Friday, January 03, 2014

Competence, Creativity, Mastery, Genius: The Essential Role of Risk

When risk vanishes, so does creativity.

Which characteristics lead to success? Which lead to greatness? Let's start by pondering companies that were once dominant in their respective fields: Microsoft and Nokia. Microsoft recently bought Nokia's mobile phone business, once valued at $240 billion, for $7.2 billion. Nokia's share of the global smart-phone business is around 4%. Microsoft's share of the global smart-phone software market is less than 1%, despite spending billions of dollars developing and promoting its mobile software.

Bill Gates created a powerhouse based on two principles--monopoly (getting a lock on the PC market as the default operating system) and copying and/or buying successful competitors. MSFT would then slowly increase their market share with two strategies: integrate the new software into their Windows/Office monopoly and keep adding features. In the case of web browsers, this was a successful strategy, as Microsoft's IE (Internet Explorer) overcame Netscape Navigator and its offspring, Mozilla, to dominate the browser market.

In the gaming space, Microsoft took on the established leaders with XBox, using its cash flow to develop the platform during the initial money-losing years--losses that would have doomed less well-funded companies.
Under CEO Steve Ballmer, these strategies have failed spectacularly. Microsoft has continued buying companies left and right, and spent a reported $10 billion trying to compete with Google in search. Its search engine, Bing, remains an also-ran. MSFT also spent billions attempting to dominate the mobile software space, but the results have been catastrophic: MSFT's share of mobile software has declined from around 10% to 1%.

Microsoft's tablet is also an also-ran. Its plan to leverage the XBox platform into the convergence-TV space has also come up short of expectations.

Microsoft's core monopoly continues to generate billions in profits because it is the tech equivalent of a utility: anyone who buys a PC has to pay MSFT $100 for the operating system, and if they are in any sort of business or job that requires computers, then they also have to pony up $300-$500 for Office.

But MSFT's core monopoly is under threat as Google's free operating system Chrome expands from mobile phones to tablets. As PCs lose their dominance, so too does MSFT. If Chrome is good enough to power tablets, why not PCs? Google already offers Google Docs as an alternative to Office. If someone comes up with Word-Lite and Excel-Lite which can open Office docs, MSFT's last bastion of monopoly will face real competition.

Here is an interesting quote on the tone-deaf corporate culture that leads to systemic failure: (Nokia Deal Marks a New Chapter for Microsoft)

"It is hard to stress the importance of culture for a technology company; after all it is a transit system for creativity. In an industry that was moving fast, Microsoft became fat and slow. Its products suffered. This brings us to Windows 8. I installed a preview version of Windows 8 on my computer a few months before it was officially released and was shocked at how horrible the product was. I am a computer geek, but I could not figure out how to use that product. Windows 8 was not just buggy, it was thoroughly terrible. 
To be effective and well compensated (within Microsoft), employees don’t need to be good at their jobs, they need to be good politicians. This turned Microsoft from a technology company into the U.S. Congress and therefore its software products started to resemble legislature by Washington’s finest — bulky and full of pork."
Tech darlings Samsung, Google and Apple are also huge companies with plenty of political jockeying and wasted resources--it goes with bureaucratic bloat. Even back in 1983, a few years after Apple went public, Steve Jobs had to physically and managerially sequester the Macintosh development team from the bureaucracy of Apple.

Nokia and Blackberry both squandered dominance and have shrunk to irrelevance. Microsoft is heading down the same path. On the surface, the management of all three firms was competent; but competence doesn't spawn Creativity, Mastery and Genius; competence in a no-risk environment leads to failure.

I think we can draw several conclusions from the MSFT/Nokia story.

1. Doing what worked spectacularly in the past is not guaranteed to keep working.
2. When risk vanishes, so does creativity.

When management and employees alike feel the security of dominance and near-monopoly, they are free to indulge in bureaucratic infighting and loss of focus.When risk has been vanquished, there is no compelling need to keep in touch with the market and customers: dominance/monopoly means they have to take whatever we provide and like it.

Without an awareness of risk, even competence disappears. Creativity, mastery and genius either fall on parched, dead soil or are ruthlessly suppressed as political threats.

I think the same is true of individuals and nations: competence can be reached with practice, but Creativity, Mastery and Genius all require space for spontaneity and risk.

I came across the 1982 obituary of Arthur Rubinstein, one of the 20th century's most famous pianists. I think his story illustrates the limits of practice and competence.

Rubinstein was a bon vivant, and this persona masked the type of practice he undertook in his 20s to acheive mastery. The cliche is that 10,000 hours of practice yields mastery, but this turns out to be false: only practice with the express purpose of getting better has any effect. For Rubinstein, getting better meant being technically good enough to become expressive and spontaneous. 
What Mr. Rubinstein offered, above all others, was the ability to transmit the joy of music.
In a recording session for RCA Victor Records, in Webster Hall here, he would play and replay a piece until he was satisfied that it was his best; and before a concert he would practice, particularly passages that he thought he might have difficulty with. Nothing less than perfection was tolerated. 
Practice for its own sake, however, was not Rubinstein's notion of how to extract music from the printed notes. "I was born very, very lazy and I don't always practice very long," he said once. "But I must say, in my defense, that it is not so good, in a musical way, to overpractice. When you do, the music seems to come out of your pocket. If you play with a feeling of 'Oh, I know this,' you play without that little drop of fresh blood that is necessary -and the audience feels it." 
On another occasion he explained in his tumbling English his philosophy this way: "At every concert I leave a lot to the moment. I must have the unexpected, the unforeseen. I want to risk, to dare. I want to be surprised by what comes out. I want to enjoy it more than the audience. That way the music can bloom anew." 
Another ingredient of Rubinstein was an unusually fine ear that, among other things, permitted him to spin music through his mind. "At breakfast, I might pass a Brahms symphony in my head," he said. "Then I am called to the phone, and half an hour later I find it's been going on all the time and I'm in the third movement." 
In his late 20s, he began to take stock of himself as an artist. The result was the end of his days as a playboy and intensive study and practice - six, eight, nine hours a day. In the process he brought discipline to his abundant temperament and intelligence to his grand manner."
Perhaps Competence, Creativity, Mastery and Genius form a sort of matrix. Creativity is limited without basic competence, but competence alone is not fertile ground for creativity. Technical mastery does not lead to genius unless the creativity born of risk and spontaneity is allowed to bloom.

This essay was drawn from Musings Report 51, one of the weekly reports sent exclusively to subscribers and major contributors (i.e. those who contribute $50 or more annually). 

The Nearly Free University and The Emerging Economy:
The Revolution in Higher Education

Reconnecting higher education, livelihoods and the economy

With the soaring cost of higher education, has the value a college degree been turned upside down? College tuition and fees are up 1000% since 1980. Half of all recent college graduates are jobless or underemployed, revealing a deep disconnect between higher education and the job market.

It is no surprise everyone is asking: Where is the return on investment? Is the assumption that higher education returns greater prosperity no longer true? And if this is the case, how does this impact you, your children and grandchildren?

go to Kindle edition
We must thoroughly understand the twin revolutions now fundamentally changing our world: The true cost of higher education and an economy that seems to re-shape itself minute to minute.

The Nearly Free University and the Emerging Economy clearly describes the underlying dynamics at work - and, more importantly, lays out a new low-cost model for higher education: how digital technology is enabling a revolution in higher education that dramatically lowers costs while expanding the opportunities for students of all ages.

The Nearly Free University and the Emerging Economy provides clarity and optimism in a period of the greatest change our educational systems and society have seen, and offers everyone the tools needed to prosper in the Emerging Economy.

Kindle edition: list $9.95 

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify. We will cover the five core reasons why things are falling apart:

go to print edition1. Debt and financialization
2. Crony capitalism
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy

Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Once we accept responsibility, we become powerful.

Kindle: $9.95       print: $24

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