Tim Cook take his first major step of reshaping the top executive ranks at Apple. It appears that a battle was brewing within Apple for some time about key design philosophies. Scott Forstall, who apparently has been branded as not being a team players, stumbled of the debacle with the Apple maps.
Citibank’s CEO Viram Pandit was removed through a boardroom coup. There are two questions that the episode raises. Was Pandit truly oblivious to the what the chairman Michael E. O’Neill was up to? Did O’Neill in the end do CITI a favor or has done long-term damage to the morale of the high-level employees. The NY Times reports:
Vikram Pandit’s last day at Citigroup swung from celebratory to devastating in a matter of minutes. Having fielded congratulatory e-mails about the earnings report in the morning that suggested the bank was finally on more solid ground, Mr. Pandit strode into the office of the chairman at day’s end on Oct. 15 for what he considered just another of their frequent meetings on his calendar.
Michael O’Neill is said to have begun building a case to force out Mr. Pandit after Mr. O’Neill became chairman in April.
Instead, Mr. Pandit, the chief executive of Citigroup, was told three news releases were ready. One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his. The abrupt encounter, described by three people briefed on the conversation, included a terse comment by the chairman, Michael E. O’Neill: “The board has lost confidence in you.”
Read full story on NY Times.
You may not have heard it. Magazines, unlike newspapers, are continuing to do well in the age of the internet. But this is apparently not true for News Weeklies in the USA. Newsweek today announced that it will stop its print edition and focus on an electronic edition. The LA Times provides the details. Read Story.
Microsoft is rumored to imitate Apple’s strategy of making both software and hardware.
Microsoft (MSFT) is currently in the midst of a major transition unlike anything the company has dealt with in the past. According to our own sources and multiple subsequent reports, Microsoft is working on its own smartphone. While this would mark the first time Microsoft has launched a self-branded smartphone (we’re not counting the KIN), the implications for the company are much greater than just a phone. Noted industry insider Eldar Murtazin has written a lengthy piece on the company’s upcoming Windows Phone plans, but has also explored some of the reasons why Microsoft is being forced to make its own tablets and smartphones, and most likely its own laptops and desktops as well in the near future.
Source: Yahoo News
After the government did not allow ATT to buy T-Mobile, T-Mobile needed to find a different way to achieve scale and cut costs. Today it announced buying and merging with Metro PCS. Will the firm be able to avoid the fiasco of the Sprint/Nextel merger?
T-Mobile and MetroPCS will continue to operate as separate brands. Throughout the morning, T-Mobile executives sought to allay one of the biggest concerns about the merger, the incompatibility of the company’s network with MetroPCS’ own. John Legere, who will become the chief executive of the combined network operator, argued that the company will slowly move MetroPCS’ customers to its own GSM standard — with the goal of moving the unified entity to the Long Term Evolution technology down the road. The aim was to avoid comparisons to Sprint’s merger with Nextel, which failed at the same task and left that merged company in a far weaker position.
HP has been falling behind Apple and Google and the race to be the leading Silicon Valley company. Now Meg Whitman is trying to turn this former star company around. The NYT reports.
So now Ms. Whitman is focusing her energy on H.P., the company founded by the tech legends William Hewlett and David Packard. Bill and Dave, as they are referred to at the company, spawned Silicon Valley. Last year, H.P. posted revenue of $127 billion. It employs 320,000 people directly, and easily that many again through a network of manufacturers and computer resellers across 170 countries.
TWENTYyears ago, people like Steve Ballmer at Microsoft, Larry Ellison at Oracle, and John Chambers at Cisco Systems heard Kenneth Olsen, then the leader of Digital Equipment Corporation, deride the PC as unsuited for business. Within a few years, DEC had been gobbled up by Compaq Computer. Everyone knows viscerally how fast change can overtake a legacy business — and how hard it is to change.
There’s little glory in managing decline, particularly in an industry in love with what’s next. Apple’s tablets are taking share from PC makers like H.P., but only after Apple had a near-death corporate experience that ended with the return of Steve Jobs. He created a new reality for Apple with its retail stores, something that H.P. can’t copy to sell PCs. I.B.M. also transitioned successfully after billions in losses and years of cuts. Most others ended like DEC.
Yesterday the Apple CEO apologized for Apple’s crummy maps application in iOS 6. The WSJ reports on the financial reason why Apple wanted to dump Google maps.
Maps are a big piece of the Apple-Google rivalry. Opus Research has estimated that mobile ads associated with maps or locations account for about 25% of the roughly $2.5 billion spent on ads in mobile devices in 2012. Google has had mapping software since 2005, and a Google Maps app was pre-installed on the first iPhone starting in 2007. Apple only began building its maps software in 2009 under Mr. Jobs, with an eye toward making its version the default mapping app on the iPhone and, later, the iPad. Apple acquired several companies to construct its mapping technology, as well as using information from third parties, such as navigation system maker Tom Tom NV, before it was ready to boot Google Maps.
Home Depot is not the first company to find out that the strategy that worked well back home does not work in a foreign country. Wal-Mart failed in Germany not realizing that the competitive landscape was different. Starbucks failed in Australia, closing most of its shops because the Australian consumer was used to much sophisticated coffee. The WSJ journal reports on the changes in the Home Depot China strategy after failing to implement the previous one successfully.
Home Depot Learns Chinese Prefer ‘Do-It-for-Me’
The largest U.S. home-improvement retailer, which entered China in 2006, has struggled to gain traction in a country where cheap labor has stunted the do-it-yourself ethos and apartment-based living leaves scarce demand for products like lumber.
Home Depot conceded that it misread the country’s appetite for do-it-yourself products. “The market trend says this is more of a do-it-for-me culture,” a Home Depot spokeswoman said of China.Home Depot is shaking up its strategy by focusing on specialty stores. Three months ago, it opened one paint-and-flooring store and one home-decorations outlet in the northern port city of Tianjin to cater to specific needs and shopping preferences shown by Chinese consumers, the spokeswoman said. It also plans to launch online operations with a Chinese partner, she said, without naming the company.
Home Depot debuted in China with a 12-store acquisition six years ago and the number has since dwindled as it found that Chinese consumers differ from their global counterparts. As Swedish furniture giant IKEA discovered, Chinese consumers will pay for people to do the work for them. Several years ago, the furniture store added services to help customers assemble their furniture.
Home Depot’s closures will cause the company to take a $160 million after-tax charge in the third quarter, a company statement said. The charge will be equal to about 10 cents per diluted share, and will include the impairment of goodwill and other assets, lease terminations, severance and other charges associated with closing the stores.
When a company has a very high financial targets, employees are encouraged to do everything possible to achieve it, which in turn may lead to an unwanted increase in the level of risk that the firm faces. As the FT.com reports, the new leadership of the Deutsche Bank determined that the target was to high. They may have felt that they needed to curb the risk taking in the bank.
Deutsche’s new co-chief executives are expected to make a decisive break with the decade-long era of Josef Ackermann, their predecessor, when they will drop a target of generating a 25 per cent pre-tax return on equity. At a strategy presentation in Frankfurt after 100 days in charge of the bank, Anshu Jain and Jürgen Fitschen are set to announce a “substantially lower return on equity target”, one person close to the situation said.High quality global journalism requires investment. They are also expected to unveil a strategy for much closer integration of the bank’s business lines, make significant changes to the bank’s bonus model and give more details on a plan to take out €3bn of costs.Analysts estimate that the new goal could be in the region of 12 to 13 per cent ROE after tax – a benchmark more commonly looked at by investors than the pre-tax figure.
This is the story of how Apple reinvented the phone. The general outlines of this tale have been told before, most thoroughly in Isaacson’s biography. But the Samsung case—which ended last month with a resounding victory for Apple—revealed a trove of details about the invention, the sort of details that Apple is ordinarily loath to make public. We got pictures of dozens of prototypes of the iPhone and iPad. We got internal email that explained how executives and designers solved key problems in the iPhone’s design. We got testimony from Apple’s top brass explaining why the iPhone was a gamble.
Put it all together and you get remarkable story about a device that, under the normal rules of business, should not have been invented. Given the popularity of the iPod and its centrality to Apple’s bottom line, Apple should have been the last company on the planet to try to build something whose explicit purpose was to kill music players. Yet Apple’s inner circle knew that one day, a phone maker would solve the interface problem, creating a universal device that could make calls, play music and videos, and do everything else, too—a device that would eat the iPod’s lunch. Apple’s only chance at staving off that future was to invent the iPod killer itself. More than this simple business calculation, though, Apple’s brass saw the phone as an opportunity for real innovation. “We wanted to build a phone for ourselves,” Scott Forstall, who heads the team that built the phone’s operating system, said at the trial. “We wanted to build a phone that we loved.”
Ina Fried of the WSJ’s All Things Digital is following the Apple-Samsung Trial and is providing an analysis of all the information the typically secretive Apple is forced to reveal.
At the bottom of the article are links to her other commentaries on the trial.
Dan Levinthal organized a workshop on Evolutionary Perspectives on Strategic Management. Dick Nelson and I faciliated the fourth day on Institutional Environment and Evolutionary Dynamics. Here you can download the syllabus for the day day and the presentation slides.