two viable models for outsized organic R&D success:

  • One is based on a visionary organizational structure which creates an independent R&D lab.  IBM has IBM Research, AT&T had Bell Labs, other major companies have their research entities.  These typically have independent funding not tied to business projects, broadly defined research objectives, and little to no direct business accountability.  Such organizations can pursue basic research and/or advanced technology wherever it may lead.
  • The other is based on visionary leadership, where a corporation identifies a future need, turns completely to focus on the new market, devotes whatever resources it needs and does a complete forced march towards getting a product out the door.  While these projects sometimes have stage gates, more often than not, they just tell the project what needs to be done next, and where resources are coming from.

The funny thing is that both approaches have changed the world.  Visionary leadership typically generates more profit in a short time period. But visionary organizations often outlast any one person and in the long run may generate significant corporate profits.

The challenges of Visionary Leadership

Visionary leadership balances broad technological insight with design aesthetic that includes a deep understanding of what’s possible within a corporate environment. Combine all that with an understanding of what’s needed in some market and you have a combination reconstructs industries.

Visionary leadership is hard to find.  Leaders like Bill Hewlett, Akio Morita and Bill Gates seem to come out of nowhere, dramatically transform multiple industries and then fade away.  Their corporations don’t ever do as well after such leaders are gone.

Often visionary leaders come up out of the technical ranks.  This gives them the broad technical knowledge needed to identify product opportunities when they occur.   But, this technological ability also helps them to push development teams beyond what they thought feasible.  Also, the broad technical underpinnings gives them an understanding of how different pieces of technology can come together into a system needed by new markets.

Design aesthetic is harder to nail down.  In my view, it’s intrinsic to understanding what a market needs and where a market is going.   Perhaps this should be better understood as marketing foresight.  Maybe it’s just the ability to foresee how a potential product fits into a market.   At some deep level, this is essence of design excellence in my mind.

The other aspect of visionary leaders is that they can do it all, from development to marketing to sales to finance.  But what sets them apart is that they integrate all these disciplines into a single or perhaps pair of individuals.  Equally important, they can recognize excellence in others.  As such, when failures occur, visionary leader’s can decipher the difference between bad luck and poor performance and act accordingly.

Finally, most visionary leaders are deeply immersed in the markets they serve or are about to transform.  They understand what’s happening, what’s needed and where it could potentially go if it just apply the right technologies to it.

When you combine all these characteristics in one or a pair of individuals, with corporate resources behind them, they move markets.

The challenges of Visionary Organizations

On the other hand, visionary organizations that create independent research labs can live forever.  As long as they continue to produce viable IP.   Corporate research labs must balance an ongoing commitment to advance basic research against a need to move a corporation’s technology forward.

That’s not to say that the technology they work on doesn’t have business applications.  In some cases, they create entire new lines of businesses, such as Watson from IBM Research.   However, probably most research may never reach corporate products, Nonetheless research labs always generate copious IP which can often be licensed and may represent a significant revenue stream in its own right.

The trick for any independent research organization is to balance the pursuit of basic science within broad corporate interests, recognizing research with potential product applications, and guiding that research into technology development.  IBM seems to have turned their research arm around by rotating some of their young scientists out into the field to see what business is trying to accomplish.  When they return to their labs, often their research takes on some of the problems they noticed during their field experience.

How much to fund such endeavors is another critical factor.  There seems to be a size effect. I have noticed small research arms, less than 20 people that seem to flounder going after the trend of the moment which fail to generate any useful IP.

In comparison, IBM research is well funded (~6% of 2010 corporate revenue) with over 3000 researchers (out of total employee population of 400K) in 8 labs.  The one lab highlighted in the article above (Zurich) had 350 researchers, covering 5 focus areas, or ~70 researchers per area.

Most research labs augment their activities by performing joint research projects with university researchers and other collaborators. This can have the effect of multiplying research endeavors but often it will take some funding to accomplish and get off the ground.

Research labs often lose their way and seem to spend significant funds on less rewarding activities.  But by balancing basic science with corporate interests, they can become very valuable to corporations.

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In part 3 of this series we discuss the advantages and disadvantages of startup acquisitions and how they can help and hinder a company’s R&D effectiveness.

Image: IBM System/360 by Marcin Wichary

How has IBM research changed?

20111207-204420.jpg
IBM Neuromorphic Chip (from Wired story)

What does Watson, Neuromorphic chips and race track memory have in common. They have all emerged out of IBM research labs.

I have been wondering for some time now how it is that a company known for it’s cutting edge research but lack of product breakthrough has transformed itself into an innovation machine.

There has been a sea change in the research at IBM that is behind the recent productization of tecnology.

Talking the past couple of days with various IBMers at STGs Smarter Computing Forum, I have formulate a preliminary hypothesis.

At first I heard that there was a change in the way research is reviewed for product potential. Nowadays, it almost takes a business case for research projects to be approved and funded. And the business case needs to contain a plan as to how it will eventually reach profitability for any project.

In the past it was often said that IBM invented a lot of technology but productized only a little of it. Much of their technology would emerge in other peoples products and IBM would not recieve anything for their efforts (other than some belated recognition for their research contribution).

Nowadays, its more likely that research not productized by IBM is at least licensed from them after they have patented the crucial technologies that underpin the advance. But it’s just as likely if it has something to do with IT, the project will end up as a product.

One executive at STG sees three phases to IBM research spanning the last 50 years or so.

Phase I The ivory tower:

IBM research during the Ivory Tower Era looked a lot like research universities but without the tenure of true professorships. Much of the research of this era was in materials and pure mathematics.

I suppose one example of this period was Mandlebrot and fractals. It probably had a lot of applications but little of them ended up in IBM products and mostly it advanced the theory and practice of pure mathematics/systems science.

Such research had little to do with the problems of IT or IBM’s customers. The fact that it created pretty pictures and a way of seeing nature in a different light was an advance to mankind but it didn’t have much if any of an impact to IBM’s bottom line.

Phase II Joint project teams

In IBM research’s phase II, the decision process on which research to move forward on now had people from not just IBM research but also product division people. At least now there could be a discussion across IBM’s various divisions on how the technology could enhance customer outcomes. I am certain profitability wasn’t often discussed but at least it was no longer purposefully ignored.

I suppose over time these discussions became more grounded in fact and business cases rather than just the belief in the value of the research for research sake. Technological roadmaps and projects were now looked at from how well they could impact customer outcomes and how such technology enabled new products and solutions to come to market.

Phase III Researchers and product people intermingle

The final step in IBM transformation of research involved the human element. People started moving around.

Researchers were assigned to the field and to product groups and product people were brought into the research organization. By doing this, ideas could cross fertilize, applications could be envisioned and the last finishing touches needed by new technology could be envisioned, funded and implemented. This probably led to the most productive transition of researchers into product developers.

On the flip side when researchers returned back from their multi-year product/field assignments they brought a new found appreciation of problems encountered in the real world. That combined with their in depth understanding of where technology could go helped show the path that could take research projects into new more fruitful (at least to IBM customers) arenas. This movement of people provided the final piece in grounding research in areas that could solve customer problems.

In the end, many research projects at IBM may fail but if they succeed they have the potential to make change IT as we know it.

I heard today that there were 700 to 800 projects in IBM research today if any of them have the potential we see in the products shown today like Watson in Healthcare and Neuromorphic chips, exciting times are ahead.

One day with HDS

HDS CEO Jack Domme shares the company’s vision and strategy with Influencer Summit attendees #HDSday by HDScorp
HDS CEO Jack Domme shares the company’s vision and strategy with Influencer Summit attendees #HDSday by HDScorp

Attended #HDSday yesterday in San Jose.  Listened to what seemed like the majority of the executive team. The festivities were MCed by Asim Zaheer, VP Corp and Product Marketing, a long time friend and employee, that came to HDS with the acquisition of Archivas five or so years ago.   Some highlights of the day’s sessions are included below.

The first presenter was Jack Domme, HDS CEO, and his message was that there is a new, more aggressive HDS, focused on executing and growing the business.

Jack said there will be almost a half a ZB by 2015 and ~80% of that will be unstructured data.  HDS firmly believes that much of this growing body of  data today lives in silos, locked into application environments and can’t become truly information until it can be liberated from this box.  Getting information out of the unstructured data is one of the key problems facing the IT industry.

To that end, Jack talked about the three clouds appearing on the horizon:

  • infrastructure cloud – cloud as we know and love it today where infrastructure services can be paid for on a per use basis, where data and applications move seemlessly across various infrastructural boundaries.
  • content cloud – this is somewhat new but here we take on the governance, analytics and management of the millions to billions pieces of content using the infrastructure cloud as a basic service.
  • information cloud – the end game, where any and all data streams can be analyzed in real time to provide information and insight to the business.

Jack mentioned the example of when Japan had their earthquake earlier this year they automatically stopped all the trains operating in the country to prevent further injury and accidents, until they could assess the extent of track damage.  Now this was a specialized example in a narrow vertical but the idea is that the information cloud does that sort of real-time analysis of data streaming in all the time.

For much of the rest of the day the executive team filled out the details that surrounded Jack’s talk.

For example Randy DeMont, Executive VP & GM Global Sales, Services and Support talked about the new, more focused sales team. On that has moved to concentrate on better opportunities and expanded to take on new verticals/new emerging markets.

Then Brian Householder, SVP WW Marketing and Business Development got up and talked about some of the key drivers to their growth:

  • Current economic climate has everyone doing more with less.  Hitachi VSP and storage virtualization is a unique position to be able to obtain more value out of current assets, not a rip and replace strategy.  With VSP one layers better management on top of your current infrastructure, that helps get more done with the same equipment.
  • Focus on the channel and verticals are starting to pay off.  More than 50% of HDS revenues now come from indirect channels.  Also, healthcare and life sciences are starting to emerge as a crucial vertical for HDS.
  • Scaleability of their storage solutions is significant. Used to be a PB was a good sized data center but these days we are starting to talk about multiple PBs and even much more.  I think earlier Jack mentioned that in the next couple of years HDS will see their first 1EB customer.

Mark Mike Gustafson,  SVP & GM NAS (former CEO BlueArc) got up and talked about the long and significant partnership between the two companies regarding their HNAS product.  He mentioned that ~30% of BlueArc’s revenue came from HDS.  He also talked about some of the verticals that BlueArc had done well in such as eDiscovery and Media and Entertainment.  Now these verticals will become new focus areas for HDS storage as well.

John Mansfield, SVP Global Solutions Strategy and Developmentcame up and talked about the successes they have had in the product arena.  Apparently they have over 2000 VSPs intsalled, (announced just a year ago), and over 50% of the new systems are going in with virtualization. When asked later what has led to the acceleration in virtualization adoption, the consensus view was that server virtualization and in general, doing more with less (storage efficiency) were driving increased use of this capability.

Hicham Abdessamad, SVP, Global Services got up and talked about what has been happening in the services end of the business.  Apparently there has been a serious shift in HDS services revenue stream from break fix over to professional services (PS).  Such service offerings now include taking over customer data center infrastructure and leasing it back to the customer at a monthly fee.   Hicham re-iterated that ~68% of all IT initiatives fail, while 44% of those that succeed are completed over time and/or over budget.  HDS is providing professional services to help turn this around.  His main problem is finding experienced personnel to help deliver these services.

After this there was a Q&A panel of John Mansfield’s team, Roberto Bassilio, VP Storage Platforms and Product Management, Sean Moser,  VP Software Products, and Scan Putegnat, VP File and Content Services, CME.  There were a number of questions one of which was on the floods in Thailand and their impact on HDS’s business.

Apparently, the flood problems are causing supply disruptions in the consumer end of the drive market and are not having serious repercussions for their enterprise customers. But they did mention that they were nudging customers to purchase the right form factor (LFF?) disk drives while the supply problems work themselves out.

Also, there was some indication that HDS would be going after more SSD and/or NAND flash capabilities similar to other major vendors in their space. But there was no clarification of when or exactly what they would be doing.

After lunch the GMs of all the Geographic regions around the globe got up and talked about how they were doing in their particular arena.

  • Jeff Henry, SVP &GM Americas talked about their success in the F500 and some of the emerging markets in Latin America.  In fact, they have been so successful in Brazil, they had to split the country into two regions.
  • Niels Svenningsen, SVP&GM EMAE talked about the emerging markets in his area of the globe, primarily eastern Europe, Russia and Africa. He mentioned that many believe Africa will be the next area to take off like Asia did in the last couple of decades of last century.  Apparently there are a Billion people in Africa today.
  • Kevin Eggleston, SVP&GM APAC, talked about the high rate of server and storage virtualization, the explosive growth and heavy adoption of Cloud pay as you go services. His major growth areas were India and China.

The rest of the afternoon was NDA presentations on future roadmap items.

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All in all a good overview of HDS’s business over the past couple of quarters and their vision for tomorrow.  It was a long day and there was probably more than I could absorb in the time we had together.

Comments?

 

Strategy is dead, again

American War Cemetary - Remembering by tienvijftien (cc) (from Flickr)
American War Cemetary - Remembering by tienvijftien (cc) (from Flickr)

Was talking with a friend of mine this week and he said that strategic planning has been deemphasized these last few years mainly due to the economic climate.  We have discussed this before (see Strategy, as we know it, is dead). Most companies are in a struggle to survive and had little time or resources to spend on thinking about their long term future, let alone next year.

Yes, the last few years have been tough on everyone but the lack of strategic planning is hard for me to accept.  As I look around, products are still being developed, functionality is being enhanced, technology continues to move forward.  All of these exemplify some strategic planning/thinking, albeit prior efforts from 24 to 30 months ago.

Nonetheless, development has not ceased in the interim. New features and products are still being planned for introduction over the next year or so.  Development pipelines seem as full as ever.

One could read the apparent dichotomy between deemphasizing strategic planning but continuing to roll out new products/enhancements as indicating that strategic planning has little impact on product development.  Another, more subtle interpretation is that strategic thinking goes beyond near term product improvements to something longer term, perhaps outside the 3 year window we see for current product enhancements.

In that case, then the evidence for reduced strategic planning will not show up until a couple more years have passed.  Thus, we should eventually see a slow down in new or revolutionary technology offerings.

Such a slowdown is hard to view.  Apple seems to introduce a revolutionary product every 4.5 yrs or so (iPod ’01, iPhone ’07, Ipad ’10).  Other companies probably have longer cycles.  But any evidence for a strategic planning reduction may ultimately show up as a slowdown in the rate of new/revolutionary product introductions.

Other potential indicators of decreased strategic planning include margin erosion, loss of core competencies, reduction in market value, etc.  Some of these are objective, some subjective but they all sound like a better topic for an MBA thesis than a blog post or at least my blog posts.

For example, Kodak over the last 15 years or so comes to mind as a strategic corporate catastrophe playing out.  They almost invented digital photography/imaging.  But for whatever reason they failed to react to this coming transition until it was too late.  The result is a much diminished company of today, e.g., over the last 15 years their stock price has been reduced by a factor of 12X or more.

There are probably many more examples of both business strategy failure and success but from my perspective the choices are obvious:  Ignore strategic planning for too long and your company struggles to survive or implement strategic planning today and your company may thrive.

What other examples of strategic failure and successes can you think of?

Punctuated equilibrium for business success

Finch evolution (from http://rst.gsfc.nasa.gov/Sect20/A12d.html)
Finch evolution (from http://rst.gsfc.nasa.gov/Sect20/A12d.html)

Coming out of the deep recession of 2007-2009 I am struck by how closely business success during recession looks like what ecologists call punctuated equilibrium.  As Wikipedia defines it, punctuated equilibria, “… is a model for discontinuous tempos of change (in) the process of speciation and the deployment of species in geological time.”

This seems to me to look just like strategic inflection points.  That is punctuated equilibrium is a dramatic, discontinuous change in a market or an environment which brings about great opportunity for gain or loss.  Such opportunities can significantly increase business market share, if addressed properly. But if handled wrong, species and/or market share can vanish with surprising speed.

Galapagos Finches

I first heard of punctuated equilibrium from the Pultizer prize-winning book The Beak of the Finch by Jonathan Weiner which documented a study done by two ecologists on Galapagos island finches over the course of a decade or so.  Year after year they went back and mapped out the lives and times of various species of finches on the island.  After a while they came to the conclusion that they were not going to see any real change in the finches during their study, the successful species were holding there own and the unsuccessful species were barely hanging on.  But then something unusual occurred.

As I recall, there was a great drought on the islands which left the more usual soft-skinned nut finch food unavailable.  During this disaster, a segment of finches that hadn’t been doing all that well on the islands but had a more powerful beak was able to rapidly gain population and there was evidence that finch speciation was actually taking place.  It turns out this powerful beak which was a liability in normal times was better able to break open these harder nuts that were relatively more plentiful during drought but normally unavailable.

Recessionary Business  Success

Similar to finches, certain business characteristics that in better times might be consider disadvantageous, can reap significant gains during recession.  Specifically,

  • Diverse product & service portfolio –  multiple products and services that appeal to different customer segments/verticals/size can help by selling to differing business some of which may be suffering  and some who may do ok during a recession.
  • Diverse regional revenue sources – multiple revenue streams coming from first, developing and third world localities around the world can help by selling to regions which can be less impacted by any economic catastrophe.
  • Cash savings – sizable savings accounts can help a company continue to spend on the right activities that will help them emerge from recession much stronger  than competitors forced to cut spending to conserve cash.
  • Marketing discipline – understanding how marketing directly influences revenue can help companies can better identify and invest in those activities that maximize revenue per marketing spend.
  • Development discipline – understanding how to develop products that deliver customer value can help companies better identify and invests in those activities that generate more revenue per R&D $.

Probably other characteristics that were missed, but these will suffice. For example consider cash savings, a large cash horde is probably a poor investment when times are good.  Also, diverse product and regional revenue streams may be considered unfocused and distracting when money is flooding in from main product lines sold in first world regions.  But when times are tough in most areas around the globe or most business verticals, having diverse revenue sources that span the whole globe and/or all business segments can be the difference between life and death.

The two obvious exceptions here are marketing and development discipline.  It’s hard for me to see a potential downside to doing these well.  Both obviously require time, effort and resources to excel in, but the payoffs are present good times and bad.

I am often amazed by the differences in how companies react to adversity.  Recession is just another, more pressing example of this.   Recessions, like industry transformation are facts of life today, failing to plan for them is a critical leadership defect that can threaten business long-term survival.

Is M and A the only way to grow?

Photograph of Women Working at a Bell System Telephone Switchboard by US National Archives (cc) (from flickr)
Photograph of Women Working at a Bell System Telephone Switchboard by US National Archives (cc) (from flickr)

Oracle buys Sun, EMC buys Data Domain, Cisco buys Tandberg, it seems like every month another major billion dollar acquisition occurs.  Part of this is because of the recent economic troubles, which now values many companies at the lowest they have been for many years and thus, making it cheaper to acquire good (and/or failing) companies.  But one has to wonder is this the only way to grow?

I don’t think so.

Corporate growth can be purely internally driven or organic just as well as from acquisition.  But it’s definitely harder to do internally.  Why?

  • Companies are focused on current revenue producing products – Revolutionary products rarely make it into development in today’s corporations because they take resources away from other (revenue producing) products.
  • Companies are focused on their current customer base – Products that serve other customers rarely make out into the market from today’s corporations because such markets are foreign to the companies current marketing channels.
  • Company personnel understand current customer problems – To be successful, any new product must address it’s customer pain points and offer some sort of a unique, differentiated solution to those issues and because this takes understanding other customer problems, it seldom happens.
  • New products can sometimes threaten old product revenue streams – It’s a rare new product that doesn’t take market share aware from some old way of doing business.  As companies focus on a particular market, any new product development will no doubt focus on those customers as well.  Thus, many new internally developed products will often displace (or eat away at) current product revenue.  Early on, it’s hard to see how any such product can be justified with respect to current corporate revenue.
  • New products often take efforts above and beyond current product activities – To develop, market and sell revolutionary products takes enormous, “all-out” efforts to get off the ground.  Most corporations are unable to sustain this level of effort for long, as their startup phase was long ago and long forgotten.

We now know how hard it can be but how does Apple do it?  The iPod and iPhone were revolutionary products (at least from Apple’s perspective) and yet they both undeniably became great successes and helped to redefine industries in the process.  And no one can argue that they haven’t helped Apple to grow significantly in the process.  So how can this be done?

  • It takes strong visionary leadership in the company at the highest level – Such management can make the tough decisions to take resources away from current, revenue producting products and devote time and effort to new ones.
  • It takes marketing genius – Going after new markets, even if they are adjacent, requires in-depth understanding of new market dynamics and total engagement to be succesful.
  • It takes development genius – Developing entirely new products, even if based on current technology, takes development expertise above and beyond evolutionary product enhancement.
  • It takes hard work and a dedicated team – Getting new products off the ground takes a level of effort above and beyond current ongoing product activities.
  • It takes a willingness to fail – Most new internally developed products and/or startups fail.  This fact can be hard to live with and makes justifying future products even harder.

In general, all these items are easier to find in startups rather than an ongoing corporation today.  This is why most companies today find it easier and more successful to grow through acquisitions rather than through organic or internal development.

However, it’s not the only way.  ATT did it for almost a century in the telecom industry but they owned a monopoly.  IBM and HP did it occasionally over the past 60 years or so, but they had strong visionary leadership for much of that time and stumbled miserably, when such leadership was lacking.  Apple has done it over the past couple of decades or so but this is mainly due to Steve Jobs.  There are others of course, but I would venture to say all had strong leadership at the helm.

But these are the exceptions.  Strong visionary leaders usually don’t make it to the top of today’s corporations.  Why that’s the case needs to be the subject of a future post…