Strategy 101 - Mission

The vision statement tells why the organization exists and has a multi-decade time horizon. The mission statement lays out the way the company will move toward the vision, with a three to five year horizon.

The mission statement communicates three essential ideas:

• What the organization does
• Who it does it for
• How it does it differently from others

This can usually be done in no more than three sentences.

Here is an example. This is Google’s mission statement as of 2007, quoted from their web site: "Google's mission is to organize the world's information and make it universally accessible and useful." It says what they do, though at a pretty abstract level. It only implies both who they do it for and how they do it that is special. It is misnamed. This is a vision statement.

Here is our version of a Google mission statement: "We provide the fastest, most useful, and easiest-to-use web search results for anyone with Internet access. We monetize web search through advertising targeted to search results. We provide Internet users with free or low cost web based services that leverage our computing infrastructure and provide us with opportunities to extend the reach of search and targeted advertising."

Like the vision statement, the mission statement is declarative. It starts with "we" or "our" so that it is clear that it belongs to the organization and that everyone in the organization is part of the effort to achieve the mission. It uses no extra words to describe the "what, who and how."

The mission statement tells the organization what it needs to focus on in the near-term in order to make the vision happen.

(The examples used above are made up by the author unless explicitly attributed. Any similarity of these fictional examples to those used by actual organizations is coincidental and unintentional.)

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning.

Strategy 101 - Vision

Business strategy begins with a vision. The vision is often that of the founder of the business, but many companies do not find their vision until they have been in business for years when the founder may no longer be active in the organization. Regardless of when the vision is spelled out, it is only lofty words unless it is the vehicle for the company's leader to drive the entire organization forward, as summarized perfectly by Jack Welch, who said:

"Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion."

The vision is articulated in a vision statement. The vision statement sets a clear, specific, inspirational goal. It does not matter if the goal is achievable so long as it is worth striving toward. The vision statement spells out the desired goal in unambiguous terms.

Here are examples of effective vision statements:

• Our vision is a world without hunger.


• We network the world.


• We put you in control of your finances.


• Our vision is clean, affordable energy for everyone.


• We serve the best pizza in Chicago.

The vision statement is a single declarative sentence. It starts with "we" or "our" so that it is clear that it belongs to the organization and that everyone in the organization is part of the effort to achieve the vision. It uses no extra words to describe the desired end state. It presents a unifying idea that can endure over decades. It should be stable over long periods of time.

The vision statement tells the organization why it exists. The mission statement tells it what it needs to focus on in the near-term in order to make the vision happen. This is the next subject in Strategy 101.

(The examples used above are made up by the author unless explicitly attributed. Any similarity of these fictional examples to those used by actual organizations is coincidental and unintentional.)

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Strategic Planning.

Meebo Needs Milo

Instant messaging company Meebo last week announced that it had raised at least $9 million in another round of venture funding. Meebo is an instant messaging company with some cute technology but it is in a commodity market with little to differentiate its service that cannot and will not be copied by the heavyweights, AOL, Microsoft and Yahoo.

According to VentureBeat, "Meebo exchanges 75 million messages per day, with average sessions of 70 minutes — a length of time that becomes significant if you can advertise creatively during the session." To me, this is a classic case of a Startup in Wonderland generating Tribble Traffic. Tribble Traffic is web traffic that grows like crazy and consumes huge amounts of infrastructure resources, but is maddeningly hard to monetize. Perhaps the Meebos are hoping for their neighbor, Google, to buy them in order to beef up its laggard IM offering, Google Talk. But I advise Meebo to adopt the Web 22 - Where Everybody Has A Share model.

In the Web 22 model you pay people to visit your site, pay them more to click on ads, and pay more again if they then actually buy something. Venture capital is used by Web 22 startups to fund the visitor payments. The VCs raise their funds from the companies that might become advertisers. Advertisers pay the web sites for the clicks, and the sites share that revenue with the clickers. Advertisers also offer rebates to clickers who actually make purchases. This all works because everyone involved in the process has a share!

This business model was actually perfected in World War II and documented by Joseph Heller in Catch-22. Milo Minderbinder, whose Nobel Prize in Economics is long overdue, is the genius behind this business model. In Web 22, no one gets any real money, which is derisively referred to as "old money." All payments are made to a virtual account. The unit of currency is the milo. Milos are usable in any part of the Web 22 economy.

Meebo needs Milo.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Meebo, Venture Capital.

Why iPhone Is Good For Microsoft

While iPhone raises the bar for Microsoft’s Zune clone-and-hone strategy, one aspect of Apple’s iPhone announcement is particularly good for Microsoft. The iPhone will use a version of the Macintosh OS X operating system. Apple has made it clear that this will be a full-function operating system with a touch screen interface replacing the Mac GUI. It will be a closed system, meaning that Apple will control the applications that can run on it. Don't expect to be downloading apps except as carefully controlled extensions of some Apple base application.

Why is this good news for Microsoft? Windows CE is the version of Windows designed for small memory devices. In its most familiar form, Windows CE powers Windows Mobile, which runs PDAs and SmartPhones. Think of Windows Mobile as Windows CE with an interface designed for cell phones and PDAs.

Hmm, that sure sounds similar to OS X with an interface for cell phones, doesn't it? It is. The main difference is that Windows Mobile is implemented by hardware vendors, and they can and most often do allow installation of third party applications. That follows the Microsoft Windows strategy on the PC platform. It is how they got 95% of that market.

The iPhone will raise the expectation of what a cell phone can and should do and how it should do it. This will increase the market for Windows Mobile phones, because Windows Mobile is the best way for phone manufacturers to get full operating system functionality. The bonus is that users get the benefit of adding innovative applications from all sorts of sources. Like games, which were noticeably missing from the iPhone entertainment package. Windows Mobile frees you from dependence on a single software vendor. Apple simply cannot be all things to all people.

Microsoft and others are working feverishly to extend the seasoned capabilities of Windows Mobile to add iPhone-like goodies. The main work will be in extending the touch screen interface, long a part of Windows Mobile, to an on-screen keyboard interface, coupled with button-free capability and a consistent application look-and-feel. This just like what Windows 3.0 brought to the DOS application user interface Tower of Babel when it mimicked the Macintosh user interface in 1990. For the hardware makers, their investment in Windows Mobile implementation skills can be leveraged over a wide range of devices, with or without keys and buttons, with large and small screens and a range of available packaged applications targeted at audience segments large and small.

With 50% gross margins, the iPhone will be very successful for Apple if it gets 5% of the cell phone market of a billion units a year (Apple is looking for just 1% in the first year). Guess who covets the other 95%? Could it be just like in the PC market, Apple extends the envelope and Microsoft gratefully delivers those advances to "the rest of us?"

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Microsoft, iPhone, Apple.

LG Prada Is iPhone Prequel

Yesterday LG Electronics, the number four cell phone maker, announced the LG Prada Phone. It looks like an iPhone. Same form factor. No buttons. Touch-screen. Designed jointly by Korea-based LG and Milan-based fashion house Prada, it is targeted at the well-heeled phone-as-fashion-statement set and will be priced at about $800 when it becomes available in Europe next month. No US availability has been announced yet.

So who copied what from whom? Who innovated? Serendipity?

The vaunted Mac interface was largely inspired in the '80s by work done at Xerox PARC, the infamous lab where Xerox researchers made many technology advances that Xerox never figured out how to take advantage of. Steve Jobs did. He also apparently found inspiration for iPhone from a tablet PC. One now wonders where else the Apple folks found inspiration.

The LG Prada demonstrates that the iPhone design will not be limited to Apple products, Apple's 200 patents notwithstanding. Regardless, the iPhone will still provide the ceiling for the mass market, as discussed in my last post.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Apple, LG, Prada, iPhone.

iPhone A Gift To Cell Phone Manufacturers

Apple's much ballyhooed iPhone could be a real gift to Nokia, Motorola, Samsung and the other cell phone companies. The iPhone may set a boutique ceiling under which the rest can freely harvest large market segments with targeted offerings.

iPhone will be very successful. Apple has made some wonderful design breakthroughs. Ditching keys and making the whole phone into a touch screen is brilliant. But about a billion cell phones are sold each year. Apple is targeting 10 million units in iPhone's first year. That is just one percent of the market. The iPhone will come in two models, one priced at $499 and the other at $599. Those prices require a two year Cingular cell phone service contract. Most cell phones are sold for under $100 and many are free or nearly free with cell phone service contracts. The iPhone thus leaves a lot of customers and a lot of pricing room for the traditional cell phone companies to emulate its form factor and interface, but with reduced functionality aimed at the mass of users with more simple expectations of their phones.

On the other hand, watch for Apple to exploit the iPhone’s high-end niche with offerings aimed at the BlackBerry and Treo market. RIM, Palm and their clones are duly concerned. They need a strategic competitive defense against Apple.

Expect this ceiling to endure. Even as Apple inevitably lowers prices, directly or indirectly, and widens distribution outside the Cingular (AT&T) network, its traditional high-margin appetite will keep it away from the low-end mass cell phone market. Unlike the iPod/iTunes franchise, where Apple controls the entire ecosystem, the cell phone service providers have a lock on services delivered to cell phones. So think about the Macintosh model rather than iPod. Mac too provides a ceiling, in its case for Windows PCs. And we know how that worked out.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Apple, Nokia, Samsung, Motorola, iPhone.

Perhaps It Is Cisco That Is Silly

Here is the latest in the silly tale of the iPhone trademark, as reported on ZDNet.

It seems Cisco, which had acquired the trademark when it bought Infogear in 2000, let the trademark expire. You have to file a "declaration of use" every six years for a federally registered trademark, showing that in fact you have been using it continuously during that period. Cisco failed to do this when it was due in November of 2005. They did file in May of 2006, just under the wire for the six-month grace period the feds allow. It seems, however, that their filing was disingenuous. The just slapped a label that said iPhone on a box of a voip phone they sell. Worse, they put the label outside the shrink wrap. They did not start actually using the name for a phone product until last December.

So it seems they let the trademark lapse. It seems they abandoned it through disuse. It seems they revived it in order to get something from Apple in return for it. It seems they did that too late. It seems they committed perjury in their federal filing.

I accused Apple and Steve jobs of silliness when an Apple spokesperson called Cisco's trademark claims "silly." I may have been the silly one. Then again, there may be more twists as the facts of this silliness unfold.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Apple, Cisco, iPhone.

Five Questions For Steve Jobs

I want to thank Lenny Greenberg, CEO of the Greenberg Technology Group, for suggestions that I have used to formulate the following questions I'd like to ask Steve Jobs in response to his MacWorld keynote in which he announced iPhone, re-announced Apple TV and changed the company's name from Apple Computer to Apple Inc.:

Is Apple a consumer entertainment company or a consumer electronics company? Sure, the iTunes store sells content, but Apple produces none of it. No music, no video, no games. Maybe you forgot you sold Pixar to Disney. Apple seems to now be a gadget shop emphasizing coolness and design.

Where is the game component? Apple TV, described by one wag as "an expensive box that lets you play TV shows on a TV," seems weak. Game consoles rule the living room. Xbox seems to be heading towards adding the same functionality as Apple TV. I had earlier suggested that Apple acquire Nintendo to fill this hole. Ah, well, once again you did not listen to me.

Who will produce the iPhone "for the rest of us?" As Lenny says, "The big mistake is the Cingular [pun intended] relationship with one cell phone provider." There is a huge opportunity for the traditional cell phone makers to fill this void for Verizon and Sprint/Nextel users. And how about a Zune phone that serves them?

Where are the games for iPhone? This seems like a big hole in the iPhone announcement. A game would have been great iCandy (sorry, could not resist) for your keynote. Will Apple provide the support game makers need to develop titles for the iPhone? Your history supporting developers is not especially good.

Why did you let the iPhone name problem occur? I can forgive backdating stock options, but this distracting controversy is inexcusable. It is not like it sneaked up on you. Even Cisco figured you must have agreed to their terms when you announced iPhone and just forgot to tell them so. But, no, your minions are now calling Cisco's ten-year-old trademark "silly." Yup, those Cisco goobers think that owning the name iPhone for phones just might apply to cell phones. Steve, you should have either reached agreement with Cisco or used your vaunted creativity to come up with another name. Silly is as silly does.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Apple.

Apple Inc.-The Zune Attack Is Working

Readers of this blog know what I think the strategic value of Zune is to Microsoft (see Why Microsoft Needs Zune). Zune is Microsoft's weapon designed to keep Apple focusing its resources on iPod and not on freeing OS X to compete generically with Windows. The threat to Microsoft is that OS X sold separately from Mac hardware could break the Windows monopoly hold on 95% of the PCs sold worldwide. The Zune attack on iPod is designed to divert Apple resources to defending iPod and away from even contemplating such a move with OS X.

Steve Jobs yesterday verified that this attack is working. His MacWorld keynote was not about Mac. The Mac was mentioned only in passing. It was not about the great new features coming in the next OS X release. Not a word. It was about iPhone. It was about Apple TV. It did not skewer the latest Windows release, Vista, by comparing it unfavorably to OS X, a traditional part of the Jobs MacWorld performance. No, this year, Jobs skewered Zune. That's what Apple is paying attention to.

It was about Apple transitioning from a computer company to focusing on becoming a consumer entertainment powerhouse, a goal well within its reach. Jobs announced this formal strategy change as the reason Apple Computer was changing its name to Apple Inc. He said Apple now has four product lines: Mac, iPod, iPhone and Apple TV.

What he did not say is that Apple was becoming a software company determined to put OS X on everyone's PC. In Redmond, there were sighs of relief from the executive suite. Vista has been launched with no OS X attack. The Zune attack is paying off.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Zune, Microsoft, Apple.

Apple iPhone Raises Zune Clone-and-Hone Bar

Yesterday, Robbie Bach, president of Microsoft's entertainment and devices division, dismissed the idea of an Apple iPhone. The gist of his comments was that there were too many design problems getting a phone and music player to both work well on the same device. Today, Steve Jobs announced Apple's iPhone with a slick new touchscreen interface and other innovative advances that seem to solve all of those nagging design problems, and then some.

This episode sums up the Microsoft clone-and-hone approach (see yesterday's post for more on clone-and-hone). For all its virtues, Microsoft does not innovate core design. Apple does. Microsoft sees problems. Apple sees opportunities to be creative.

In fact, the main Microsoft challenge is to figure out how to clone the innovations of others without paying too much for intellectual property violations. Let us look to history for an example:

In the 1980s Apple’s Macintosh operating system, with its graphical user interface, gave it a distinct competitive advantage over Microsoft’s character based DOS interface. To hamper Microsoft’s efforts to develop its own GUI, Apple asserted copyright ownership of the "look and feel" of its interface. This included 189 specific elements, like the use of icons, rectangular windows and overlapping windows. Apple then licensed Microsoft the rights to use certain of these elements, but with severe limitations. For example, Microsoft was not permitted to use a trash can metaphor for deleting files; windows had to be arranged side-by-side ("tiled") and not overlapped. These restrictions made the first release of Microsoft Windows clunky and it was notably unsuccessful. That was Apple’s intention.

Microsoft fought back by re-interpreting its license agreement with Apple and pretty much ignoring any restrictions. The Windows GUI soon became very Mac-like. In a series of expensive legal actions starting in 1988, Apple attempted to assert copyyright and contractual violations by Microsoft, finally dropping all claims in 1997 when Microsoft invested $150 million in a then-struggling Apple. In the interim, Windows achieved monopoly status, generating billions of dollars of annual revenue, and the payment to Apple was a trifle to Microsoft.

It will be interesting to see how the Softies do with the iPhone intellectual property. Early in his MacWorld presentation, Jobs was clear, stating, "Boy, have we patented it!" Later, he added that Apple had "filed for over 200 patents for all the inventions in iPhone, and we intend to protect them." This clone won't be quite as easy for the Softies to pull off as the Mac clone was. It should be fun to watch this story unfold.

A footnote: it seems that Apple has reached an agreement with Cisco Systems to use the iPhone brand name, for which Cisco owns the trademark. Chalk up another negotiating coup to Jobs.

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Clone-and-Hone, Zune, Microsoft, iPhone, Apple.

Microsoft, Masters of Clone-and-Hone

While many in the tech gadget world gather at the annual Consumer Electronics Show in Las Vegas this week, most attendees are waiting anxiously to hear what wonder Steve Jobs will announce at MacWorld in San Francisco. Speculation centers on the long-awaited iPhone (though, when it comes, it won't be called that because Cisco Systems owns the iPhone name). Zune watchers wonder what Microsoft's response will be if Apple integrates phone and iPod functionality on a single device.

Which brings up the subject of Microsoft's Zune strategy. I've already written about why I think Microsoft needs Zune (see Why Microsoft Needs Zune). Zune is Microsoft's weapon designed to keep Apple focusing its resources on iPod and not on freeing OS X to compete generically with Windows. Today I'd like to focus on how Microsoft goes about entering a market once it has decided to do so.

Microsoft uses a strategy I call clone-and-hone. In clone-and-hone, you copy the leading market entry (clone), then modify it by learning from the competitor’s mistakes and limitations, and, later, your own experience in the market (hone). When Microsoft attacked Netscape, this became euphemistically known as "embrace and extend." Clone-and-hone is a particularly good strategy when there is a well-established market leader and disruptive innovation is not your strong suit. In Microsoft's case, their strengths are distribution, marketing, wealth and brand.

Thus, Microsoft cloned iPod and iTunes with Zune, with minor attempts at honing. Now they are in the serious honing phase. The problem they face is that pesky Apple keeps innovating. This makes iPod a moving target. So Microsoft needs to wait for the next round of iPod innovation before it does more honing. They need to wait and see what Apple does with this phone thing.

I think this explains why some of the details of Zune are so lame (see, for example, Looney Zune Decision Stifles Gift Sales). Microsoft does not want to sell too many Zunes too soon. They want a more stable target. Of course, the more Apple innovates with iPod, the more it pulls resources away from unleashing OS X against Windows, which is good for the Softies...

Copyright © 2007 Philip Bookman

Technorati: Business Strategy, Clone-and-Hone, Zune, Microsoft.

Deja Vu All Over Again

If imitation is the sincerest form of flattery, IBM continues to flatter Microsoft with effusive sincerity.

I was reading an interview on MIT's Technology Review site today with Kristof Kloeckner, the vice president of strategy and technology for IBM's software group. He discusses IBM's "Information On Demand" concept. This is software that lets you see patterns, trends and other meaning in data. It is IBM's version of the visualization innovations that many companies are now pursuing to make it easier to sift through the vast amounts of data available today for useful, reliable information. (Here is a great example of this.)

Hmm, "Information On Demand" sounds vaguely familiar. Why, yes, it was way back at Comdex in 1990 that Bill Gates gave his famous "Information At Your Fingertips" speech. I dug up some articles about that speech. In it, Gates said:

"Someone can sit down at their PC and see the information that's important for them. If they want more detail, they ought to just point and click and that detail should come up on the screen for them...All the information that someone might be interested in, including information they can't even get today."

Gates spoke of the PC as an aggregator of data. He spoke of search. He spoke of applications that could exchange and share data. He made the case that the PC was ideal for displaying and making sense of all of this, and he did so before there was a worldwide web.

Gosh, those marketing types at IBM are worth every cent they are paid. Substituting "on demand" for "at your fingertips" is certainly a vast leap forward.

I know that "on demand" is a trendy phrase for software-as-a-service and utility computing offerings and such, and IBM has done a lot of branding with it, but really, where has all the creativity gone?

Copyright © 2007 Philip Bookman

Technorati: IBM, Microsoft