The Critical Path #60: Innovation Anxiety

2 comments

1. Fadil · 28 October 2012, 23:40

   Hi Horace,

   I greatly appreciate your work and the spirit with which it's done.

   I believe the Critical Path's investigation into the 'causality' of success and failure of business provides a greater opportunity for learning than the pervasive 'prescriptive advice' approach that offers methods and models, but not necessarily understanding. I notice that you never impose advice directly but instead explore the mechanics of the underlying principles i.e causality, to bring your listeners, within their own minds, to their own wisdom. Your approach encourages listeners to critique and develop their own methods and models, which in my opinion is the signature of a great teacher.

   I would love to hear your views on the prevalence of what you could call 'deferred monetization.' Essentially, this is when a company delays profiting from a product hoping/believing that by doing so they are able to secure more reward at a later time. You began to touch on this in your analysis on Android.

   My own opinions: Profit for Product or Product for Profit is the central value exchange of business, and so it seems natural to me for the trajectory of Profit over time to follow the trajectory of Product over time. I believe there can be some discrepancy between the two trajectories but that there is a natural limit to this discrepancy, if the business is to remain sensible i.e. if its risk is to be managed. Disproportionate deferment is high risk and unwise, especially when it is unnecessary.

   I sense the 'exit' imperative of entrepreneurial and VC cultures partly encourages this deferred monetization. The aim is not necessarily to create a sustainable business i.e. a profitable one (which can be harder), but to achieve an exit, which can be done with 'user retention' numbers (which can be easier).

   There are many recent web/technology businesses that have/do engage deferred monetization: Facebook, Twitter, Myspace, YouTube, Android, Groupon as well as a sea of start-ups. Is anyone able to name companies that have deferred monetizing and been successful by doing so?

   I would be interested in hearing your views as well as that of the community.

   Thanks, Fadil

2. Keith · 31 October 2012, 05:39

   Fantastic episode as always. You touched on the TV and whilst I am loathe to discuss a rumour I think there is some merit here. After the most recent launch event the most significant piece of information from a forecasting perspective is that there is now a clear "gap" in Apple's launch schedule. The entire Mac (Pro excluded), iPod, iPhone and iPad range has been updated in the second half of 2012. One would anticipate that they would not be refreshed again until the second half of 2013. That leaves the entire first half of 2013 without and obvious product launch/refresh. I strongly suspect, therefore, that there is a new product line waiting for launch in the first half of next year. Given the lag time in new product development and their own knowledge of the late 2012 line refresh it is almost inconceivable that Apple intended sit on their hands for 6-9 months.

   Which brings me to the TV. I am unconvinced by the App based setup for TV. Firstly, the current setup has no integration between content suppliers, broadcasters and distributors. Further breaking up the current content setup into even more separate channels as Apps will further complicate an experience that is poorly integrated. App has gone to great lengths to remove the file structure from programs such as iPhoto and this simplicity is what I see as having an advantage in TV. You'd simply request that you wanted to watch a program on a topic or with a certain actor or you could be highly specific and it would find it and deliver it to you. No Apps, just one button and you say "i want to watch CNN news". Current TV interfaces struggle to organise content that is being broadcast and SmartTVs simply add a layer of complexity with more Apps that have no integration. Hundreds of channels that you have to plough through to get what you want. I don't see how having hundreds of Apps improves things. One app with the mess hidden behind and a method of input/interaction that gave you content with no laborious search would be perfect.

   Hardware-wise, I do think the current iMac points the way. Actually, i'd rather hoped the iMac would disappear and be replaced by a TV. My current machine sits in an office and is a repository for images and music/video. It serves no other purpose that can't be dealt with on a MacBook or iPad. I'd rather have my mac on the wall so that the content would be there on the screen that is most heavily used. That's worth noting. In almost every household the screen that is "on" the most is the TV. Wouldn't it be disruptive if Apple brought computing to the TV finally in the same way they brought the computer to phones and music players