The tech industry is busier than normal this August, which is usually a time of summer doldrums. The stock market tanked. Google bought Motorola. Hewlett-Packard decided to move into software via a $10 billion deal even as it decided to get out of PCs and tablets. And now Steve Jobs has resigned as the CEO of Apple. If you blinked, or were on vacation, you would come back to a different tech world.
Everything is accelerated
These events may cause you to wonder if the Rapture is upon us. Each one of the tech industry events seemed so monumental, as if we entered a new era three times over the course of nine days. It reminds me of James Gleick’s book from a decade ago: Faster: The Acceleration of Just About Everything. Gleick’s book describes the “hurry sickness,” a need to rush around that launched us into the “epoch of the nanosecond.” He meant that technological change, driven by the internet, was accelerating just about everything we do.
On its surface that sounds ridiculous, as time doesn’t speed up. And the irony of Gleick’s book was that it arrived just as everything was slowing down due to the bursting of the dotcom bubble.
But the events that are happening now make it seem like the windows for inaction are getting smaller and smaller. The New York Times pointed out that the lifespan for tech gadgets is — particularly unsuccessful ones — getting shorter and shorter. Microsoft killed its Kin mobile phones after 48 days on the market. Hewlett-Packard killed the TouchPad tablet after seven weeks of weak sales. “There is little to no room for the sleeper indie hit that builds good word of mouth to become a solid performer over time,” the article said.
The age of Great Turbulence
This busy week also harkens back to the words of futurist Paul Saffo, who was research director for the Institute for the Future research center for many years and is now at Discern Investment Analytics. He talks about how we are entering “an age of Great Turbulence,” where there will be a lot of disruptions coming at a faster pace. Saffo believes that in the coming period, all of the rules will be broken and the overall economy will behave in strange ways. It will all be triggered by technological change and globalization. He thinks this time of turbulence could last 20 years. It will now be mostly stormy, not calm, and the patron saint of the period will be economist Joseph Schumpeter, who championed the notion of creative destruction. Technology is changing so much that different companies are leading each new wave, such as Microsoft in one era, Google in another, and Facebook in yet another age.
“We’re at a very interesting moment in time,” Saffo said in an interview today. “[Jobs] is stepping down at a time when the PC era is ending and the mobile era is beginning. For Silicon Valley, it really is a time of profound shift. HP is getting out of PCs. They clearly didn’t make the bridge from one era to another. Motorola is getting absorbed because they didn’t make the leap.”
This time isn’t for the faint of heart, but it’s full of opportunities to create vast wealth. Whatever the company, entrepreneurs are likely to be in great positions to ride out the turbulence. The concept of turbulence isn’t just that things are going faster, Saffo said. Rather, the collisions and disruptions are happening because many things are moving on different cycles. Technology is changing fast, but governments move slow. The habits of people can change quickly or slowly.
“Different pieces are moving at different speeds,” he said. “Technology moves quick, but social change is slow. Economic and political systems move at different speeds. The turbulence comes from the intersection of those things.”
Strategies for companies to deal with rapid changes
To me, the recent changes will trigger more big changes at other companies, and the trend will continue to snowball. In an industry full of changes, it may seem like a stretch to say that change is accelerating.
“We take change for granted here because it is built into our DNA,” Saffo said.
I challenge anyone to claim that we are living in a time of patience and long-term thinking. Companies can stick with strategies that don’t work, but the opportunity cost is huge. Intel has stubbornly stuck with its Itanium chip business for more than 17 years, even though it makes for more money from its Xeon server chip business. What would happen if Intel put those Itanium engineers to work on more Xeon chips? They would probably make more money.
HP decided it didn’t have enough money to spend all the projects it had going on, so it decided to narrow its focus and pour more money into software. Even though it was making money from PCs, HP thought it would be a better to invest that money in software and services. The company’s new CEO, Leo Apotheker, essentially ran out of patience with the tablet competition, even after the TouchPad’s very short time in the market. The opportunity cost of staying in hardware was too high, and a dollar invested in software made a lot more sense than a dollar invested in hardware. Apotheker acted quickly in choosing software over hardware.
By contrast, it took about a decade for Microsoft to hit its targets in video games. It launched the Xbox in 2001 and saw huge losses over four years before it launched the more cost-efficient Xbox 360 in 2005. That business was shaken after a defect debacle, but it has started coming back in the past few years. With the launch of the Kinect sensor system, Microsoft took a leadership role in the industry and saw its console sales and game sales bounce back. If Microsoft had shown as little patience on the Xbox as it did for the Kin, it would have missed out on the most successful diversification in its history.
That patience now seems to be a contrarian strategy. But it is precisely the kind of strategy that Jobs, at times, pursued. He took time to design innovative products and gradually improved them until the result was a monumental success. The iPad seems like an overnight success, but the fact is that Apple worked on it a very long time before it released it. Now that Apple has found what works, it is launching new versions of the device more quickly.
It seems there are two strategies to pursue. You can move slow and deliberate and get it right. Or you can move at blazing speed, fix your mistakes, and move on. The great thing about Steve Jobs is that he knew when to have patience, and when to move fast. In an age of turbulence, the consequences of getting it wrong are going to be dire.
“Steve had an incredible sense of timing,” Saffo said. “In the early part of his career, he was always a little too early. But from Pixar to his return to Apple, Steve’s timing has been exquisite. He understands how to surf the waves of change. Devices like the iPod, iPhone and iPad all came out when technology made them practical.”
[photo credit: LSDEX]