disruption

Why Apple Is Not Building An Autonomous Car (and what it's building instead).

Barring a horrible spate of autopilot accidents the self-driving car movement is in full swing. The technology is improving at pace with Elon Musk declaring that “worldwide regulatory approval will require something on the order of 6 billion miles (10 billion km). Current fleet learning is happening at just over 3 million miles (5 million km) per day.” Every single one of the big technology and automobile players is plowing money and brainpower into being the company that ushers us into this utopian future where there will be zero vehicular accidents caused by human behind the wheel errors. Only Apple keeps denying that they are working on autonomous cars while hiring some of the best minds

But is Apple really building a car? Why would they? Why are we assuming that all that matters in this push is the actual development of the self-driving car? We forget there are a lot of aspects to the technology that is required to make that future happen. I believe Apple is building something else…

I believe Apple is building the autonomous car Operating System (OS) using the IPhone/Apple Watch as a portable telematic device: knowing where a car is, what condition it’s in and recording that information to make better decisions is something that will be required in every autonomous car. We all know our iPhones are already personal telematic devices (I hope you do). The phone tracks your location and your health (see images below).

Becoming the mobile telematic system OS is the most strategically adjacent move Apple can make. Why would a company ignore it’s most sold asset,surpassing 1Bn iPhones sold this past week, to focus on a product that is capital intensive and not it’s core competence? Why would Apple enter a space where the most talked about company in the space is one that has not sold more than 150,000 cars? Yes, the orders for the Tesla Model 3 has broken records for EVs sold but the real work will be in delivering those cars and that will be interesting to watch.

As we move into a future where fewer people will actually own cars but people will continue to buy IPhones I do not expect Apple to move away from what is working. Imagine an OS that enables any brand of autonomous car to work with the telematic system that is on the riders iPhone? Seamlessly. A standard autonomous car OS (ACOS) on your iPhone will improve routing and getting a car to you regardless of the cab/car service you choose to use — the autonomous Uber cab app will most likely only work with Uber cars — and improve customer service since you’ll get the closest available car/cab regardless of the autonomous car service provider.

Yes Apple is hiring the best automotive engineers. But it isn’t to build a car. It’s to learn from the best in the industry so that it can do to the industry exactly what it did to the music industry with iTunes. An ACOS will iTunesthe industry by

  • enabling each one of us with an iPhone to order any car or cab from any provider where you need it from your iPhone. It’s the a la carte model like the 99c single from ITunes.
  • levelling the playing field and accelerate the shared resource model where anyone with an autonomous car can rent out their own car to anyone without an intermediary and get paid through (you guessed it) Apple Pay.
  • combining with Apple HomeKit to provide a seamless convenience experience across the home and vehicle of the Apple customer unmatchable by no one else in the industry with their siloes of service.

If we accept that Apple cares about design and understands the customer then an autonomous car, with all it’s inherent business risks, is the wrong strategy.

Something else I know about Apple is that the company is too smart to continue to cede leadership in the battle for the future as being defined by Amazon (Alexa), Alphabet and Facebook (Oculus)…an ACOS for the autonomous future of the vehicle and the connected home makes too much sense for it not to happen.

It’s the only way Apple can compete in this fast approaching future...

Why LinkedIn Needs To Pull A Netflix (And Why Amazon Is Doing So).

Netflix has been a darling of the stock market with a market cap that has grown to ~$40Bn over the last 5yrs (image below). The company did this by disrupting the movie rental industry (biggest victim being Blockbuster Movies along a few thousand mom and pop movie rental stores) with its watch and return all you can/pay a flat fee business model. 

 

Netflix stepped up its game (and better served existing customers with improved technology in the form of algorithmic filtering/selection and the move to streaming. This was great for us but was just a sustaining innovation. Not much happened to the stock price but these innovations, which weren't internally developed but were as a result of overall technological improvements, kept Netflix at the top of the game capturing more and more customers.

And then along came ‘House of Cards’ and the era of data driven original content. Using data/intent and interest algorithms, Netflix green-lighted a series that a lot of people actually doubted would succeed. Competitors missed the shift that was happening because the competition (Netflix) did not look like whom they'd competed with all along. "There's no formula...there's no textbook on the shelf that you pull down and say, 'How do you run an Internet movie distribution company?' We're writing that textbook."Even when Steve Swasey (Netflix VP of Communication) said this  in 2012 talking about the show competitors missed Netflix's bigger ambition to be a full production and distribution house.

Binge watching sessions, Emmy wins by several original shows created using this mix of data/intent/interest (by Netflix and Amazon) and, most recently, the movie rights bidding wars at the last Sundance festival (with the movie writers as benefits) finally signaled to movie houses and the TV/movie establishment that they’d been disrupted by Netflix. Similar to how Blockbuster (and even Redbox) did not know what hit them...

Which brings me to LinkedIn.

LinkedIn came into the market as the network of people; people get jobs through the people they know riding on the wave of social networks and greater internet access (technology not created by LinkedIn but key to its success). People could brand themselves and very soon companies could as well.

LinkedIn knocked companies like Monster out of the game; Monster’s stock price crater coincides with Linkedin’s IPO and it currently has a market cap that is 1.8% of LinkedIn's market cap. Since then Linkedin has added more engaging content through the acquisition of Pulse (where you are reading this now) & Slideshare, mobile apps for recruitment and career training (through the acquisition of Lynda). But these are all sustaining innovations.


LinkedIn needs to disrupt another industry and I believe it should pull a Netflix and get into publishing original career development booksEspecially as we all wonder about the future of work and our roles in the New Economy (if the robots don’t take over). Think about it; LinkedIn has data on the job vacancies, talent pool and their interests/skills gaps and a huge market opportunity. Data, interest, intent and predictive capability. Despite the wrong declarations on the death of books, the global book publishing industry will grow to $128.3Bn in 2019 from $120Bn in 2014. The ability to target career needs using advanced analytics and provide the books/content to bridge the skills gap will enable entrants  to capture market share from (and dare I say disrupt) the incumbents.

It’s a great opportunity for Linkedin to utilize its strength and get into adjacent markets where innovation is lacking and much required.

I’ve read 4 books this year, all based on personal recommendations and I even walked into a store to buy one. Like a lot of people, I will always buy more books than I can possibly read and recommending books that meet me at my point of need will always make me open my wallet. Why else do you think Amazon is opening over 300 stores? Because Amazon knows the market is huge, technology is ripe and it's time to disrupt the book publishing industry.

How Google Is Cleverly Becoming Your Power Utility

It’s quite fitting that while COP21 is going on in the background, with leaders and governments talking about climate change, Google announces 842MW of renewable energy purchased. While world leaders plan to make the world greener and promise money towards future research, Google is actually doing the work of moving us towards a greener more sustainable future. 

What you might not know is that Google's current renewable energy portfolio of~$3Bn (investments and assets) makes it one of the largest renewable energy owning utilities in the world. Google has invested in Solarcity, Sunpower, Wind Farms in Carson County Texas, Jasper Power in South Africa, Clean Power Finance (a residential solar financing company) and runs several locations on hundreds of megawatts of clean energy with plans to run all it’s facilities on renewables by 2025. That's more investments in renewables than even the most progressive US utility (in a glacial industry like the utility industry it’s not quite hard to be called progressive)!!

As with dinosaurs, what will kill you is not a bigger dinosaur. It is the meteorites you didn’t even know were coming your way.

Remember how Google powered Yahoo search? Guess who’s wondering where the internet went now? What the utilities signing solar participation deals with Google don't seem to realize is that they have a powerful competitor on their hands. The industry forgets that Google had Powermeter (a dashboard for residential energy use management) that was shut down after 2 years it launched in 2010. What they don't know is that Powermeter was not a failed experiment, Powermeter was a 2 year beta test to learn things like how consumers only spend 6mins a year thinking about their energy (outside of paying their bills)! Sidenote: when Powermeter was shut down I sent an email to someone at Google trying to buy it for $10 or something ridiculous like that, I thought it would be a great ‘win’ for the company I’d founded then! Unsurprisingly I never got a response..

Still don't think Google is planning on becoming your utility? A few more indicators of intent:

  • Nest: Unlike most analysts suggested, the Nest acquisition was not for data. It was the PowerMeter replacement with a product that actuallymanages the energy in your home rather than just measure and monitor the ~$1400/year the average consumer spends. Most utilities are spending millions of dollars to own the connected home to hedge their future. While the utilities are trying to figure this out Googlethrough Nest and it’s Google Fiber product in cities like Austin and Kansas City, already owns the Connected Home infrastructure layer...power over ethernet will get better.
  • Toothpaste Test: Power (and energy) usage passes Larry Page’s toothpaste test; Other than energy, I can't think of too many other things that you and I use all day and makes our lives better. Energy is probably the only thing left that passes this test that Google isn’t currently involved in at scale.
  • Power (the other one): What is more important than access to the internet for most of us? If you’ve read this far, you already guessed it; it’s the energy that we use to power the devices that give us access to the internet. From Google's perspective why not control that too? From a systems perspective, one of the input flows for what makes our use of the internet possible is energy. Own the energy and you own another critical element in how you and I survive in this technology driven world we live in.
  • Smart Cities/Infrastructure: Google is doing serious work, through Sidewalk (one of the few startups to have been spun out of Google), on smart city development and understanding. Energy is one of the 4 core elements of a smart city. The other three are policy, infrastructure and people. Google is making big and bold statements through investments in both energy and city infrastructure.
  • Market Size: The global energy industry is one of the few Trillion Dollar opportunities left. It also just so happens that the product does not need customization in every new market you go into...

These investments, these steps, are the elements of the long game where losses are incurred in the short-term (something the utility competitors cannot afford due to shareholder pressure) to lay the ground for long term competitiveness and outsize returns based on learnings from in-house experiments and external bets. It’s the typical strategy for innovative companies.

What would complete Google’s move towards this inevitable future? It would be actually purchasing renewable energy and connected home assets of a utility. Or even the utility itself. One big one did just come up for sale...

Now that's a #BigIdea...

Why Tesla Is Not Disruptive; A Systems Thinking Assessment.

Watch Bloomberg West and you would be forgiven if you came away with the impression that Tesla recalling all 90,000 Model S cars is good news. It is quite interesting to watch how commentators fawn over Elon Musk and all thedisruption he's causing. Don't get me wrong I’m not suggesting we all pile on, I know it is terribly difficult to build a business (or 3), but let’s stop calling Tesla disruptive.

Tesla is impressively innovative (with a CTO at the top of his game) but the company is not disrupting the automobile industry. Disruptive innovation is not what we think it is. Tesla’s innovation is in bringing a beautifully designed electric car to the market but for the company to be disruptive it would have to have entered the automobile market one of two ways.

  1. 'Low-end footholds that occur because of the incumbents focus on their most profitable and demanding customers with ever improving products and services'. Tesla is selling products that are well above the annual wage of the average American. There is no low-end foothold in a product that only the 1% can afford. Even moving into the low-end of the market with new cheaper products does not make this count as a disruption to the status quo, it’s just the natural trajectory of any competitor in a market like this.
  2. 'New market footholds of creating a market where none existed before': in this entry mode Tesla also fails to disrupt. Wealthy consumers were going to buy expensive cars regardless of the fuel source. Fantastic design and great marketing doth not a disruptive product make (even thought it maketh a more sustainable world). Tesla captures market share, making it competitive, but I’ll suggest it has not created a market where none existed before as people were buying electric cars before Tesla came along. The majority of consumers who were not thinking of buying an electric car (or able to afford one) are not about to buy or lease a Tesla.

Assessing Tesla through a simple Systems Thinking lens

From an innovation frame Tesla is not disruptive. What about from a systems thinking perspective? A method we can use is what I call zooming (in and out). Through this lens we also see that Tesla, while innovative, is not disruptive.

    • If we zoom into the company (squint) and pick one of the component parts - let’s go with manufacturing - we see a company that is using new technology, robots and humans to build an electric car (video below). For most people who haven’t visited a car manufacturing plant this all looks cool and great. I almost ended up working in one of these manufacturing plants in 2001 and I can assure you the plants in the midlands of the UK that I visited had technology, robots and humans building their cars too. A state of the art car manufacturing plant, as evidenced below, is innovative but it is not disruptive. 


  • Zooming out of the company and putting on a systems lens you see that Tesla's supply chain (sourcing parts from 200 global partners), distribution channels (company owned stores), service coverage (high quality no questions asked) and type of vehicle (electric) all differ from that of traditional auto manufacturers. But the elements of the business model are basically the same as that of said traditional auto manufacturers. Most engineers would look at a Tesla manufacturing plant and recognize every element of the plant. What might be new is the level of technology applied to what is a traditional plant. Again, innovative but not disruptive.

Like Clayton Christensen (an innovation sage), in his HBR article that fueled this post, I’m not suggesting that Tesla isn't doing amazing work. As a systems thinker what I worry about is how we devalue words (and the work that underlies the work) by ascribing it where it is not applicable. There are people doing truly disruptive works across all industries and you yourself might have an idea and can use the framework above to assess whether your product or service is truly disruptive.

Innovation abounds around us. But disruption? It’s actually pretty hard..

One Wearable To Rule Them All...

My Amazon search for 'Wearable Tech' turned up ~7000 distinct pieces of wearable device from brands as varied as the use cases they all try to serve. There are wearables to measure your well being, mental state and every single thing you do or can imagine doing. There are wearables to measure your pet's activities and well being. For a phrase that did not show up until a few years ago (see google trend graph below) it has definitely become a huge market.


Are we heading for a time when we'll have 15 devices on us to measure everything? Hopefully not. I, like you, want some of the functionality and benefits that these devices provide but how about I get them all in one wearable?

So here's a business opportunity for an interested entrepreneur. I present 'The One Wearable To Rule Them All'; the iFitBone.

  • You wake up from a fantastic night of sleep because your iFitBone, which understands your circadian rhythm and is in tune with your body clock, also controls your home thermostat. This ensured that as your body temperature dropped with the your stage of sleep your home adjusted to keep you as warm or as cool as required.
  • Your iFitBone wakes you up from said fantastic sleep in time to enable you get ready for the meetings you have on the day. You get dressed (or are assisted) and head out of the house which automatically enables the map functionality in your (self driving) car.
  • You stop off at the gym on your way and iFitBone, already synced to your gym system and exercise history, suggests the perfect routine. You do just the right amount of reps and laps based on the health records that (no surprises) have already been provided to iFitBone.
  • You drove by your Starbucks your pumpkin spice latte is already at the counter. It's a short drive from there to your office building and it already knows where your meetings are directing you to the nearest available parking spot as your car pulls up.
  • As the day winds down your iFitBone confirms your ticket for the immersive museum experience you'd signed up for a few months prior and you'd forgotten. Your car drives up as you settle in for a great night...

You get the point. All this technology is here and continues to improve. Some folk even want it embedded under their skin. Not me though, I'm too squeamish for that.

I do want one and only one wearable. Someone should get working on that...

In technology, things change but things stay the same

In 1971, 44 years ago, Intel introduced the first 'computer on a chip'.

In 1981, 34 Years ago, the operating system DOS 1.0 was fired up.

In 1991, 24 years ago, the world wide web was opened up to the general public. Amazon was launched 3 years later.

In 1997, 18 years ago, IBM released Deep Blue (which beat Gary Kasparov in chess) which had the 32-bit copper chip that also powered the Sojourner Rover/Pathfinder mission to Mars. Also in 1997/1998 Google (essentially the gateway to the world wide web that was publicly released 5 years prior) was born.

In 2007, 8 years ago, Apple released the iPhone

One looks at this timeline and three things pop into mind pretty quickly. 3 things that give us a sense for where technology or (more precisely) technology companies are going.

  1. Every one of these major technology releases was the beginning of a 'platform' business. One or a few companies were the 'platform' providers of that technology. These platform providers are still some of the biggest companies in the world right now.
  2. Each release of a technology led to an ecosystem of businesses built around that platform. Many of the best companies around the platform also became huge businesses.
  3. The platform defining technologies have benefited greatly from Moore's Law which explains the exponential accelerating rate of the reducing cost and increasing capacity of computing power over the last 5 decades.

We are getting closer to 5th decade of  said Moore's Law (even though some thinkMoore's Law is stalling/no longer applies) i.e. computing power will exponentially increase and get cheaper over the next few years. Even cheaper than it currently is. This is why we are hearing more about Artificial Intelligence (AI), Machine Learning (ML), Virtual Reality (VR), The Internet of Things etc. all technological advancements that are benefitting fundamentally from exponential reductions in processing power at cheaper costs.

Apple (with cars), Google (with cars/robots and AI), Facebook (with AI and VR) and Amazon (with Alexa and Voice Control) are all banking on the increased predicted capacity and have all picked a platform to 'own'. Of course IBM (with Watson), Microsoft (with Hololens) and Intel (with Skylake, their new processor) are also banking on becoming the next platform business.

What's odd about that list up there (save Facebook) is that it's the same companies in that timeline I've drawn above.

And it is truly odd that as things change (at the platform level), things seem to stay the same in the technology industry...Not sure how I feel about this... what do you think?