Apple, the OODA Loop and Staying The Course
December 19th, 2006
-- The Cluetrain Manifesto, Chapter 4
Apple is building great products and making lots of money. But they're also in a little bit of trouble. We haven't been able to put our finger on it lately. We know there's a problem. It lingers and troubles us, but it hasn't been given a label, so we can't really bring it out in the open and shine some light on it.
I'm going to shine some light right now.
However, in order to do so, I must first put the problem into context, so bear with me a minute while I provide some background.
There is a military concept called "Getting inside the enemy's decision cycle." What this means is that if one side in a military conflict can generate a series of events that happen fast enough, the opponent won't be able to cope with the myriad of confusing events, multiple attacks, and information overload. The other side becomes confused and dysfunctional. Even demoralized.
John Boyd, who many claimed was the greatest Air Force jet fighter pilot ever, spent his later years at the Pentagon developing this concept, and you can read about it at Wikipedia. Colonel Boyd laid out the logic of what he defined as the military OODA loop. Briefly, this is the process whereby military commanders Observe, Orient, Decide, then Act. Hence OODA.
Because competitive business has many of the same elements as warfare, the OODA loop also plays a role in American, if not global, business.
Before the Internet, businessmen generally muddled through. Even if they were not formally familiar with the OODA loop, it was instinctively used by the smartest of them against the competition. Salesmen would go to conventions, read about competitor's products in the newspaper, and learn a little bit about the competition from customer surveys. A business would observe the competition, put their products into perspective ( orient ), survey a sample of customers, decide on a competitive course of action, then act, that is, design and ship a product. Sales numbers would then be observed and the cycle continued.
What dictated, in many cases, the success of a product in times past was the so-called Fog of War. Uncertainties and incomplete information led to bad decisions. Brilliant schemes and sheer luck could propel a product into leadership. In the early days of TV, just the right jingle with just the right message could have people humming all the way to Krogers or Walgreens.
We've come very far from that, of course. Wal-Mart can redirect a shipment from its original destination to another town in an instant if a sales shortage shows up unexpectedly. Sales numbers are tallied by super computers within minutes. Customers are tracked in detail by their grocery discount cards, credit cards, and even Internet browsing habits. We know the drill.
The outcome of a furious cycle of OODA loops for the past 30 years has been, generally, a stalemate in large businesses that have copious resources. HP creeps ahead of Dell by subsidizing their PC sales with print cartridges, so Dell gets into the printer business. Apple creates a sensation with a portable MP3 player. Microsoft will spend billions to catch up. Sun struggles in vain against IBM, and Apple struggles to ooch the market share up a few percent.
It's a standoff.
The New Enemy
One reason all these companies are in a standoff is because it requires a certain amount of time, too long for our modern tastes, to generate a new product. That amount of time is dictated by the limits of knowledge, technology, and the ability of humans to interact and come to agreement. Imagine the process of designing, manufacturing, and shipping a new computer. Literally, thousands of things must be done before a new Mac shows up in the Apple store. I won't even try to cite the list.
What's worse is that the evolution of modern electronics, as we have seen over and over, depends on cooperation or at least agreements that protect everyone's interests. Few modern toys stand alone like a calculator. There is interaction, networking, interoperability, and turf to protect. As we've seen, these agreements take a long time to execute -- as each party sizes up its own relative contribution, risks, rewards, and positioning.
On the other hand, the Internet functions on, well, Internet time. An analyst can mess up his math and post a negative story about Apple's iTunes sales. Within minutes, it's posted. Within minutes after that, you'll pick it up with your RSS reader. And within just a few minutes after that, Apple's stock plummets.
The OODA loop for the Internet is measured in minutes. For electronics manufacturers, it's months.
Moreover, thousands of Websites, all dedicated to the idea of attracting your attention, fill the Internet daily with stories about Apple. I suspect there are more stories written about Apple every minute of every day than were written about IBM in a year -- 30 years ago.
And so, expectations soar. The Apple rumored cell phone, the so-called iPhone, is a product that doesn't exist and which Apple has never announced yet a Google search of the word "iPhone" turns up over 11 million results. As of yesterday, Linksys got inside Apple's OODA loop and announced their own iPhone.
Today's customers want cooler toys, and they want them now. They get into a fever over products that are merely rumored because there is no dialogue, only Apple's steadfast desire to blockade millions of Internet OODA loops in order to have a few moments of frenzy for the TV networks in a Keynote.
It isn't working.
The Internet informed customer is well inside Apple's decision cycle. As I wrote last week, customers are like the ghosts in the IBM commercial, chasing executives in their dreams, demanding more and more while breakthrough products take longer and longer to conceive and build. Sooner or later, mostly sooner, the ability of Apple to deliver will get so out of sync with the mind-of-the-Internet, that Apple will no longer be able to function effectively.
I believe the competition is well aware of this.
Every Macworld and every WWDC is a major opportunity for Apple to dazzle but also to gravely disappoint. Customers are getting edgy. It's no longer sufficient for Apple to say, "We never promised that!" Each SteveNote has become a delicate balancing act of feeding the wolves with distractions and reality distortion to buy more time for the engineers and lawyers.
It isn't working.
Boarding the Cluetrain
I am a firm believer in the ideas expressed in the book, The Cluetrain Manifesto by Levine, Locke, et al.
In the Cluetrain Manifesto, the authors point out that successful companies can no longer hide behind castle walls, fences, and obtuse computer systems that answer the phone but block discourse. Markets are smart -- they have conversations, whether or not the vendor is on board, and they get smarter faster than anyone ever anticipates. It is only a crusty, protective outer coating of good will toward Apple that keeps it in a position to stonewall customers. I believe that good will is now strained to the limit by Steve's fixation on The Big Surprise.
If Apple delivers everything that their customers have been yearning for at Macworld 2007, there will be much surprise and delight. But if the audience suspects that Apple just can't seem to deliver, that Apple remains in denial, then some day soon there may have to be a change. It'll be as big a policy shift as ever happened at Apple, but it might be the most practical, smart, and evolutionary thing Apple could ever do: listen to customers, announce a product, announce a ship date, listen some more, meet the schedule (within reason), and move on to the next great product.
Or Apple could stay the course.
John Martellaro is a senior scientist and author. A former U.S. Air Force officer,he has worked for NASA, White Sands Missile Range, Lockheed Martin Astronautics, the Oak Ridge National Laboratory and Apple Computer. During his five years at Apple, he worked as a Senior Marketing Manager for science and technology, Federal Account Executive, and High Performance Computing Manager. His interests include alpine skiing, SciFi, astronomy, and Perl. John lives in Denver, Colorado.
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