Plan like Steve Jobs

In 2010, Steve Job's email to Apple's 100 most senior employees was released as part of Apple's lawsuit against Samsung.

This email sets the agenda for Apple's annual "Top 100" meeting. I read the email when it was released to public in 2014. Today, I would like to comb through it and learn some lessons on Product, Strategy and Marketing from one of the greatest product minds of our time. 

As Product Managers, we are responsible for our product's strategy. While there are many books and articles on strategy and planning, this email is a real world example from a top product guy doing this exercise for one of the most successful tech company of our time. This practical example offers many insights to this process. This is my attempt to do so.

The day is October 24, 2010. Earlier in June, Apple released the iPhone 4. Here is a snapshot of the Apple product line in  2010, for context.

Wikipedia

In this post, I quote interesting parts of the email, and offer my commentary below. So, without further ado, lets go.

1. 2011 Strategy – SJ
– who are we?
– headcount, average age, …
– VP count, senior promotions in last year
– percent new membership at this meeting
– what do we do?
– pie chart of units/product line and revenues/product line
– same charts with tablets + phones merged together
– Post PC era- Apple is the first company to get here
– Post PC products now 66% of our revenues
– iPad outsold Mac within 6 months
– Post PC era = more mobile (smaller, thinner, lighter) + communications + apps + cloud services
– 2011: Holy War with Google
– all the ways we will compete with them
– primary reason for this Top 100 meeting
– you will hear about what we’re doing in each presentation
– 2011: Year of the Cloud
– we invented Digital Hub concept
– PC as hub for all your digital assets
– contacts, calendars, bookmarks, photos, music, videos
– digital hub (center of our universe) is moving from PC to cloud
– PC now just another client alongside iPhone, iPad, iPod touch, …
– Apple is in danger of hanging on to old paradigm too long (innovator’s dilemma)
– Google and Microsoft are further along on the technology, but haven’t quite figured it out yet
– tie all of our products together, so we further lock customers into our ecosystem
– 2015: new campus

[SID] - Steve starts his agenda with "who are we". That's how he plans to open his company's "Top 100" annual meeting. Think about that for a minute. This is not a new company or a startup. This is their north star, guiding "the how" and "the what" they work on. Steve highlights new "memberships" to this meeting, mentions VP count and senior promotions.

He then moves to "what do we do", with pie charts of units and revenue per product line. He describes the Post-PC era, what it means - smaller, thinner, lighter + communications + apps + cloud services, and how important it is to Apple.

Then comes the holy war with Google, his reason for this meeting. Steve puts in all the ways they will compete with Google, and expects each following presentation to tie into this central idea of the meeting.

He describes how PC as a digital hub is no longer relevant as the PC is now just another client to the iPhone and iPad. The digital hub describes all the things important to users (contacts, calendars, bookmarks, photos, video) and that its moving from the PC to the cloud. Apple's strategy to beat Google and Microsoft was to figure out this before they do, otherwise Apple would be in danger of the "innovators dilemma". 

The new campus for 2015 was the last item of the first section on Steve's agenda.

2. State of the Company
– Peter & Tim
– FY2010 recap
– FY2011 plan
– where is our business
– geo analysis (NA, Euro, Japan, Asia, possibly break out china) (present on map)
– key milestones, trends & future goals
– comparisons with Google, Samsung, HTC, Motorola & RIM3. iPhone
– Joz & Bob
– 2011 Strategy:
– “plus” iPhone 4 with better antenna, processor, camera & software to stay ahead of competitors until mid 2012
– have LTE version in mid-2012
– create low cost iPhone model based on iPod touch to replace 3GS
– Business & competitive update
– show Droid and RIM ads
– Verizon iPhone
– schedule, marketing, …
– iPhone 5 hardware
– H4 performance
– new antenna design, etc
– new camera
– schedule
– [CONFIDENTIAL]
– cost goal
– show model (and/or renderings)
– Jony

[SID] - Steve plans Peter and Tim to cover the State of the Company. This reviews the past year and plans for the next one. "Where is our business" is next, with geographical analysis. Then come the milestones, trends, goals and Competition. 

Joz and Bob are pencilled next, with the 2011 strategy for the iPhone. Discussion is planned around the next two versions of the iPhone, and a new SKU that is low cost. One important mention here is that Steve plans to show the Droid and RIM ads, not just their product or revenue/customer numbers. This is rare. How many times have you shown your competitors through the eyes of your customer? 

The section ends with discussions around the Verizon iPhone and the iPhone 5.

4. iPad – Bob, Jony, Dan Riccio, Michael Tchao ,Randy Ubillos, Xander Soren, Roger Rosner
– 2011 Strategy: ship iPad 2 with amazing hardware and software before our competitors even catch up with our current model
– Business & competitive update – Michael
– Apps, corporate adoption, …
– show Samsung, HP(?) anf iPad ads
– 2011 Product Roadmap
– Bob, Dan & Jony
– iPad 2
– new ID, H4, UMTS + Verizon in one model, cameras, …
– EVT units & cases
– HDMI dongle (use for projection of demos below?)
– iPad 3
– display, H4T
– DEMOS:- PhotoBooth (Michael?)
– iMovie (Randy)
– GarageBand (Xander)
– text book authoring system (Roger)
– working display for iPad 3 (during break)

[SID] - Strategy section for the iPad is crystal clear. Ship a new iPad that gives no chance to the competition to catch up. Also note the order of the iPad on the agenda and number of people presenting. Again the discussion is around the next two versions of the iPad, iPad 2 and iPad 3. Competition ads are to be shown. Apps for the iPad and Corporate Adoption are two unique items for the iPad, that were absent for the iPhone. 

5. iOS – Scott, Joz
– Strategy: catch up to Android where we are behind (notifications, tethering, speech, …) and leapfrog them (Siri, …)
– Timeline of iOS releases from first until Telluride, including Verizon
– Jasper tent poles
– Durango tent poles (without MobileMe)
– Telluride tent poles (with “catch up” and “leapfrog” notations on each one)
– DEMOS:
– Jasper: AirPlay to AppleTV – video from iPad, photos from iPhone, ??
– Durango: ?? (without MobileMe features)
– Telluride: Siri, ?

[SID] - iOS strategy defines places where Apple is behind, and how they plan to leapfrog the competition. Features are broken into "Catch Up" and "leapfrog". Three product releases are mentioned (Jasper, Durango, Telluride). Demos are expected.

6. MobileMe – Cue, SJ, Roger Rosner
– Strategy: catch up to Google cloud services and leapfrog them (Photo Stream, cloud storage)
– Android
– deeply integrates Google cloud services
– way ahead of Apple in cloud services for contacts, calendars, mail
– 2011
– Apple’s year of the cloud
– tie all of our products together
– make Apple ecosystem even more sticky
– Free MobileMe for iPhone 4, iPad and new iPod touch
– Jasper – Sign up with Apple ID, Find My iPhone
– Durango
– Find My Friends, Calendar, Contacts, Bookmarks, Photo Stream
– April
– iWork cloud storage
– Telluride
– cloud storage for third party apps
– iOS backup
– new iDisk for Mac
– Growth
– projected growth, cost/user
– plan to scale to 100 million users
– transition plan for paid members
– what about email?
– DEMOS:
– Find My Friends
– Calendar
– Photo Stream
– iWork cloud storage (Roger Rosner)

[SID] - MobileMe is a separate section for Steve. He plans to announce 2011 as the year of the cloud. Android's deep integration is highlighted. Apple plans to tie in all of its product together, making the ecosystem more sticky. Backups, Find My Friends, Calendar, Contacts, Bookmarks, Photo Stream, iWork Cloud Storage, iDisk for Mac are mentioned. Cost/user is mentioned, along with plans to scale the service to 100 million users. Email is a dilemma for Steve.  

7. Mac
– David Moody, Bob, Craig Federigi, Randy Ubilos & ?
– Hardware roadmap
– Lion plan
– Mac App Store
– Final Cut Pro DEMO (Randy & ?)

[SID] - The Mac appears. A new hire or a promotion was possibly on the cards, described as a "?" on the agenda. Hardware, Software, App Store, Apps, all of it has a place.

8. Apple TV 2- David Moody, Jeff Robbin
– Strategy: stay in the living room game and make a great “must have” accessory for iOS devices
– sales so far, projections for this holiday season
– add content:- NBC, CBS, Viacom, HBO, …
– TV subscription?
– where do we go from here?
– apps, browser, magic wand?

[SID] - Same story for Apple TV. Steve had an idea for a TV subscription service, in 2010. He was open on Apple TVs strategy going forward.

9. Stores Update – Eddy, Patrice
– Music
– Strategy: Leap even further ahead of Google in music
– Beatles
– iTunes in the cloud
– App Store
– Strategy: Leap even further ahead of Google in discovering great new iOS apps

[SID] - Now come the Stores. Music and the App Store. App Discovery is Apple's leapfrog item with respect to Google. iTunes in the cloud is on the list. Beatles get their obligatory mention.

10. iAds Update – Andy Miller

11. Retail Update – Ron Johnson

[SID] - The agenda closes with iAds and Retail updates.

This is how Steve's agenda looked like for Apple's strategy meeting. I found it very simple and interesting. Hopefully, you found it too.

Find me on twitter (@sidoza), if you want to discuss this post.  

Quotes from The Psychology of Human Misjudgement

I just finished reading "The Psychology of Human Misjudgement" by Charles T. Munger. A simple Google search will get you the whole text. There is a YouTube video on this article too.

I highly recommend you read/listen to it.

The article prescribes a latticework of theory to help you build mental models for decision making. I will write a separate blog post on mental models proposed in the article. There are a ton of interesting quotes in the article. As a quip lover, I find them very interesting. Here I present a select few for your reading pleasure. 

"I don't believe life ever knocked all the boy's brashness out of the man."
- Charles T Munger

"Of what use is a philosopher who never offends anybody?" 
- Diogenes

"My sword I leave to him who can wear it."
- "Old Valiant of Truth" in John Bunyan's Pilgrims Progress

"Invert, always invert."
- Jacobi

"We are too soon old and too late smart."
- German Folk Saying

"Many an academic is like the truffle hound, an animal so trained and bred for one narrow purpose that it is no good at anything else."
- Jacob Viner

"If you would persuade, appeal to interest and not to reason."
- Ben Franklin in Poor Richard's Almanack

"They pretend to pay us and we pretend to work."
- An Employee in Soviet Russia

"To a man with only a hammer every problem looks pretty much like a nail."
- Folk Saying

"Bad behaviour is intensely habit forming when it is rewarded."
- Skinner

"Shrouds have no pockets."
- Patterson

"I did not completely die."
- Horace

"Children need to eat their carrots before they get dessert."
- Granny's Rule

"Politics is the art of marshalling hatreds."
- From England

"I wear the chains I forged in life."
- Marley's Miserable Ghost

"An ounce of prevention is worth a pound of cure."
- Franklin's Poor Richard's Almanack

"A man never forgets where he has buried the hatchet."
- Folk Saying

"It is not greed that drives the world, but envy."
- Warren Buffett

"You can always tell a man off tomorrow, if it is such a good idea."
- Tom Murphy

"Keep your eyes wide open before marriage and half shut thereafter."
- Franklin's Poor Richard's Almanack

"Always tell the bad news promptly. It is the good news that can wait."
- Common Injunction at Berkshire

"Why does that man hate me so? I never did anything for him."
- Henry Ford

"It is not necessary to hope in order to persevere."
- Folk Saying

"What a man wishes, that also will he believe in."
- Demosthenes

"They asked me if I wanted to become a director of Northwest Bell, and it was the last thing they ever asked me.
- Joe Rosenfield

"A small leak will sink great ship."
- Ben Franklin

The Right Question

Horace Dediu wrote a piece on Tesla and SolarCity. He starts the article with a very simple explanation of what is meant by mergers, integrations, spinoffs and acquisitions.

A merger is the result of two entities in the same business joining forces. It is usually justified through “synergy”, a euphemism for removing redundancies from their unity. Arithmetically, the desired outcome is that the resulting organization should be smaller than the individual parts (which is desired if the available market is shrinking.)

An Integration is the answer to the question of “Why two companies in different businesses are better off together.” Arithmetically, it suggests that the proposed sum is greater than the individual parts.

The spin-off is the response to a situation where one company houses two unrelated businesses.

For completeness, we can define an acquisition as the purchase of an unequal entity in order to improve the value of the acquirer.

This explanation is extremely simple to understand from a strategy and markets point of view, a trademark of Horace's writing. He continues the article with the importance of questions.

Henry Ford asked, “What would enable everyone to have a car”. The result was  not a better car but a better production system.

Steve Jobs asked, “What would enable everyone to have a computer”. The result was not a faster computer, but a more approachable computer.

Akio Morita asked, “What would enable young people to have their own music”. The result was not a better audio quality but a smaller audio player.

Kiichiro Toyoda asked, “How can a car be built without faults”. The result was not a bigger factory but many smaller ones.

For Product Managers, this is a good way to crystallise your thinking around your product's strategy and positioning. What is the correct question for your product? Your answer defines your vision and identifies the strategy you need to get there. 

A similar approach is to focus on the "problem" part of the equation (customer, market, technology) and less on the "solution". 

Product Managers need to keep asking the right questions. Keep focusing on the problem. Right solutions and strategies emerge out of your answers to the right questions and problems.

Nietzsche and startups

A few days ago, I came across the following article on Nietzsche on Maria Popova's excellent brainpickings.org website -

https://www.brainpickings.org/2015/09/30/nietzsche-find-yourself-schopenhauer-as-educator/

The article quotes Nietzsche's essay "Schopenhauer as Educator", on how to bring forth our gifts and find ourselves. That to achieve true happiness, our soul needs to be unshackled from the chains of opinion and fear. He touches upon the role of our educators as liberators and how this helps us find purpose and happiness. The whole article is a wonderful read. Truly beautiful.

Read in another light, we can also use Nietzsche's advice for starting up new companies and building new products. For example, a perennial question facing many "to-be" entrepreneurs is when to start and what to work on. Here is some guiding light from Nietzsche on these two subjects -

“What have you truly loved thus far? What has ever uplifted your soul, what has dominated and delighted it at the same time?” Assemble these revered objects in a row before you and perhaps they will reveal a law by their nature and their order...

Any human being who does not wish to be part of the masses need only stop making things easy for himself. Let him follow his conscience, which calls out to him: “Be yourself! All that you are now doing, thinking, desiring, all that is not you.

Timeless advice can be applied to any problem, no matter what the field or times of the question. To find answers, you can rely on books, mentors and experts in your field of interest today.

Or you can seek guidance from the greats who have withstood the test of time and use their advice to build your own way forward.

No one can build you the bridge on which you, and only you, must cross the river of life. There may be countless trails and bridges and demigods who would gladly carry you across; but only at the price of pawning and forgoing yourself. There is one path in the world that none can walk but you. Where does it lead? Don’t ask, walk!

Feed the data dragon

Google Photos is Google's third attempt at photos. While Picassa and Google+ photos were good products in their own right and attracted a considerable user base, they were not adopted by users at Google scale. 

This time, Google is offering an incredible value proposition with it's new product in Photo management, catching our imagination. It has certainly caught mine.

The ever growing data set

We carry amazing cameras with us everywhere. We take more photos everyday. Thanks to the smartphone, everyone is now a photographer.

Some of the pictures we take are immediately shared with our family and friends using social networks and messaging apps . But the majority remain in our gallery or photos app, waiting for an illusive backup and sorting. They get deleted eventually when the storage or our love for them runs out.

Once in a blue moon, we browse through our photos and take a backup on a USB drive or a hard disk, where they are quickly forgotten. 

Once in two blue moons, we take a heroic effort to organise our photos. We make a mental process of how we will sync up our collection and keep it pristine. This system usually holds up till the next data dump.

We take more pictures than ever, share a few and forget the majority. All too often, our pictures are littered across devices. Smartphone pictures are on the phone, some are backed up on a hard disk. Older pictures are on the computer. 

Storing and reliving our memories is a very ordinary experience. 

Google Photos

To solve this problem, Google has taken the most popular feature of Google plus and made it a standalone independent app. In addition it has slapped the best price it can, free. 

Google allows you to store all your photos and videos in the cloud, accessible through apps and the browser. They are stored and synced across devices, without eating into the storage limits of your well endowed phone. 

For pictures below 16 MB, Google promises minimum reprocessing and optimisation but keeps the originals. This limit is a clear boundary for the product. This is not a backup service. It's a consumption service. While this means there is some optimisation, the alternative to most people is the hard disk. This will do just fine. 

You can store the original that are above 16 MB against your account's storage limit, but that misses the point of Google photos. Organising and sharing is simple and easy. Google offers an assistant feature that attempts to create interesting collages, gifs and albums for you. Editing and retouch is also easy. 

Why is this free?

As smartphones become more and more popular, people are spending less time in their browsers searching. This does not help Google. For Google to earn more money through its main business of advertising, it has to either show you more ads or earn more per ad. Google photos focuses on the second set. 

After search and messaging, photos and videos provide a rich dataset for Google algorithms to build a better advertisement profile. Photos contain location information, equipment, time, subjects and observed behaviour like favourites, sharing etc are very helpful. Googles algorithms can identify objects, people and so much more. This helps Google create a better profile of you for ad targeting.

This is something only Google can do, as is evident from the lacklustre response to the competition in this market. Flickr tried this first, but it's perception as a public photo sharing site has not changed. Apple photos app is for Apple customers only. Dropbox is not viewed as an app for sharing memories. And you can't put all your photos on Facebook. Facebook is only for the most curated and self appeasing pictures. Instagram is more a social network than a photos app. And only Amazon photos knows what it's for. 

Google's intentions are clear when you install the app on your smartphone (iPhone for me). Without access to the Photos app, Google Photos does not work. Plus, the price offered makes it a proper Google product. It will become more and more difficult for its competition to charge for photos storage. 

Other advantage with this knowledge is customisation. Google Now and Google Search can clearly benefit from more signals. Besides, having all your photos in Google is the biggest moat ever. Even if you stop using other google services, chances are Google will be able to build a pretty accurate profile of you based purely on your photos. 

Privacy

There has been a lot of debate over privacy. People wrongly believe that Google will share your pictures with advertisers. They forget that Google looses all credibility if that ever happens. It's golden goose is the profile it makes of you. Google sells targeting as it's main product, not data. Google will provide as much security for your pictures as somebody who is charging you to store them. This is Google's bread and butter business. 

With search going down, this is yet another app that feeds the Google data dragon and helps it build a better profile for ad targeting. Android offers a big market, but apps like Google photos are cross platform, targeting all the users. 

So give this a spin, but with one caveat. Put your photos on it but don't ditch your hard drives yet. Remember Google Reader? 

Going forward, I would not be surprised to see features like Face Detection, APIs, auto edit features and even better search than we need. Let's see how this goes for Google and for it's competition.

The iPad spread

If you are in the market for an iPad, get your pen and paper ready and answer the following -

• What's your budget?
• Big or small?
• Retina display? TouchID? Storage Capacity? Camera? What about a Barometer?
• WiFi or WiFi + Cellular?
• Colour?

or compare all the iPad models available for purchase.

Need more details?

Need more details? Of course you do.

There is a distinct possibility that you come out of this exercise with a model launched 3 years ago. Then, Apple's last two years in iPad improvements mean nothing to you.

The iPad has not been performing well since the last few quarters. Sales are flat for this magical device. In addition, the iPad's exceptional build quality and usage patterns impact existing customers who will buy a new one but already have an iPad.

This has forced Apple to become strange bed-fellows with IBM and focus on the enterprise. The other big idea is to broaden the product mix and address every price point in this segment.

But what about product simplicity? What about making the best product? This bewildering array of iPads confuse customers. The huge performance gap and complexity drive developers away.

The A5 chip has proved to be more resilient than the floppy disk and the optical drive.

Which colour you want?

The iPad Spread

Can this be simplified? Of course. Apple is the king of simple.But how? My 2 cents...

The iPad Mini has to be the first one to the slaughter house. This device is so old, it is nearer to the original iPad than to the latest one. And at this price point, consumers may incline more towards Android tablets. I have not heard of anybody buying an iPad Mini recently.

Moving on, the Mini 2 can be scrapped and the Mini 3 can be offered with and without the TouchID, only through certain distribution channels (Apple Stores, Apple.com). Rinse and repeat for the iPad Air/Air 2.

This leaves us with the iPad Air 2 and the iPad Mini 3.

Now we have a much simpler product lineup for the iPad. Displays are awesome, cameras are great and performance is fantastic all around. After deciding the size, the user gets to choose the color, TouchID support, storage capacity and cellular option.

This leaves the prospective iPad buyer with concrete yes/no, this/that decisions. Far less confusing and easier to make.

Now Apple, if you don't mind, please exchange my iPad 4 with an iPad Air 2 16 GB WiFi-Only Space Gray.

App Store - Search Page

App_Store_Search_Suggestions

Go searching in the App Store, and you are presented with (left image) -

Its a major improvement from the past. Previously, all we got was a barren white screen with a search bar at the top. Apple has spiced things a bit and now displays trending searches in your store.

A few ideas to improve this interface (right image) -

1. Change the text alignment from centre to left, please. Much better already!
2. Add App Icons for straight hits, first result icon for generic searches.

This adds some visual appeal to the page. And hopefully stops us from searching for "themes for iphone".

Beats with Apple

Apple's acquisition of Beats Music and Beats Electronics has perplexed the inter webs. Some say this is a clear indication that Apple's best days are over. Others say this is proof that Apple is getting smarter. Many have admitted that they have no idea why Apple would acquire Beats as there is nothing about Beats that Apple can't manage on its own. My perspective is a bit different. I looked at Apple's Press Release announcing the acquisition and their reason is clear.

"Apple® today announced it has agreed to acquire the critically acclaimed subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, speakers and audio software…"

OK.  So you buy a company for $2.6 billion. What do you say when you announce the deal? Why you bought it, right?

Apple wants Beats for it's subscription service. Everything else is just icing. Beats Music is a very small part but gets the first mention in the press release. Ahead of the headphones, and ahead of Iovine.

Yes, there is $400 million more, but it vests over time, so relax.

No? Not convinced? Here is another example. This is the opening line in Satya Nadela's statement on the Microsoft - Nokia acquisition.

“Today we welcome the Nokia Devices and Services business to our family. The mobile capabilities and assets they bring will advance our transformation...”

It is clear why Apple bought Beats. They wanted a music subscription service. So they bought one. But can't Apple just build a service like Beats Music instead of spending the monies? Yeah, of course. Here are a few reasons they bought instead of built.

A stitch in time

Apple needs a music subscription service. The likes of Spotify and Pandora have proved there is a market. Apple's data shows that the "buy" music model is on a decline. Apple wants to retain its position as the top destination for Music lovers. And Apple has run the numbers. Such a service will work. Apple will give it prime real estate on the iOS home screen.

But Apple already has a brand in the music space, iTunes. And brand iTunes works not only for music, but also apps, movies, podcasts and much more.

If Apple has to enter the music as a subscription space, it needs a new brand. And Apple has to enter the music as a subscription space.

A good option

Beats Music was the only viable option for Apple. It is run by industry veterans and not software entrepreneurs. The founders understand the music business better than most and have connections inside the industry. The Beats Music service uses a personalization algorithm that is a mix of digital innovation and musical passion. 300 years of experience in the music industry comes with this acquisition. This rich team cannot be built just by snatching Jimmy Iovine and offering him a lucrative contract to bake this within iTunes. Plus, Beats has fantastic relationships with some of the big artists, a mandatory requirement after the Ping debacle.

A trojan horse

Whenever Apple is compared with Google, the following quote is never far behind in the discussion. That Google is getting better at design faster that Apple is getting better in services. Maps and mail are cited as proofs.

A new, independent brand will give Apple the flexibility to launch the service on Android and Windows. It will open the market and bring the Apple experience to many more users. Since the smartphone market is getting saturated quickly, growth can come only from customers jumping ship. What better way to start than with Music? Email and maps are covered. But Music is still wide open.

And the headphones? Yeah, they are important. They sell a lot and are profitable. Apple will shore up this part of Beats, and introduce another accessory for its devices. So there's that.

Most of the data and facts in this blog post come from Apple Press Release announcing the acquisition. Here it is.