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Sunday, November 20, 2016

Apple - The Strategy!

When Steve Jobs came back to Apple in 1997, the product line then was confusing. When he went to the VP of Marketing and asked him which Computer he would suggest given the requirement of himself, the VP offered 3 different choices. That incident is a testimony to the fact that over the years, the product line of Apple became confusing. 

Then Steve Jobs called a meeting of strategy and put forward his thoughts on how the product line should look like going forward and he gave a shocker to the whole team when he said, he's going to kill all the existing products. He absolutely hated people who gave presentations on slides and asked them instead to take a marker and write it on the board because he believed people should know what they are talking about and when they know what they are talking about, they don't need slides to assist them. So in his trademark style went to the white board and drew this simple 2 X 2 matrix which went on to became the one single page of strategy for Apple. The matrix looked like this: 

Over the years Nomenclature changed but the strategy remained the same. iMac remained iMac. iBook became Macbook Air, Power Mac became Mac Pro and Power Book became Macbook Pro.

This slide explained the vision for Apple. The need of the hour for them was to eliminate the clutter of thinking users have to go through before they bought a laptop or a desktop from Apple. Steve Jobs felt, this is the way to move forward. There should be one choice for each of the use case: Consumer Desktop, Consumer Laptop, Professional Desktop, Professional Laptop. That's it. No different products for the same use case. 

Then Apple started with iMac - the consumer desktop in 1998 and went on to fill the parts of the grid over the years. Now that we have the power of hindsight, we can admire how logical and correct the decision was but for the people who were at Apple, it was a nightmare. 

Firstly, unlike many other companies where the teams were formed around function, the teams at Apple are made around products. ie., iPhone has a team, iPad has a team, Mac has a team and so on. So to execute this kind of strategy where in 40 different products are brought down to only 4 needs a lot of management power and consolidation. Management needs to fire people to make this consolidation happen which in itself is a difficult task. They need to identify the right composition for the team so that the power centres are proper. 

Secondly, Apple didn't fell in the trap of cost cutting and instead focussed on making great products. Apple is loosing money like crazy when Steve Jobs came back and the logical step for any CEO to do is to fire people, decrease incentives and other bonuses. These kind of strategies not only suffocate people but kills the innovative vigour needed to make a great product happen and as they believe, Apple is made not by a bunch of scientists but a team of Artists! So the focus of Steve Jobs when he came back was always to innovate than cutting down the costs.

Thirdly, it may sound trivial but the right incentive structure is very important for a company like Apple that not just focuses on great products but on all these products working together. In any other company in the same industry the incentive system is based on the performance of that particular division. For Eg, Windows team is incentivised based on the sales of Windows and Office team is incentivised based on the sales of MS Office in Microsoft. But the case at Apple is completely different. Every division receives incentives based on the overall performance of Apple. ie., even iPhone brings two-thirds of profits of all the products combined, Apple TV team and iPhone team are incentivised in the same manner. This decision by management of Apple is really important for 2 reasons:

  • When an organisation grows, divisions fight for resources and attention from top management. This creates a vicious culture where the company is seen as a conglomerate with many divisions and individual P&L accounts. This is not at all good for a company that operates in a single industry and so, fights happen between divisions all the time. In case of Apple, for an iPhone team to receive proper incentives, Apple TV team has to perform as well. This creates a collaborative environment by definition.
  • Apple is a company that is built around the reputation of all the devices working seamlessly. The features like - handover where in you can take a call of an iPhone in a Mac or coping something in iPhone and pasting it on a Mac or even unlocking a Mac automatically with Apple watch requires enormous cross collaboration effort. This can be possible only through the organisational and incentive structure Apple put in place. 
We can attribute various other factors to why Apple is so successful but their strategy and the way they went about executing the vision which is as important as formulating a strategy, makes them stand apart in the industry. When Steve Jobs said "we think we have the right architecture not just in silicon but in the organisation to build these kinds of products" while introducing iPad 2, (video linked below) this is what he meant!

Sunday, November 13, 2016

3D Printing: From Stones To 3D Printing

"If a picture is worth a thousand words a prototype is worth a thousand pictures."

Most of the people now know or at least have heard about 3-D printing. For those who have not heard of, it is the process of making three dimensional solid objects from a digital file using a 3-D printer.

Manufacturing has always played the most important role in all sorts of endeavour of the mankind. Printing dates back to the time when Johannes Gutenberg  introduced printing to the Europe and the World through a printing press thus enabling the dissemination of knowledge throughout the world in the form of Books. At that time printing was done on 2 dimensions however, printing has grown by leaps and bounds to manifest into its present form known as 3-D printing.

A 3-D printer can make copies of any object in 3 dimensions unlike a conventional printer thus making even the complex processes easier many times. 3-D printing is achieved through additive manufacturing. Additive process creates objects by laying down successive layers of material till the object is created.

Nearly three decades ago before machine parts, toys, artificial organs were created engineer Charles Hull printed a small cup using a plastic material and ultraviolet light. He named this process stereo-lithography and got it patented in 1986. Stereo-lithography is the process for creating prototypes in a layer by layer fashion using photo polymerization ,a process by which light causes chain of molecules to link together forming polymers.It is one of the many methods for creating 3-d printed objects.

Slowly and slowly this new technology started gathering attention of manufacturers for use in prototyping. Chuck Hull founded 3-D systems in 1986 to sell 3-D printers to  the likes of Mercedes Benz  and General motors. Competition rose in 1989 when Stratasys, another 3-D company was founded. Stratasys used Fused deposition modeling which layer-by-layer building of the object from the bottom up by heating and extruding thermoplastic filament through a nozzle of the 3-D printer which is called an Extruder in 3-D printing industry.

There are many processes used for 3-D printing however the two processes mainly used for 3-D printing are Stereolithography and Fused deposition modeling. Let’s have a look at the difference between the two:

3-D systems use stereo-lithography while companies like Stratasys employ fused deposition modeling technology. For a more precise and detailed objects laser based stereo-lithography process is used. Laser based process employs usually a UV laser which is focussed on to a vat of photopolymer resin. Computer aided design softwares are used to prepare designs of the object to be printed after which UV laser is used to draw the design on the photopolymer surface.Projection based lithography(DLP) employs projector below the resin tanks to project the layers at once. DLP can print objects finer than even Laser based stereolithography however its capacity is limited in terms of volume.Whatever the processes may be but they all are being used for one or the other purpose.

3-D printing today is being used from creating parts of planes to creating 3-D printed houses. It is also being used for creating artificial ears,kidneys,Prosthetic Hands with the help of patient's tissues thus opening new doors for such patients while at same time reducing the grave possibility of rejection by the body such as in case of Kidney transplants. 3-D printing has also been used lately to print eatable items thus bringing more options for the customers.

Parts used in space shuttles are today being created using 3-D printing technology. 3-D printers are today being manufactured for the households thereby enabling the customers to print whatever they need, designs for which are  available on the internet.

However, with positives every invention brings with itself some negatives as well.Recently an activist Cody Wilson 3-D printed a gun which created a lot of fuss in the media about the possible threats which 3-D printing brings with itself such as the existence of the design of a gun on every computer.

So, while the advantages of 3-D printing include Rapid prototyping, more jobs, hope for Medical patients its disadvantages include the possible increase of Dangerous items.With the advantages of 3-D printing, mankind may be entering a new post-industrial manufacturing age where products are significantly cheaper and built quicker than ever before, however the disadvantages of 3-D printing needs to be known to be better understood and mitigated against.

Sunday, November 06, 2016

Cryptocurrency - The End Of Money?

We spend a major part of our life chasing money and accomplish our dreams but its also an instrument of destruction some might say evil driving criminals to lie, steal and even murder. The existing Banking system derives enormous value from society and it is parasitic in nature. Money is the catalyst for the worst and the best of human endeavours.

All civilizations are based on currency, go back to the earliest of the earlier civilizations and you shall find how important a role money plays in the development and running of a civilization. However it has always been a subject of interest just like an unsolved mystery as to how does money runs through the whole world.

Traditionally measure of an individual’s potential was based on the amount of cash he/she used to have in his/her vaults. However time brought an enormous change and no more do we see people carrying loads of cash, in fact people now rely more on the amount they hold in their bank accounts connected via a small yet important interface and a significant invention to the humankind known as an ATM card.

But why do we need the traditional forms of currency like Dollar, Sterling Pound, Yen or Rupee when all we are doing is transferring money online? In Britain as much as 97% of the transactions are done online then why do we need banks? What if technological innovation allowed everyone to carry bank in their pockets to create a currency free from taxes and banking fees?

Bitcoin is a cryptocurrency, now what does a crypto currency means and why did it come into existence, was there really a need for such a currency.

In the ancient civilizations currency existed in the form of a commodity money (Barter system), however soon people realized the need of currency 

There are 5 important characteristics for a currency to be accepted universally

1.It should be relatively scarce
2.Easily recognizable
3.It can be cut into smaller pieces
4.One can substitute one piece with other piece of equal value
5.One can carry it around without too much trouble.

Commodity money are subject to their availability thus decreasing their durability.

Enter physical currency in the form of coins, however coins were subjected to debasement by the central authority that issued them.

Debasement is the practice of lowering the value of currency. It is particularly used in connection with commodity money such as gold or silver coins. A coin is said to be debased if the quantity of gold, silver, copper or nickel is reduced.

Enter currency notes., Currency notes were printed on the promise of an individual to pay a certain amount of gold or silver coins. Over generations the concept of paper money revolutionized and became popular in the present day countries .

In the present day countries currency notes are printed only on the order of the central bank such the Federal reserve in USA or Reserve Bank in India. The central banks are supposed to print money proportionate to the amount of gold in the bank’s reserve however this does not happen anymore. Banks print money way more than the gold reserve on the basis of concept of debt. Suppose you deposited Rs 10 lakh in your bank account. Banks are custodians of your money right? Wrong, this money deposited is now bank’s property on their balance sheets and it can do virtually anything with this money including printing new money. Lets understand this:

You hold 10 lakh ruppes but bank keeps only 1 lakh rupees while lending the other 9 lakh to say Shyam for starting a business on his promise of paying back in a certain time interval. In the bank’s computer you still have 10 lakh rupees but shyam now has 9 lakh worth of virtual money created by the bank. This is called debt.

This process of loaning put money more than the reserve is called fractional reserve banking.Thus entire system is based on trust and debtor’s promise to payback. If only 3% of people demand their money at the same time this run on the banks would reveal the truth however this happens rarely. Thus came the need of cryptocurrency -Bitcoin is the first recognizable promisable cryptocurrency.

A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature.

Bitcoin is a a decentralised peer to peer payment network. Since it is decentralized it cannot be controlled by any government. Bitcoin is a shared code that creates a global payment network using internet. Bitcoins are virtual currency, digital money created stored exchanged on network. But unlike virtual currency created by central banks this is created with math. Bitcoin is an open source software protocol thus anyone can use it and no one can control it and every change is transparent. Any shared info can be flawed and corrupted then how do we know that bitcoin is safe.

In finance we rely on third party like banks and other financial institutions. We trust that their digital ledger balance a financial system that cuts out these middlemen could be faster cheaper and most secure. A bitcoin is not a file on a computer, it is an entry in the publicly distributed database called the block chain. Just like a ledger, bitcoin’s ledger is a block chain which keeps track of all the transactions ever performed since its inception.When bitcoin is sent from one digital wallet to other what they are really sending is control over that part of the database code that is unique for the new owner. Every transaction performed is simultaneously updated across all the peers or the bitcoin miners in the block chain.

Each bitcoin miner has a complete and ana identical copy of the ledger and since the block chain is public it cannot be controlled by any single miner in the network. Bitcoins are created by bitcoin miners using special softwares to solve math problem and a re issued a certain number of bitcoins in exchange.This provides a smart way to issue the currency.

Incase of bitcoin math problems act as the gold reserves, the more the number of solved problems the more is the number of bitcoin generated. Bitcoins are created at a decreasing and predictable rate. The number of new bitcoins created each year is automatically halved over time until bitcoin issuance halts completely with a total of 21 million bitcoins in existence thus eliminating the question of not being scarce.

Advantages of bitcoin

Payment freedom
Choose your own fees
Fewer risk for merchants
Security and control
Transparent and neutral

Disadvantages of bitcoin

Degree of acceptance is low as of now 
Ongoing development.

Why do people trust bitcoin?

Much of the trust in Bitcoin comes from the fact that it requires no trust at all.


Coming on to the legality,bitcoin has been reported to be used for illegal purposes like trading drugs like ecstacy and cocaine, however every major currency that we know of has been used by people for illegal purposes. Even credit card systems have been hacked in recent times however the benefits of bitcoin are far beyond its potential drawbacks.

Many companies like Microsoft, Reddit, Subway, Expedia have started accepting bitcoin. Bitcoin seems to be a promising substitute however all the questions need to answered before it gets accepted widely.