July 2010 – artdiamondblog.com

Apple Fired Mike Scott for Firing the Laggards

Wozniak writes of pre-1983 management troubles at Apple, in the passage quoted below. The passage highlights that large companies usually lose flexibility in hiring and firing. Good managers who have tacit (or just insufficiently documented) judgment about who the best employees are, have limited ability to act on that knowledge.
I wonder if this is a necessary disadvantage of size, or a disadvantage that is due to our laws, customs and institutions?

(p. 231) By this time, I should point out, Mike Scott–our president who took us public and the guy who took us through the phenomenally successful IPO–was gone. During the time the Apple III was being developed, he thought we’d grown a bit too large. There were good engineers, sure, but there were also a lot of lousy engineers floating around. That happens in any big company.

It’s not necessarily the lousy engineer’s fault, by the way. There’s always going to be some mismatch between an engineer’s interests and the job he’s doing.
Anyway, Scotty had told Tom Whitney, our engineering manager, to take a vacation for a week. And meanwhile he did some research. He went around and talked to every engineer in the company and found out who was doing what and who was working and who wasn’t doing much of anything.
Then he fired a whole bunch of people. That was called Bloody Monday. Or, at least, that’s what it ended up being called in the Apple history books. I thought that, pretty much, he fired all the right ones. The laggards, I mean.
And then Mike Scott himself was fired. The board was just very pissed that he’d done this without a lot of backing and enough due process, the kind of procedure you’re supposed to follow at a big company.
Also, Mike Markulla told me Mike Scott had been making a lot of rash decisions and decisions that just weren’t right. Mike thought Scotty wasn’t really capable of handling the company given the point and size it had gotten to.
I did not like this one bit. I liked Scotty very, very much as a person. I liked his way of thinking. I liked his way of being able to joke and be serious. With Scotty, I didn’t see many things fall (p. 232) through the cracks. And I felt that he respected the good work that I did–the engineering work. He came from engineering.
And as I said, Scotty had been our president, our leader from day one of incorporation until we’d gone public in one of the biggest IPOs in U.S. history. And now, all of a sudden, he was just pushed aside and forgotten.
I think it’s sad that none of the books today even seem to recall him. Nobody knows his name. Yet Mike Scott was the president that took us through the earliest days.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Capitalism is Not a Zero-Sum Game

The Wall Street Journal on 7/12/2010 ran the above photo on the top of its front page and referred to articles inside on the final game of the 2010 World Cup. Their caption was: “120 minutes, a record 13 yellow cards and a single goal: Andrés Iniesta, right, celebrates scoring to beat the Netherlands in the World Cup; Dutch player Gergory van der Wiel, left, buries his face.” Source of photo: http://www.zumapress.com/images/SIGMA/IMAGES312/20100711_zaf_d20_347.pre (sic)

What a beautiful picture for illustrating a zero-sum game. Football (or soccer) is a zero-sum game—Spain can only win, if the Netherlands lose.
Capitalism is sometimes compared to sports, because both involve competition. In the short-run competition of capitalism, sometimes one “team” wins and another “team” loses. But in the longer run, the essential fact about capitalism is not competition, but innovation. And in the longer run triumph of innovation, all can win.
When Ghiberti and Brunelleschi competed to build the Gates of Paradise, Ghiberti ended up building the doors. But it would be a mistake to see him as the winner and Brunelleschi as the loser. Brunelleschi moved on to build the Duomo, and everyone won.

Finland Approves Two New Nuclear Power Plants

(p. B5) The Finnish Parliament approved the construction of two nuclear power plants on Thursday, the latest victory for proponents of atomic energy in Europe.

Just two weeks ago, the Swedish Parliament narrowly voted to allow the reactors at 10 nuclear power plants to be replaced when the old ones are shut down — a reversal from a 1980 referendum that called for them to be phased out entirely.
Nuclear power fell out of favor in much of Europe after the 1979 accident at Three Mile Island in Pennsylvania and the 1986 disaster at Chernobyl, Ukraine.
But in an era of concern about dependence on foreign supplies of fossil fuels and increases in atmospheric carbon, there is renewed interest in electricity generated by nuclear fission.
“Over all, opinions are firming and more positive,” Ian Hore-Lacy, a spokesman for the World Nuclear Association, said of the European mood. “People are less concerned about waste because they’ve seen it’s not a drama, and it’s been well managed.”

For the full story, see:
AVID JOLLY. “Why Is the Gulf Cleanup So Slow? There are obvious actions to speed things up, but the government oddly resists taking them..” The New York Times (Fri., July 2, 2010): B5.
(Note: the online version of the article is dated July 1, 2010.)

“A Rare Phenomenon in Europe — A Genuine Business Celebrity”

“Nicolas Hayek was asked to help shut the troubled Swiss watch industry, but instead he revived it by introducing the Swatch.” Source of caption and photo: online version of the NYT article quoted and cited below.

Richard Langlois has used the story of Nicolas Hayek to illustrate why Schumpeter was wrong when he worried that the entrepreneur might become obsolete.

(p. A23) Nicolas Hayek, a Lebanese-born business consultant who is widely credited with having saved the Swiss watch industry with the introduction of the Swatch, the inexpensive, plastic — and, as it transpired, highly collectible — wristwatch that made its debut in 1983, died Monday in Biel, Switzerland. He was 82.

Mr. Hayek, a founder and the chairman of the Swatch Group, died of heart failure while working at the company’s headquarters, according to an announcement on the company Web site.
The formation of the Swatch Group, which in addition to Swatch today comprises high-end watch brands like Breguet, Omega, Longines, Tissot, Calvin Klein and Mido, made Mr. Hayek one of Switzerland’s wealthiest men. The exquisite irony is that the company came about after Mr. Hayek was brought in to help shut the foundering Swiss watch industry altogether.
A flamboyant figure with a roguish sense of humor, Mr. Hayek was “a rare phenomenon in Europe — a genuine business celebrity,” as The Harvard Business Review described him in 1993.

For the full story, see:
MARGALIT FOX. “Nicolas Hayek Dies at 82; His Swatch Saved an Industry.” The New York Times (Tues., June 29, 2010): A23.
(Note: the online version of the article is dated June 28, 2010.)

Nicolas Hayek’s entrepreneurship is nicely summarized and analyzed on pp. 59-65 of:
Langlois, Richard N. The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy. London: Routledge, 2006.

The Problems of Design by a Marketing Committee

(p. 226) So why did the Apple Ill have so many problems, despite the fact that all of our other products had worked so great? I can answer that. It’s because the Apple III was not developed by a single engineer or a couple of engineers working together. It was developed by committee, by the marketing department. These (p. 227) were executives in the company who could take a lot of their power and decide to put all their money and resources in the direction of their own ideas. Their own ideas as to what a computer should be.

Marketing saw that the business community would be the bigger market. They saw that the typical small businessman went into a computer store, bought an Apple II, a printer, the VisiCalc spreadsheet program, and two plug-in cards. One was a memory card, which allowed them to run larger spreadsheets. And the other was an eighty-column card, which allowed them to present eighty columns of characters across the video display, instead of the normal forty. Forty columns was the limit of American TVs.
So they came up with the idea that this should all be built into a single machine: the Apple III. And it was built.
Initially there was virtually no software designed for the Apple III. Yet there were hundreds of software programs you could buy for the Apple II. So to have a lot of software right away, Apple built the Apple III as a dual computer–there was a switch that let you select whether the computer started up as an Apple II or as an Apple III. (The Apple III hardware was designed to be extremely compatible with the Apple II, which was hard to improve on.) It couldn’t be both at. once.
And it was here they did something very wrong. They wanted to set the public perception of the Apple III as a business computer and position the Apple II as the so-called home hobby machine. The little brother of the family. But get this. Marketing had us add chips–and therefore expense and complexity–to the Apple III in order to disable the extra memory and eighty column triodes if you booted it up as an Apple II.
This is what killed the Apple Ill’s chances from the get-go. Here’s why. A businessman buying an Apple II for his work could easily say, “I’ll buy an Apple III, and use it in the Apple II mode since I’m used to it, but I’ll still have the more modern machine.” (p. 228) But Apple killed the product that businessman would want by disabling the very Apple II features (extra memory and eighty- column mode) he was buying the computer for.
Out of the chute, the Apple Ill got a lot of publicity, but there was almost nothing you could run on it. As I said, it wasn’t reliable. And in Apple II mode, it was crippled.
To this day, it boggles my mind. It’s just not the way an engineer–or any rational person, for that matter–would think. It disillusioned me that big companies could work this way.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

The British Museum Collaborating with Wikipedia

“Two visitors from Wikipedia, Liam Wyatt, left, and Joseph Seddon, at the British Museum.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. C1) The British Museum has begun an unusual collaboration with Wikipedia, the online, volunteer-written encyclopedia, to help ensure that the museum’s expertise and notable artifacts are reflected in that digital reference’s pages.

About 40 Wikipedia contributors in the London area spent Friday with a “backstage pass” to the museum, meeting with curators and taking photographs of the collection. And in a curious reversal in status, curators were invited to review Wikipedia’s treatment of the museum’s collection and make a case that important pieces were missing or given short shrift.
Among those wandering the galleries was the museum’s first Wikipedian in residence, Liam Wyatt, who will spend five weeks in the museum’s offices to build a relationship between the two organizations, one founded in 1753, the other in 2001.
“I looked at how many Rosetta Stone page views there were at Wikipedia,” said Matthew Cock, who is in charge of the museum’s Web site and is supervising the collaboration with Wikipedia. “That is perhaps our iconic object, and five times as many people go to the Wikipedia article as to ours.”
In other words, if you can’t beat ’em, join ’em.
Once criticized as amateurism run amok, Wikipedia has become ingrained in the online world: it is consulted by millions of users when there is breaking news; its articles are frequently the first result when a search engine is used.
. . .
(p. C6) Getting permission to work with Wikipedia was not as hard a sell as he expected, Mr. Cock said. “Everyone assumed everyone else hated it and that I shouldn’t recommend it to the directorate,” he said. “I laid it out, put a paper together. I won’t say I was surprised, but I was very pleased it was very well received.”
He said he had enthusiastic support from four departments, including Greek and Roman antiquity and prints and drawings. “I don’t think it is just the young curators,” he added.

For the full story, see:
NOAM COHEN. “Venerable British Museum Enlists in the Wikipedia Revolution.” The New York Times (Sat., June 5, 2010): C1 & C6.
(Note: ellipsis added.)
(Note: the online version of the article is dated June 4, 2010.)

More on How Federal Regulations Delay Oil Cleanup

(p. A15) First, the Environmental Protection Agency can relax restrictions on the amount of oil in discharged water, currently limited to 15 parts per million. In normal times, this rule sensibly controls the amount of pollution that can be added to relatively clean ocean water. But this is not a normal time.

Various skimmers and tankers (some of them very large) are available that could eliminate most of the oil from seawater, discharging the mostly clean water while storing the oil onboard. While this would clean vast amounts of water efficiently, the EPA is unwilling to grant a temporary waiver of its regulations.
Next, the Obama administration can waive the Jones Act, which restricts foreign ships from operating in U.S. coastal waters. Many foreign countries (such as the Netherlands and Belgium) have ships and technologies that would greatly advance the cleanup. So far, the U.S. has refused to waive the restrictions of this law and allow these ships to participate in the effort.
The combination of these two regulations is delaying and may even prevent the world’s largest skimmer, the Taiwanese owned “A Whale,” from deploying. This 10-story high ship can remove almost as much oil in a day as has been removed in total–roughly 500,000 barrels of oily water per day. The tanker is steaming towards the Gulf, hoping it will receive Coast Guard and EPA approval before it arrives.

For the full story, see:

PAUL H. RUBIN. “Why Is the Gulf Cleanup So Slow? There are obvious actions to speed things up, but the government oddly resists taking them..” The Wall Street Journal (Fri., July 2, 2010): A15.

Android App Phones Play “One Seriously Crazy Game of Leapfrog”

“The Droid X is the latest “best Android phone on the market.”” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) You think technology moves too fast now? You think your camera, camcorder and computer become obsolete quickly?

Try buying an app phone. In this business, the state of the art changes as often as Lady Gaga changes outfits.
Suppose, for example, that you want one of the increasingly popular phones that run Google’s Android software.
Last November, you might have been tempted by the Motorola Droid, “the best Android phone on the market.” A month later, the HTC Hero was “the best Android phone on the market.” By January, “the best Android phone yet” was the Nexus One. In April, “the best Android device that you can purchase” was the HTC Incredible. In May, “the best Android phone on the market” was the Sprint Evo.
Either “the best Android phone on the market” is a tech critic’s tic, or we’re witnessing one seriously crazy game of leapfrog.
The latest buzz is about the Motorola Droid X, which Verizon will offer in mid-July for $200.
. . .
(p. B8) . . . , it’s thrilling to see the array of excellent app phones that the original iPhone begat. If you who crave power, speed, flexibility, dropless calls an almost-Imax screen and Verizon’s network (as opposed to Sprint and its similar Evo), the Droid X is a big, beautiful contender for the “best Android phone on the market” crown.
This month’s crown, anyway.

For the full story, see:

DAVID POGUE. “State of the Art; Big Phone, Big Screen, Big Pleasure.” The New York Times (Thurs., July 1, 2010): B1 & B8.
(Note: ellipses added.)
(Note: the online version of the article is dated June 30, 2010.)

Commodore, Atari, and Some Venture Capitalists, Refused to Fund Jobs and Wozniak

(p. 196) After Commodore turned us down, we went over to Al Alcorn’s house. He was one of the founders of Atari with Nolan Bushnell, and he was the one who’d hired Steve to do video games there two years before.

Now, I knew Al knew me. He knew I had designed Breakout, the one-player version of Pong. I remember that when we went to his house I was so impressed because he had one of the earliest color projection TVs. Man, in 1976, he would have been among the first people to have one. That was cool.
But he told us later that Atari was too busy with the video game market to do a computer project.
A few days after that, venture capitalists Steve had contacted started to come by. One of them was Don Valentine at Sequoia. He kind of pooh-poohed the way we talked about it.
He said, “What’s the market?”
“About a million,” I told him.
“How do you know?”
I told him the ham radio market had one million users, and this could be at least that big.
Well, he turned us down, but he did get us in touch with a guy named Mike Markkula. He was only thirty, he told us, but already retired from Intel. He was into gadgets, he told us. Maybe Mike would know what to do with us.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

“We’re Spending at a Rate that’s Just Unsustainable”

George Shultz, former Dean of the University of Chicago Business School, former Secretary of the Treasury, and former Secretary of State. Source of photo: online version of the NYT article quoted and cited below.

(p. 12) What do you make of the direction the Republican Party has taken since you served in Washington? Isn’t the Tea Party a corruption of the values you stood for?
From what I understand of it, it is a reaction, which I share, to the fact that our government seems to have gotten out of control. We’re spending at a rate that’s just unsustainable.
That’s a legacy of the Bush era, I guess.
Everybody is conveniently blaming everything on Bush, but he’s not responsible for what’s happened in the last year.
You’ll be 90 in December. How are you?
I’m terrific. Feeling great. I’m vertical, not horizontal. That’s a big thing.

For the full interview, see:

DEBORAH SOLOMON. “Questions for George Shultz; The Statesman.” The New York Times Magazine (Sun., July 4, 2010): 12.
(Note: bolding of interviewer questions was in original.)
(Note: the online version of the article is dated June 28, 2010.)