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Managing change: 25 billion – now what?

By Joseph Cervenak

On February 13, 2012 the computer giant Apple launched a promotion, offering a prize to the person who downloaded its 25 billionth application. So, downloading an app to an iPhone, iPad or iPod Touch gave the purchaser a chance to win. The prize? A $10,000 Apple Store gift card. 

For the few who may not know, ‘app’ has become the popular abbreviation for ‘application’.

In less than one month, on March 5, Apple’s home page read: “A billion thanks, 25 times over – the App Store has reached 25 billion downloads. Thanks for getting us there.”

Wow! Congratulations to Apple and to the winner of the $10,000 gift card. To reach 25 billion of anything is nearly beyond comprehension. Ten to the ninth power; nine zeros after the one; 1,000 millions; or, in computer parlance, just a bit less than a ‘gig’. Off the charts?

Let’s relate this to real-world numbers. It is roughly the income of the Christy Walton Family (Wal-Mart). Or, according to Bloomberg Billionaires Index, nearly half the income of Microsoft’s Bill Gates or Warren Buffett.

Regardless of the number of zeros, the magnitude of this accomplishment (that is, selling 25 billion units) is far-reaching and of serious implication. In his 2000 best seller ‘Tipping Point: How Little Things Can Make a Big Difference’, Michael Gladwell posits that a single event, with scale, changes a culture.

Indeed, we have a tipping point … tipping towards a new model for computing, digital content, software and the web. Not surprisingly, tipping points are without borders.

In previous issues of Caribbean Maritime, I offered forecasts of the “next new thing and next new think” under the Janus View1, and Eleven Ways to Cope with Future Shock2 rubrics. In these columns I cited apps as technology markers for change.

While new to some, this growing model is transitioning the way our lives and our businesses are conducted. This transition began on March 6, 2008 when Apple made available a tool kit for third-party independent software developers to make apps for its iPhone. At record pace apps affordably engaged the user, the retail customer. Of the hundreds of thousands of apps now available, half are for free or cost between US$5 and US$9. Gradually, and in the very near future, apps will likely migrate to the enterprise level and become quite an ordinary part of our computer systems – likely our smartphone computer-in-our-pocket. Of note, Microsoft app is included in the new Windows 8 operating system.

What does all of this mean for our businesses?

This is less about apps than it is about our leadership and our ability to effect changes in our companies. And changes, ultimately, are manifested as our future success or failure.

The Apple app event was not an accident. Offering tool kits to developers was deliberate. There was strategic intent. By extension, it offered its customers the opportunity to create their own value and ultimately to create a business system allowing them to do more, do better and at less cost 

For us, this is a time for rigorous self-examination of our value offerings and value-creating systems – that is, if we have such. And it is an examination of how we run our business. No, this is not external nor a macro factor. This is pervasive and close to the vest.

The inscription ‘Know Thyself’ at the Temple of Apollo at Delphi and so often posited by Socrates some 2,500 years ago, never rang so true. We need to develop plans to achieve forward-looking accomplishments and do so (most likely) by changing and reshaping our business model.

While we may hope for charts with slopes that are gradual linear regressions and predictable, our preference for change is three or four years away. While we would like to live in 2015 and 2016, visualising the future so we can anticipate and solve today’s problems, it simply is not in the calculus. Our actions today demand that we set a strategy emanating from the challenges and changes of our time and grasp the big picture. (Read: innovation, creativity, developing people and technology.)

According to Henry Mayers Hyndman, author of ‘The Evolution of Revolutions’: “Leadership … is about coping with change ... leading an organisation to constructive change begins by setting a direction.” And, if I may add, ours is to set forward-looking strategy that is grounded in today’s reality while making necessary change and guiding our people to above-the-bar accomplishments. 

Jim Irsay, owner of the American football team Indianapolis Colts, understands this reality. Does he pay the $28 million dollar roster bonus to NFL quarterback Peyton Manning or let Manning become a free agent? “When you are younger, you think there’s a wise man behind that door with a white beard, and you can go see him and he’ll tell you the answers,” Irsay said. “But that man is not there.” He goes on: “Continuity is a great thing: staying the course and being patient, those are important virtues. But, also, there is virtue in being realistic enough to know you have to make serious changes sometimes.”

Consider Tom J. Frey, Google’s top-ranked futurist and host of FuturistSpeakers.com where he writes of ‘28 Major Trends for 2012 and Beyond’: “Our vision of the future creates our actions today.” He adds: “This is a period of extreme chaos and also a period of extreme opportunity … we are in a very fluid changing world.” However, prudence suggests we acknowledge that our world is still coupled to an ever-so-slow recovery from economic crises. 

To this point, Lynda M. Applegate, Martin Marshall Professor of Business Administration at Harvard Business School, extolled in her article entitled ‘Sharpening Your Skills: Leading Change’ ( HBR newsletter June 6, 2009): “An economic crisis is a charter for business leaders to rewrite and rethink how they do business.”

The key, Ms Applegate advises, is:“Don’t think retrenchment; think growth.” Her key concepts are to identify and exploit innovation; to rethink offerings, markets, business processes and organisational structure; and to create innovative new offerings. 

Interestingly, albeit with tongue in cheek, we have identified two opportunities: one from the ongoing economic crisis and one from providing a channel to the customer for ongoing value-creating activities.

What to do with these opportunities?

We begin by acknowledging that change is an engineering process that replaces the fundamental nature of an institution. Alternatively stated, we are re-engineering our company – yes, once again, and thank you Messrs Hammer and Champy3.

Further, we need to move to the fore the effort of re-examining our mission, confirming our vision and validating our purpose. Without doubt we are challenging our very being: the business model of today, and this, of course, is frightening. However, or as Mike Jarrett is fond of adding, the “sobering thought, however”, is that it may not work for tomorrow. As such, we might have to move quickly and far from our core business model. 

In contrast, if after examination we decide to effect change and innovate before we have to, thus avoiding the shroud of urgency that diminishes our options, we are then able to develop alternative strategies and embark on incremental adventures. Make changes, take on initiatives that are inconsequential but not life threatening – think accretion.

Another ‘however’, this time a caution as put forth by author Scott Anthony referencing Kodak, which filed for Chapter 11 (bankruptcy) protection on January 19, 2012: “Even an insightful company can go wrong if it doesn’t push far enough, fast enough into uncomfortable territory.”

No need to read tea leaves; instead, we need to develop new and better systems to regulate, manage and leverage the activities surrounding them. And, in the light of new experiences, re-examine, re-examine and act.

All such said, where will we be when we realise everything has changed? For Apple, with rumoured release of iPhone 5, ‘the new’ iPad, Macbook Air and 25 billion downloads; and, crossing the $500 billion mark, 2012 is a banner year — Apple’s annus mirabilis – a miracle year.

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” – Charles Darwin.

1 Joseph Cervenak, ‘The Janus View, Changes and Transitions 2011’, Caribbean Maritime No. 12, (January - April 2011): 52-53.
2 Joseph Cervenak, ‘Eleven Ways to Cope with Future Shock’, Caribbean Maritime, No 15 (January to April 2012): 46-48. 
3 Hammer, M., & Champy, J. (2001) ‘Reengineering the Corporation: A Manifesto for Business Revolution’. New York: HarperCollins Publishers Inc.