Nov 18, 2020
Earlier this week Apple introduced their own microprocessors for its line of desktop and laptop computers. Many industry observers consider this not only yet another bold move from Apple — one which will further differentiate the Cupertino-based company from their competitors and allow Apple to extend their deep vertical integration — but also a repeat of Apple’s move from IBM/Motorola PowerPC CPUs to Intel-based ones in the early 2000s. A move which, at the time, further cemented Intel’s position in the market and effectively killed the PowerPC-line of CPUs for the end-user market.
In many ways this move is also the development of a weak signal which became stronger and stronger over time (see our radical Briefing #0025 on “Sorting Strong Trends from Weak Signals”). Apple started developing and using their own chips first in their iPhone-line of devices, grew their functionality (and therefore replacing more and more 3rd party circuits) and slowly started using custom silicon in other products (every modern Macintosh has custom, Apple-designed chips to power features such as device security and the infamous TouchBar in the MacBook Pro series of laptops). Truly a weak signal which grew to a loud and strong signal since the early days of the iPhone and iPod touch.
Further it is a great application of our State Change Theory of Disruption (see radical Briefing #0027 for details), as the industry is moving from one state (standardized and therefore commoditized components) toward another (custom-designed chips to allow for, not only, better performance but also a tight coupling of hard- and software to solve specific problems). Expect other companies (those with the deep pockets and engineering prowess) to follow step — and those who can’t fall further behind.
But it also connects to a theory Steve Jobs, Apple’s charismatic founder, developed in the late 80’s: The Glide Slope Theory of Innovation. According to Jobs, each new technology platform has a certain lifespan – in the 80’s Steve showed that new computer platforms have about a ten year lifespan before they get replaced by the next generation. For the first couple of years, a technology platform matures, and then eventually peaks a few years after it was brought to market. At this point the technology is (in Steve’s words) “everything it will ever be” – and from there on, it will stay essentially static (with only small, incremental improvements – what Clayton Christensen calls “Sustaining Innovation”). Companies regularly ride out this “glide slope” (a term originating in the aviation industry), often very profitably – but eventually the glide slope will come to an end and the market will get disrupted.
In an impassioned speech, delivered during the launch of the NeXT computer at the Boston Computer Society in 1988, Steve Jobs points out the fallacy of glide slopes: Once you commit to a technology, you are stuck with that technology. The technology becomes embedded in your offerings, you build an ecosystem of partners and clients on top of the technology, you invest time, money and other resources – all of which act like a strong incentive to stick with the technology even when you see it having peaked and entering the glide slope. Switching to a new, better technology is often not an option as newer technologies tend to be incompatible with the old one – literally and figuratively. And as, at least initially, riding the glide slope is a lucrative financial position, the necessity to invest and change, is not obvious to many. But, of course, state changes loom and come “gradually then suddenly”.
We believe the theory is a good lens to look through when you want to understand why companies “don’t get it”. It is tempting to ride the glide slope – which makes it hard to invest into new, incompatible technologies (we use the term “technology” loosely here – it describes also new business models, substantial behavioral changes, etc) and you can quickly get out of sync with the state changes in your industry.
Applying the skills of weak signal spotting, continuously scanning for state changes combined with an understanding where you are in terms of the glide slope of your business becomes a vital leadership skill. One which should be relegated to the “strategy department” but rather one everyone should be well versed in.
radically yours,
Pascal and the be radical team
