Disrupting Apple’s Tao

Clay Christensen’s Disruption Theory has been subjected to severe criticism this past week. If one’s aim is to criticize the predictive power of disruption theory, one of the best ways to do it is to point out Clay Christensen has consistently been wrong about Apple.

Christensen’s Apple Predictions

— In a January 2006 interview with Businessweek, Christensen predicted the imminent demise of the iPod. ((“During the early stages of an industry, when the functionality and reliability of a product isn’t yet adequate to meet customer’s needs, a proprietary solution is almost always the right solution — because it allows you to knit all the pieces together in an optimized way.”

“But once the technology matures and becomes good enough, industry standards emerge. That leads to the standardization of interfaces, which lets companies specialize on pieces of the overall system, and the product becomes modular. At that point, the competitive advantage of the early leader dissipates, and the ability to make money migrates to whoever controls the performance-defining subsystem.” ~ What Clayton Christensen Got Wrong)) Didn’t happen.

— In a June 2007 interview, again with Businessweek, Christensen reiterated the iPod was doomed and further predicted the iPhone would not be successful. ((The iPhone is a sustaining technology relative to Nokia. In other words, Apple is leaping ahead on the sustaining curve [by building a better phone]. But the prediction of the theory would be Apple won’t succeed with the iPhone. They’ve launched an innovation that the existing players in the industry are heavily motivated to beat: It’s not [truly] disruptive. History speaks pretty loudly on that, that the probability of success is going to be limited. ~ What Clayton Christensen Got Wrong)) REALLY didn’t happen.

— In a May 2012 episode of the Critical Path with Horace Dediu, Christensen again announced his pessimism about the iPhone. ((Christensen’s second concern is that although integrated approaches in technology can be quite successful for a period, in the end modular approaches to technology always defeat integrated approaches. Christensen said:

“The transition from proprietary architecture to open modular architecture just happens over and over again. It happened in the personal computer. Although it didn’t kill Apple’s computer business, it relegated Apple to the status of a minor player. The iPod is a proprietary integrated product, although that is becoming quite modular. You can download your music from Amazon as easily as you can from iTunes. You also see modularity organized around the Android operating system that is growing much faster than the iPhone. So I worry that modularity will do its work on Apple.” ~ What Clayton Christensen Got Wrong)) Really, really, really didn’t happen.

So, Is Disruption Theory Wrong Or Is Apple The Exception That Proves The Rule?

Well kinda sorta both. As I discussed yesterday in Disruption Corruption: What Disruption Theory Is And What It Isn’t, when Christensen created Low-End Disruption Theory (as opposed to his other theory: New Market Disruption) he may have focused a bit too much on business buyers and not enough on consumers. Business buyers tend to make cold, hard, rational decisions that over value cost cutting and devalue the end user experience. Consumers tend to make warm, soft, emotional decisions that under value long term costs and over value experience. As I put it yesterday:

We never desire strongly, what we desire rationally. ~ Francois De La Rochefoucauld’s

The PC Was Made For Businesses. The iPhone And iPad Were Made To Be Loved

The old, pre-Nadella Microsoft wouldn’t have know a warm fuzzy emotion if it had smacked them in the face. And when IT departments were the primary consumers of PCs, this served Microsoft well. As Microsoft’s near 95% market share attested, Microsoft was the near ideal company to make a product that appealed to the sensibilities of IT departments. Nearly everything about the PC played to Microsoft’s strengths.

However, as PCs became smaller with the introduction of notebooks and then became WAY smaller with the introduction of phones, Apple’s design strengths became more and more important. First, consumers purchased iPods from Apple, then they purchased iPhones from Apple, and then they started to insist the computer equipment they used at work be as good as the computer equipment they owned at home. IT departments — Microsoft’s unassailable bastion — were blindsided and the Bring-Your-Own-Device (BYOD) movement wrested power away from IT and put it in the hands of the less rational, less penny-pinching, more emotional, end user.

If Microsoft was the ideal company to sell PCs to IT departments, then Apple may have been the ideal company to appeal to the sensibilities of consumers. Why? Because Apple prioritized the end user experience above all else.

The Innovator’s Dilemma

If you’ve heard this story before, don’t stop me, because I’d like to hear it again. ~ Groucho Marx

Let’s recap. Disruption theory eloquently explained why great companies that worked hard to serve their best customers ended up over serving — and over charging — the vast majority of the remainder of their customer base, thus making it possible for challengers to steal those customers away with products that seemed to be only “good enough” but which were, in reality, great in some way that really mattered.

The incumbent is faced with a dilemma – an unsolvable problem, as it were. If they maximize product benefits for their best customers and maximize product profits — which after all, is their job — they lose in the long run as hungry startups steal their low-level customers and, eventually, their mid-level customers with disruptive “good enough” products.

(A) strategy that seeks to maximize revenue and profits – i.e. the sort of strategy at which Ballmer excelled – necessarily precludes the creation of significant new products. ~ Ben Thompson

The Innovator’s Impossible Solution

There is always an easy solution to every human problem—-neat, plausible, and wrong. ~ H. L. Mencken

The innovator’s solution is unbelievably simple and simply unbelievable:

      1) Invent the future…before your existing competitors — and the competitors that don’t yet exist — do; and

2) Prioritize future profits over current profits.

Even if it were possible to predict the unpredictable and create a disruptive product within one’s own company, it’s tantamount to committing suicide to do so. I mean, what’s the point? Who wants to create a disruptive product that destroys the profits of an existing cash cow and replaces it with a seemingly inferior product that doesn’t generate nearly as much profit as the old, highly respected and highly valued product did? That’s just crazy talk.

The Innovator’s Dilemma, Redux

And that’s why it’s a dilemma — there are simply no good solutions, only choices between equally bad alternatives.

Doodle yin-yang symbol

Steve Jobs’ Attempt To Resolve The Innovator’s Dilemma

Do not go where the path may lead, go instead where there is no path and leave a trail. ~ Ralph Waldo Emerson

In order to overcome the Innovator’s Dilemma, Steve Jobs created a radically new way to run a company, structuring it entirely differently than any large company of the 20th century. Apple put the customer at the center of their business. Profit is viewed as necessary, but not sufficient.

We believe that we’re on the face of the Earth to make great products, and that’s not changing. ~ Tim Cook

Apple’s primary objective is to make a great product, to build the best, to delight the customer and provide a great experience. Apple reinvents existing markets by making the user experience easier, richer, and more pleasant. Each time, they begin at the beginning and start with the user’s experience first, then drive back through their infrastructure to make that a reality.

You know, we want to really enrich people’s lives ~ Tim Cook

Apple absorbs the complexity and presents the simplicity. They’re obsessed with details and sweat the small stuff so the customer doesn’t have to.

We try to make tools for people that enable them to do things that they couldn’t without the tool. But we want them to not have to be preoccupied with the tool. – Jony Ive

If it disappears, we know we’ve done it. ~ Craig Federighi

The Expected Result: Fanatical Customer Loyalty

Apple_Yin Yang_1

If user experience is Apple’s number one priority, it should come as no surprise Apple generates fanatical customer loyalty.


Design is where Apple products start,” writes Lashinsky. “Competitors marvel at the point of prominence Apple’s industrial designers have. ‘Most companies make all their plans, all their marketing, all their positioning, and then they kind of hand it down to a designer,’ said Yves Behar, CEO of the design consultancy Fuseproject. The process is reversed at Apple, where everyone else in the organization needs to conform to the designer’s vision. ‘If the designers say the material has to have integrity, the whole organization says okay,’ said Behar. In other words, a designer typically would be told what to do and say by the folks in manufacturing. At Apple it works the other way around.”

Fanatical Customer Loyalty

A satisfied customer is the best business strategy of all. ~ Michael LeBoeuf

Apple’s customers love Apple. For some reason this baffles Apple’s critics. Apple’s critics are always referring to the ‘cult’ of Apple, or to Steve Jobs’ ‘reality distortion field’ or to Apple’s marketing prowess as if Apple has some mystical, Svengali-like power over their customers.


Why fall back upon supernatural explanations when the natural explanation so obviously explains the phenomenon?

If Apple’s first priority is the user experience, then OF COURSE Apple’s customers are going to be loyal to Apple. It’s not an enigma or some great mystery. Just the opposite. Apple’s high customer loyalty numbers are the logical and all-too-obvious result of Apple’s policies and priorities. Apple puts the customer first. Customers respond in kind. It’s that simple.

Appreciation is a wonderful thing: It makes what is excellent in others belong to us as well. ~ Voltaire

So What Does All This Have To Do With Disruption Theory Anyway?

Let’s re-review how Low-End Disruption is supposed to work.

(A)n integrated approach wins at the beginning of a new market, because it produces a superior product that customers are willing to pay for. However, as a product category matures, even modular products become “good enough” – customers may know that the integrated product has superior features or specs, but they aren’t willing to pay more, and thus the low-priced providers, who build a product from parts with prices ground down by competition, come to own the market. ~ Ben Thompson

Here’s why low-end disruption doesn’t seem to apply to Apple. Christensen was right when he said people aren’t willing to pay more for superior features or specs they don’t need. But consumers ALWAYS want and need a superior experience. And many of them are willing to pay top dollar to get it.


One of Clay Christensen’s great insights was that a business can OVER SERVE the vast majority of their customer base without even knowing they’re doing it. While over serving sounds like a great idea in theory, in practice it leads to massive disaffection as customers are made to pay for products and services they simply don’t want or need.

But here’s the thing — and this is the crux of the matter — while it is all too easy for a company to provide their customers with too many frivolous and unnecessary features and specs, it is impossible to over provide a great experience.

[pullquote]A company can not over serve their customers by providing them with too superior a customer experience[/pullquote]

Let me say that again. A company can not over serve their customers by providing them with too superior a customer experience. Too much is simply not enough. And since Apple is laser focused on providing the customer with a superior experience, the customer is not over served and Apple can not fall prey to Low-End Disruption.

Think of it as a game of Rock, Paper, Scissors. New integrated solutions beat old modular solutions. New modular solutions beat old integrated solutions. But superior customer experience beats new modular solutions. The theory is easy. It’s the execution of the theory that’s hard.

Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives – choice, not chance, determines your destiny. ~ Aristotle

Disruption Corruption: What Disruption Theory Is And What It Isn’t

Anyone who studies business — and especially those who follow tech — knows Clayton Christensen is the business school professor who developed the theory of disruption. This week, in an article in the New Yorker, Jill Lepore took that theory — and Clay Christensen — to task. Will Oremus, of Slate, sums up part of Lepore’s critique:

Disruptive innovation is simply a theory about why businesses fail. “It’s not more than that,” Lepore says. “It doesn’t explain change. It’s not a law of nature.” As for the future, it’s “unreadable.”

Where Lepore Got It Right

[pullquote]When a subject becomes totally obsolete we make it a required course. ~ Peter Drucker[/pullquote]

Lepore is right to criticize those who blindly worship “the gospel of innovation.” The word “disruption” is misused and abused. It has come to mean almost anything and it can be used in almost any circumstance. I’m told, for example, babies in Silicon Valley, no longer soil their diapers, they “disrupt” them.

People who have no connection to Christensen, many of whom don’t seem to even understand his theory, have declared everyone and everything to be disruptive. The problem has become so bad that that many intelligent people have begun writing it off as a meaningless buzzword. ~ Timothy B. Lee

Where Lepore Got It Wrong

Project is stuck, he is in trouble.

All intellectual movements start with trenchant ways of understanding the world. But as these ideas gain currency they are used to explain more and more disparate phenomena, until the explanation loses its predictive power. ~ Dan Drezner ((Excerpt From: Robert Cottrell. “The Browser Book of Quotations.”))

I love the above quote because it was not written about Disruption Theory, yet it perfectly describes what has happened to Disruption Theory. Lepore’s criticisms are not aimed at Disruption Theory itself, they’re aimed at the diluted version of Disruption Theory currently in vogue. Lepore is wrong to dismiss Christensen’s theory out of hand because she’s dismissing the counterfeit theory rather than the original.

Not Everything Is Disruption Theory

I think the overuse of disruption theory can best be explained by a joke:

Paul Pundit and Andy Analyst like to put together jigsaw puzzles. One day, Andy gets a call from Paul. 
‘I’ve got a problem,’ says Paul, ‘I’ve bought this jigsaw puzzle, but it’s too hard. None of the pieces fit together and I can’t find any edges.’

‘What’s the picture of?’ asks Andy.
‘It’s of a big rooster,’ replies Paul.
‘ All right,’ says Andy, ‘I’ll come over and have a look.’ 
So Andy goes over to Paul’s house. 
Paul takes him into the kitchen where the jigsaw is strewn all over the kitchen table. 
Andy takes one look at the kitchen table and turns to Paul and says:

‘For Heaven’s sake — put the cornflakes back in the box.’

Humans look for patterns everywhere and generally find them, whether they are there or not. But not everything has a pattern. And not everything is a jigsaw puzzle. And not everything is Disruption Theory. If we want to examine the validity of Disruption Theory, we first have to define what Disruption Theory is — and what it isn’t.

What Disruption Theory Isn’t

Trouble is an attached thing .

Professor Joshua Gans provides us with his definition of Disruption Theory:

At the heart of the theory is a type of technology — a disruptive technology. In my mind, this is a technology that satisfies two criteria.

Nitpick #1: I don’t think Disruption Theory is necessarily limited to technology. But let us continue.

First, it initially performs worse than existing technologies on precisely the dimensions that set the leading, for want of a better word, ‘metrics’ of the industry. So for disk drives, it might be capacity or performance even as new entrants promoted lower energy drives that were useful for laptops.

Nitpick #2: I think a better way to put this is to say the new product doesn’t appeal to one’s best customers. Whatever.

To distinguish a disruptive technology from a mere bad idea or dead-end, you need a second criteria…

…the technology has a fast path of improvement on precisely those metrics the industry currently values.

Humungous Gigantic Mega-Disagreement #3: Okay, stop the presses ’cause that’s flat out wrong. ((I want to make something very, very clear. Professor Joshua Gans is probably ten times smarter than I am. And if he were to respond to this article, he would probably say I am about to misinterpret what he is actually saying. But the misinterpretation I’m about to describe is so common and so insidious, I feel the need to use Professor Gan’s actual words — if not his actual meaning — to illustrate my point.)) The disruptive technology surely does improve quickly but not necessarily on the metrics the incumbent industry necessarily values.

Take, for example, the iPad. Most tech industry observers now agree the tablet is disrupting the PC. ((For the purposes of this article, the term “PC” includes both notebook and desktop computers, including the Mac.)) The tablet fulfills Mr. Gans’ first criteria for being disruptive: “it initially performs worse than existing technologies on precisely the dimensions that set the leading, for want of a better word, ‘metrics’ of the industry.” Or, as I put it, the new product doesn’t appeal to the PC manufacturer’s best customers.

Now here’s where the confusion arises. Professor Gans goes on to say: “the technology has a fast path of improvement on precisely those metrics the industry currently values.” That may be true but it may also be entirely incidental. And it leads to the mistaken belief that the disruptive product wants to BECOME the disrupted product. In fact, the disruptive product is far more ambitious than that.

Inverted Definitions

Reverse Inverted pyramid of rings

When the iPad was introduced, there were vicious debates over whether or not the iPad was even a computer. And no, I am not making this up. These debates were taken very seriously. The neck-beards in the an-iPad-is-not-a computer crowd would look at their existing (usually high-end) PCs, make a checklist of their PC’s features (neck-beards LOVE features), compare that checklist to the iPad and find the iPad seriously wanting. ((If you think this debate is ancient history, just last week a commentator on this site argued an iPad wasn’t truly worthy because it couldn’t write programs for itself. Sheesh.))

Effect And Cause
In their quest to insure the iPad was forever banned from the ranks of computers everywhere, the neck-beards had made an egregious logical error. They had essentially reversed cause and effect.

You should first look a definition and then determine whether the object under consideration does or does not fit within that definition’s criteria. You don’t do it the other way around — you don’t look at the object under consideration and use its characteristics to construct a definition. Allow me to illustrate.

Cows Don’t Give Milk
Looking at your PC and using that as the criteria for defining a computer is akin to a foolish farmer looking at his goat and using it as the criteria for defining what a milk producing mammal is. Let’s follow his foolish train of thought:

— A goat gives milk.
— A cow is not a goat. (Lousy climber, no horns, lots of other crucial “features” missing.)
— Therefore, a cow does not give milk.

Sound familiar?

— A PC is a computer.
— An iPad is not a PC.
— Therefore, an iPad is not a computer.

When you put it that way, it is easy to see both the foolish farmer and the pedantically-inspired neck-beard have gotten the use of definitions exactly backwards.

Arcane Mistakes Are Actually The Norm

Friend who reach out to unexpected trouble

I bring up the seemingly arcane “the-iPad-is-not-a-computer” debate because this kind of thinking is actually not arcane at all. On the contrary, it is the norm. Industry incumbents — just like our well meaning, but slightly delusional neck-beards and foolish farmer — routinely make the identical mistake.

In the same way the neck-beard uses his PC to define what a computer is, in the same way the foolish farmer uses his goat to define what a milk producing mammal is, that is the same way industry incumbents use their existing products to define what their product categories are. ((Why do we do this? it is a combination of myopia and hubris and we can mock it all we want, but to do so is to mock ourselves, because it is clearly deeply embedded within our nature.)) But computers and mammals and categories are only so constrained in the minds of neck-beards, foolish farmers and industry insiders. Consumers know better.

  1. Consumers know they don’t want better PCs, they want better computing experiences.
  2. Consumers know they don’t want better goat milk, they want better milk.
  3. Consumers know they don’t want better products, they want a better life or, at least, they want an experience that makes life better.

The disrupting product is NOT on “a fast path of improvement on precisely those metrics the industry currently values.” In fact, just the opposite. Yes, the product is on a “fast path of improvement.” However that improvement is NOT based on existing metrics and it is NOT based on the current industry values. Instead, the improvement is based on PREVIOUSLY UNKNOWN OR UNEXPLORED metrics and it is based on CONSUMER tastes the current industry does NOT value and may even abhor.

And that makes all the difference.

What Disruption Theory Is


In my opinion, Ben Thompson of Stretechery fame, has a much better explanation for what Disruption Theory is. To start with, he contends Clayton Christensen actually has TWO theories of disruption: New Market Disruption and Low-End Disruption.

New Market Disruption

(T)he theory of New Market Disruption describes how incumbent companies ignore new technologies that don’t serve the needs of their customers or fit within their existing business models. However, as the new technology, which excels on completely different attributes than the incumbent’s product, continues to mature, it eventually takes over the market.

This remains an incredibly elegant and powerful theory, and I fully subscribe to it. We are, in fact, seeing it in action with Windows – the incumbent – and the iPad and other tablets; new technology that is inferior on attributes that matter to Windows’ best customers, but superior on other attributes that matter to many others.

Spot on. Using our iPad example to illustrate, the new product (iPad) is a lousy PC, so PC makers treat it with disdain. But — and here’s the key — for most, the iPad is a better COMPUTING EXPERIENCE than the PC, in just the same way that, for most, a cow provides a better milk experience than does a goat. The incumbent PC manufacturer is trying to make things better for the consumer by making a better PC. The incumbent farmer is trying to make things better for the consumer by producing better goat milk. But the consumer doesn’t give a damn about remaining within artificially constructed industry categories. They want a better experience, whatever the source.

Low-End Disruption

Ben Thompson goes on to describe — and then critique — Clayton Christensen’s second theory: Low-End Disruption.

It is Christensen’s second theory of disruption – low-end disruption – that I believe is flawed.

Briefly, an integrated approach wins at the beginning of a new market, because it produces a superior product that customers are willing to pay for. However, as a product category matures, even modular products become “good enough” – customers may know that the integrated product has superior features or specs, but they aren’t willing to pay more, and thus the low-priced providers, who build a product from parts with prices ground down by competition, come to own the market. Christensen was sure this would happen with the iPod, and he – and his many adherents – are sure it will happen to the iPhone.

In other words, it’s not enough to say the iPhone has saturated the high end market and that growth will slow; rather, the iPhone will soon overshoot customers completely, and will in fact plummet in total sales in the face of good-enough Androids available for hundreds of dollars less than the overpriced iPhone 5C.

Ben Thompson’s Take
According to Ben Thompson, Low-End Disruption Theory is flawed because it focuses on the behavior of BUSINESSES, not consumers. His full explanation can be found HERE and I highly recommend it to you. If you’re at all interested in Disruption Theory — and if you’ve read this far, you must be — it’s an excellent read.

My Take
Business buyers tend to overvalue low priced products because business buyers are normally judged by how much of the company’s money they spend. And business buyers tend to devalue the end user’s experiences with those low cost products because those self-same business buyers are typically not themselves the end user.

All of this fits in beautifully with the Theory of Low-End Disruption. However, the theory’s blind spot is consumers.

Consumers — like business buyers — appreciate a bargain too. However, consumers — unlike business buyers — are also the end user so they tend to HIGHLY value the end user experience. And that experience often evokes an emotional response that is difficult to quantify and measure. None of this works well within the framework of Low-End Disruption Theory.

Business consultant Peter Drucker famously said: “What gets measured gets managed.” I have never heard of a consumer corollary to that rule, but if such a corollary did exist it would have to closely conform to Francois De La Rochefoucauld’s observation that:

We never desire strongly, what we desire rationally.

In other words, to create a business theory that has predictive value — and if you think about it, every business in the world attempts to do just that — you have to understand not just the mind of the consumer, but their heart as well.


Tomorrow, in “Disrupting Apple’s Tao“, I’ll explore whether Apple is subject to Disruption Theory…or whether Apple is the exception to Disruption Theory…or whether Apple is the exception that proves the rule…or whether Apple is the originator of a rule that has proven to be exceptional…or whatever.

Normally my Insider article requires a subscription but I’m basing much of tomorrow’s article on a previously written article — “The Tao Of Apple” — so I’m going to make it open to all.

Please join me then.

Inverse Innovation Inanity

At Forbes, Chunka Mui ((Coauthor of “The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups”, “Unleashing the Killer App: Digital Strategies for Market Dominance”; and “Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years”)) writes:

[pullquote]If you desire a wise answer, you must ask a reasonable question. ~ Johann Wolfgang Von Goethe[/pullquote]

Will Tim Cook Be the Next Steve Ballmer?

His initial premise seems reasonable:

Like Ballmer, (Tim) Cook’s legacy will be defined by whether he successfully launches new post-Jobs killer apps. … (T)o be truly successful, Cook will have to innovate beyond iPhones and iPads.

What Is Innovation?

Wikipedia defines Innovation as:

“the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.”

[pullquote]Some people see innovation as change, but we have never really seen it like that. It’s making things better. ~ Tim Cook[/pullquote]

I would add this caveat. Too often “innovation” is judged from the perspective of the engineer, rather than from the point of view of the consumer. We are seduced by the wonderfulness of the technology, but it is the market, not the maker, that is the ultimate arbitrator of what is and what is not innovative. It is the value of the product — as judged by the consumer — that matters.

If something is truly innovative the consumer’s first thought isn’t, “I was asking for this.” Their first thought is, “Of course,” because — although it’s something they didn’t even know they wanted — now that they see it, it’s seemingly self-evident.

Myth #1: First To Market Matters Most

(The) field is crowded. The biggest technology companies and numerous start-ups are already in the race. Google has invested heavily in Google [x] projects like Glass and its Self-Driving Car, and it just bought Nest for $3.2B. Samsung has already launched two generations of its Galaxy Gear smart watch. Both GE and IBM are pursuing massive Internet of Things initiatives. ~ Chunka Mui

[pullquote]In a forest, there are many plants. but only a few are destined to be trees. And of all the forest trees, only one is destined to be a California Redwood.[/pullquote]

Really? The field is crowded? Crowded with what? A lot of throw-it-at-the-wall-and-let’s-see-what-sticks experiments?

Take a look at five of Apple’s greatest innovations:

  1. Apple II
  2. Macintosh
  3. iPod
  4. iPhone
  5. iPad

Now ask yourself: Were any of the above products first to market?

No. No they were not.

[pullquote]I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things. ~ Steve Jobs[/pullquote]

In every case, those products came out many YEARS after others had tried to establish their respective markets.

Malcolm Gladwell put it this way:

“You don’t want to be first, right? You want to be second or third. Facebook is not the first in social media. They’re the third, right? Similarly, you know, if you look at Steve Jobs’ history, he’s never been first.”

LESSON UNLEARNED: It’s not first to market that matters, it’s FIRST TO GET IT RIGHT.

Myth #2: The Path Of Innovation Has Been Identified

History tells us that the new technological landscape that will likely define both Apple’s next horizon and Cook’s legacy is somewhere at the intersection of wearable computing and the Internet of Things. ~ Chunka Mui

Say what? History tells us nothing of the sort.

Pundits keep predicting that Apple will go into wearables or television. Why?

— Did anyone predict that Apple would veer into MP3 players?

— Most everyone predicted that Apple would make a phone, but by phone they really meant a flip phone that would also work as an MP3 player. Did anyone predict the pocket computer — complete with its own operating systems and, eventually, an app ecosystem — that Apple produced?

— Most everyone predicted that Apple would make a tablet, but no one predicted the tablet that Apple introduced and few understood it at the time or even understood it long after it was placed on sale. Heck, a lot of people STILL refuse to understand it, despite all its subsequent success.


It is an open secret that Apple is working on an iWatch wearable device. ~ Chunka Mui

So what? did any of Apple’s previous major innovations look or act or feel anything like the products that preceded them?

— Did the Apple II look anything like its non-monitor competitors?
— Did the Macintosh look anything like the line interface operating systems that preceded it?
— Did the iPod click wheel work anything like its MP3 competitors?
— Did the iPhone have any resemblance to its keyboard heavy smartphone predecessors?
— Did the iPad touch interface have any relationship to the stylus-driven, Windows tablets previously offered by Microsoft?

[pullquote]Predicting a wrist device from Apple as “a Fuelband, but better” is equivalent to predicting an iPhone with an iPod click wheel. ~ Zac Cichy (@zcichy)[/pullquote]

No. No they did not. In every case, these products were a significant variant from what then existed in the market.

Entrepreneurship is essentially identifying the path that everyone takes; and choosing a different, better way. ~ Sheldon Adelson

LESSON UNLEARNED: The innovative product that solves a significant problem WILL NOT LOOK OR ACT OR FEEL like anything on currently on the market.

Myth #3: History Says Apple Will Be Disrupted

(The) incremental, extend-the-ecosystem approach makes all the sense in the world—to Apple. (It) fits very nicely with how customers interact with the Apple world today—and how Apple hopes that they will interact with it in the future.

It could be entirely rational for Tim Cook to take this view. Every one of his key lieutenants, who are responsible for the day-to-day defense and extension of Apple’s iOS ecosystem, must be even more whetted to this point of view. If there is any fight for resources, mindshare, talent, etc., you can bet that they’ll want to invest as much as possible to iOS. History also tells us that industry analysts will focus on today’s sales, margins and growth forecast at those important quarterly conference calls.

Momentum will drive Tim Cook and Apple down this path—as similar forces drove Steve Ballmer and Microsoft down the path of defending and extending the Windows/Office ecosystem at the expense of smartphone/tablet/cloud dominance.

Who doesn’t think that would the natural strategy for it to follow? ~ Chunka Mui

Oh, oh! Me, me, me, me! And anyone who’s been paying even the slightest attention to Apple and Apple’s history.

[pullquote]Never underestimate a pundit’s ability to underestimate Apple’s ability.[/pullquote]

Apple’s EVERY ACTION since Steve Jobs returned in 1996 argues against their being disrupted by falling into the trap described, above, by Mui.

“Design (not profits) is where Apple products start,” writes Lashinsky. “Competitors marvel at the point of prominence Apple’s industrial designers have. ‘Most companies make all their plans, all their marketing, all their positioning, and then they kind of hand it down to a designer,’ said Yves Behar, CEO of the design consultancy Fuseproject. The process is reversed at Apple, where everyone else in the organization needs to conform to the designer’s vision. ‘If the designers say the material has to have integrity, the whole organization says okay,’ said Behar. In other words, a designer typically would be told what to do and say by the folks in manufacturing. At Apple it works the other way around.”

[pullquote]If anybody’s going to make our products obsolete, I want it to be us. ~ Steve Jobs[/pullquote]

Ben Thompson puts it this way:

“Apple’s focus on user experience as a differentiator has significant strategic implications as well, particularly in the context of the Innovator’s Dilemma: namely, it is impossible for a user experience to be too good. Competitors can only hope to match or surpass the original product when it comes to the user experience; the original product will never overshoot (has anyone turned to an “inferior” product because the better one was too enjoyable?). There is no better example than the original Macintosh, which maintained relevance only because of a superior user experience. It was only when Windows 95 was “good enough” that the Macintosh’s plummet began in earnest. This in some respects completely exempts Apple from the product trajectory trap, at least when it comes to their prime differentiation.

Indeed, it seems that Apple simply isn’t very interested in moats. They do what they think is right by the user, strategy nerds like me be damned. This kills them on Wall Street, but perhaps is the only possible route to avoiding stasis, and ultimately, disruption.

This is why Apple is so fascinating.”


Caesar defied historical prohibitions and marched his army across the Rubicon River. In doing so, he toppled the prior regime and enabled the flowering of a new Roman Empire. Will Tim Cook dare to cross the Rubicon? ~ Chunka Mui

[pullquote]In a company that was born to innovate, the risk is in not innovating. The real risk is to think it is safe to play it safe. – Jony Ive[/pullquote]

Are you kidding me? Will Tim Cook dare to cross the Rubicon? He and Apple have already constructed a four-lane highway over and across that Rubicon and left it far behind. Apple may have many a problem to deal with in the future, but playing it safe — not cannibalizing themselves — will not be one of them.

Steve Jobs himself may have said it best when he was recruiting a job applicant:

We are inventing the future. Think about surfing on the front edge of a wave. It’s really exhilarating. Now think about dog-paddling at the tail end of that wave. It wouldn’t be anywhere near as much fun. Come down here and make a dent in the universe.

Disrupting Disruption Theory

Let’s file this under the open for discussion category. I have been having discussions of late around disruption theory as it relates to many different parts of the market. There are a number of very important general rules of thumb within disruption theory that are applicable to many markets. The problem is that there are exceptions and more importantly there are situations where it is not applicable.

History in a Vacuum

I’ve read all of what Clayton Christensen has published on the subject. And many of the things he offers in the Innovators Solution point out generally sound observations. This particular one should be of interest.

“The competitive advantage from vertical integration is strongest in tiers of the market where customers are under-served by the functionality or performance available from products in the market. Vertical integration tends to be a disadvantage when customers are over-served by the functionality available from products in the market.

There are a great deal of examples historically to justify this observation. That is why disruption theory works in a very general sense. I would argue, however, that the underlying necessary assumption is that the purchaser of these products is purchasing them with a pragmatic mindset.

In many of the examples always cited within disruption theory the underlying common denominator was a buyer mostly interested in cost using a pragmatic approach to the purchasing cycle, a.k.a trying to find the best deal in order to justify the cost.

I’ll return to this in a moment, but what I’ve concluded my issue with disruption theory is, is that when it was formed there was not a true pure consumer market for personal technology. A failure to understand the incredibly emotional behaviors of mass-market consumers is the common trap most who love to quote disruption theory fall into.

Consumers are Predictably Irrational

I love Dan Ariely’s book Predictably Irrational. I’ve read dozens of behavioral science themed books like it as well. Getting inside the mass market consumer psyche is truly an art form. It is one most companies truly fail to grasp. It is also something most disruption theory fundamentalists have a hard time comprehending.

The idea of a product being “good enough” is a very nuanced discussion. With regard to appliances in consumer markets it is perfectly applicable. When I shop for a refrigerator or a toaster oven, I do so with a very pragmatic approach. I try to find the best deal to meet my needs. Appliances, however, are not personal decisions. The kind of clothes I buy, the kind of food I eat, the kind of car I drive, these are all personal decisions and ones where price often falls lower on the totem pole of priorities. The more personal the the product, meaning one wrought with personal preference, the greater the challenge to use traditional disruption theory is to apply.

Products that are more personal by nature actually disrupt disruption theory. Smartphones, and tablets to a degree, are personal decisions and for the masses the common understanding of a pragmatic approach needed to justify disruption theory are flipped on its head. Personal decisions turn ‘good enough’ into a relative and entirely subjective term. [pullquote]This mindset of personal choice and personal preference has not been present until recently in computing[/pullquote]

This mindset of personal choice and personal preference has not been present until recently in computing. And I would argue no device in the market today or for the foreseeable future is more wrought with personal preference than the smartphone. When personal preference exists value becomes subjective. When value becomes subjective it presents a great challenge to predict when or if something is good enough.

But there is one common denominator in the markets where personal preference and behavioral quirks influence consumer decisions significantly more than just price–differentiation.

The Value of Differentiation

It seems hard to put a value on differentiation. In fact, it seems hard to put a value on many intangible benefits. For example, how much is a product worth over a competitors that comes with superior customer service? The root of that question is actually how much is peace of mind worth? I’ve long argued that familiarity is a feature. How much is familiarity worth? How much is ease of use worth? How much is convenience worth? How much is an experience worth?

All of these things are hard to place a distinct value on. But how the mass market consumer perceives value varies. They simply don’t all value the same thing and in many segments, in every consumer segment, you can find examples where price is not the driving factor.

This is what stumps so many disruption theorists with regards to Apple. Apple is the poster child for disruption theorists who are convinced their future is in jeopardy.

Disruption theorists have a hard time understanding Apple in the same way they have a hard time understanding how the mass market perceives value. When I discuss this with behavioral scientists they have a much more holistic understanding of what value means to the mass market and have many of the same issues with disruption theory and how it seems to be applied to the mass market.

The mass market values differentiation. Apple can differentiate its hardware. It does so all the way from inside out. Apple can also differentiate its software. iOS can be found on no competing products. iOS is found valuable enough by the mass market to nearly crash Apple’s servers and driving downloading the update to become more than 15% of total peak time North American traffic from one provider. iOS is found valuable enough to become the industries fastest operating system transition in our history. The Apple experience is unique and it stands out from the sea of sameness.

The simple and foundational truth is that it is much easier to understand when a product is ‘over-serving’ or ‘under-serving’ when all buyers approach the process from a pragmatic standpoint. Consumers are not pragmatic. They more often than not enter the buying process with a much more emotional driven mindset than a pragmatic one. Disruption theory was never designed to address pure consumer markets with highly emotional buyers.

“Value”, as defined by markets is hugely influenced by behavioral quirks. Any definition of “over-served” that does not take this into account does not actually know the true meaning of “served” and therefore cannot know the true meaning of over serving a market. ((John Kirk gave me this line))

A lot has changed since Adam Smith proposed the theory of supply and demand. Just because alterations have been made doesn’t mean it is any less valid. Disruption theory is valid and useful in the market. However to be relevant to speak to and apply to consumer markets, it needs to be refined to include the practices of behavioral economics.

If this subject is of interest. I strongly recommend also reading Ben Thompsons article on Stratechery called ‘What Clayton Christensen Got Wrong.’ It will come as no surprise that I agree with him 100%.

Computing is no longer generic. It has shifted to personal in a way unseen before in this industry. This is key to understand where personal computing goes from here and who the winners and losers will be.