“Without owning something, over an extended period of time —like, a few years— where one has a chance to take responsibility for one's recommendations, where one has to see one's recommendations through all action stages and accumulate scar tissue for the mistakes and pick oneself up off the ground and dust oneself off, one learns a fraction of what one can.”
A trip down memory lane with Steve Jobs in 1992. In one of the most candid conversations I've heard about business in a long, long time at MIT# he talked about what they were doing at NeXT, which turned out to be object-oriented technology, the biggest technical breakthrough since the '80s. Then he just took questions.
The 10-15 minutes set up was about mistakes and scar tissue, typically how many of us learn faster, and an insight courtesy of Paul Strassmann, then CIO at the Pentagon. Strassman had published a book on The Business Value of Computers, where he surveyed companies ranging from not-so-successful to very successful.
Everyone spent about 2% of revenues on information technology — compare that to more than ten years later when the average small company spent 6.9% of revenue on IT, mid-sized companies spent 4.1%, and larger companies 3.2% of revenue#.
Industry was a big variable for several years, but now the gap is likely reducing. Effectiveness and not percentage of spending matters more still today. This is consistent with what Strassmann found much earlier in the life of computing. When he asked how they spent their money:
- the not-so-successful companies were spending most of their money on management productivity, PCs at the time
- the successful companies spent it instead on operational productivity applications
Some research through how people solved the problem in the '60s and in the '70s mainframes and terminals started to appear. Not much changed in the '80s. Around 1989-1990 the front office started to realize that they needed operational apps. It required about two years to take things into their own hands, build the apps, and it kind of worked.
Things like new products required a custom operational application. An example, “if you're in financial services and you come up with a new product, it's only three things: It's an idea, it's a sales force, and it's a custom app to bang on databases to make the product real, to do the mortgage swaps or whatever it is you want to do. Without the app, you don't have a product.”
To one noticing, it became clear that's where demand was going — operational productivity. Sun was doing that at the time, and doing well. NeXTSTEP was making it 5-10 times faster, giving companies a 90-day onramp to a new product.
The larger point Jobs makes is that in order to have a sales force and be profitable, NeXT had to be both in the hardware and software business. It was a cycle of 5 years to create a commercial product to take advantage of the window of opportunity — hard stuff to do — and another 4 years to exploit it in the market, educate people and refine the product.
Object-oriented technology opened a whole new market where hunks of things were available for developers so they could go where everyone else isn't.
The whole conversation is interesting and a learning opportunity on a couple of levels:
- it's clearly visible how as a non technical person, Jobs took the time to sweat the details and understand critical path issues to be able to relay them and think about the business opportunity — he's very frank about his process, ideas, and work, as if he were thinking out loud...
- he's relating to the group in the room, getting information from them and sussing out their reactions to the data — stories are data with a soul
A great example of how to have a conversation in a room that feeds both participants. There's much more to it on manufacturing and how his thinking about the spectrum of the problem — from necessary evil to competitive opportunity — led to today's Apple supply chain.
The concept of having items at the point of use, which leveraged just in time, is useful to start thinking about point of need in service where experience design is converging with branding.
Hardware gave NeXT and then Apple an advantage upon Jobs return in 1997. He talked with people in the room at MIT and he talked with customers, suppliers, talent he wanted to recruit, constantly. Jobs was always experimenting with ideas and insights to poke holes at them, figure out what others were thinking.
Spending times with customers provided a lot of data on how he could make their lives better. Jobs realized that the computer industry had lost the ability to create demand due to the low profitability of software. They could fulfill, but not create. Hardware was the answer to being able to afford a sales force, create demand.
The combination of those two became the operating environment for object-oriented tech developers use for apps. Which opened yet another marketplace.
Going where everyone else isn't requires thinking about the problem more deeply and differently, noticing what others are missing. It also requires commitment and hard work. Customer-centric became experience-led and the rest, as they say, is history.