Apple Case Study 2006

Apple Computer 2006, Case study

I believe many of us are using Apple’s products these days. Personally, I have an iPod touch and iPod Nano, and currently I am thinking of getting a MacBook. To be honest, I did not really like Apple’s products till 6 years ago when they released the iPod Nano. I remember my very first computer  being an Apple PC. It was around 20 years ago and I was so disappointed with the PC. I threw the Apple PC a year later and brought an IBM PC. Why? Simply because I could not play most of the games on the Apple PC and exchange files with my other friends who used IBM PCs. The worst of all, I paid premium price for the Apple PC. It was like spending a lot of money to buy a digital prison for myself. Therefore, my impression of Apple’s products was very poor. I would use “the producer of premium rubbish” to describe Apple in the past.

So, how did  Apple turn-around from producing “premium rubbish” to “premium wonder”? A Harvard Business School case study  titled “Apple Computer, 2006” written by David B. Yoffie and Micheal Slind describes the amazing transformation of Apple. This case study offers a very good insight as to why entrepreneurs should learn and progress from both their successes and failures.

Freakonomics and Super-Freakonomics

                                                      

I came across the book titled  Freakonomics in 2005. A good friend of mine, Bryan recommended the book to me. He told me that the book was about applying economics theories and principles in real life situations. He also said that the content was quite entertaining. I was puzzled by the comment. How can economics be entertaining? I have been studying economic for years since high school. I could never relate economics with entertainment. To be honest, I did not think that economics could be applied in real life as well. They were just theories which only worked out in the ideal world. However, after I have read Freakonomics and its sequels Super-Freakonomics, later published  in 2010, I have to admit that I was wrong.

The authors Steven D. Levitt and Stephen J. Dubner used microeconomics concepts and principles to explore some controversial events and social phenomenon we witness in real life . Such as, why do drug dealers still live with their moms? What makes a perfect parent?  How is a street prostitute like a department-store Santa? Why should suicide bombers buy life insurance? The depths of these case studies were almostacademic standards, and surprisingly, they were all very realistic and interesting.

As the authors stated, the proposition  of writing Frackonomics and Super-Freakonomics was to start a conversation with the general public, not to come up a theory to predict the future and solve problems as many people would expect from economists. However, four key themes were delivered through these unusual case studies. 1) People were always response to incentives.  2) The definition of incentives was dictated by the given environment. 3) Objective statistical analysis could clarify situations and identify possible solutions. 4) Unintended consequences were inherited in every decision.

Getting Past No: Negotiating In Difficult Situation (6/6)

What if, despite all your efforts to build your opponent a golden bridge, he still refuses to come to an agreement? Your natural reaction would be to abandon the problem solving approach, and shift the nature of the negotiation into a power game.  In a power game, you switch from listening and acknowledging to threatening. From reframing your opponent’s position to insisting on your own.  And from building a golden bridge to force him down from his position.  The worst part in  playing  a power game is that you escalate  not only your means, but also your ends. When you invest more of your resources in the battle, you naturally want more from your opponent to compensate for your time and effort. Thus, your goal shift from mutual satisfaction to victory, or from win-win to win-lose.  This is when people say “Screw it! I have had enough of his nonsense. If he is so childish about this, I will teach him a hard lesson!”      

The power game is supposed to work as follows: You threaten or try to coerce your opponent and then he backs down. However, unless you have a decisive power advantage, he usually resists and fights back. He gets angry and hostile, reversing your attempts to disarm him. He sticks to his position even more, frustrating your efforts to change the game. He becomes increasingly resistant to reaching agreement, not only because you may be asking for more but because agreement would now mean accepting defect. This demonstrates the typical power paradox: “The harder you make it for him to say no, the harder you make it for him to say yes.”  

Getting Past No: Negotiating In Difficult Situation (5/6)

The philosophy of “BUILD THEM A GOLDEN BRIDGE” is from one of the Sun Tzu strategy, “Don’t push your enemy to the corner, and build them a golden bridge to retreat across.” Why? Even though you have evaluated the situation objectively (step one), created positive environment to negotiate (step two), and engaged your opponent in problem solving negotiations (step three), you still have to bring he/she to a concrete agreement. Too often, this is where negotiations fall apart, because they underestimate the influence of human factors when they are forming terms and conditions in agreements.    

A classic case study from a spectacular failure of a world’s biggest media merger can demonstrate the devastated power of human influence in negotiating simple details. In 1958, CBS was fighting a hostile takeover bid by media tycoon Ted Turner. Neutharth, president of Gannett, had long had his eye on CBS and had cultivated a cordial relationship with CBS president Tom Wyman. After several exploration meetings the two men reached agreement on most of the fundamental issues. They decided that because of his age and greater experience, Neuharth would become chairman and CEO, while Wyman would become president and chief operating officer. It all went very smoothly, until when executives from both companies began to prepare details. Neuharth described this turning point in his memoir.        

Getting Past No: Negotiating In Difficult Situation (4/6)

Now you have stabilized your mental balance (step one) and created a favorable climate for negotiation (step two). It is time to focus on changing negotiation processes, which is step three“DON’T REJECT… REFRAME".  

Difficult negotiation situations are mostly caused by insisting positions. You job here is to change the process from battling at their positions, to discussing each other's interests. How do you do this? You reframe the negotiation. Instead of, rejecting your opponent point views, you accept it and transform it into the negotiation you want to have.

In here, reframing means that you need to put a problem solving frame around your opponent’s positional statements. You act as if he/she was trying to solve the problem, and thus you draw him/her into the new game, which is your game.  You may ask why I need to change the game, if he/she plays hardball, I can play it too! The reality is that those who initiate tactics like stone walls, personal attacks and tricks, they are very good at them. You rarely have a chance to control of the negotiations. Therefore, you should change to negotiation into a cooperative problem solving game, in which you can control and contribute.

Getting Past No: Negotiating In Difficult Situation (3/6)

After you have regained your mental balance from “the balcony”, you have to help your opponents regain theirs. This is step two:  “STEP TO THEIR SIDE”. The purpose of this step is to disarm their negative emotions towards you, in order to continue negotiations. Often, lots of hostage movies demonstrate this step in great detail. Out of all of them, a movie called “The Negotiator” is the best movie to show how two skillful negotiators accomplish this step in an extremely stressful situation.  

This step  consists of five components: active listening, acknowledge your opponent’s points, agree wherever you can, acknowledge the person, and express your views without provoking.  Principles of these five components are simple, but very powerful. At the beginning, you need to explore your opponent’s mental reality through listening. Then, you connect with your opponent’s mental reality by acknowledging his/her comments, feelings and situations. At the end, you use the connection to express your viewpoints. Basically, you have to be the architect to build a two way communication channel.

Getting Past No: Negotiating In Difficult Situation (2/6)

As mentioned in my first entry, most people find it  very challenging to negotiate with difficult people or under  undesirable circumstances. These challenges can be broken down into five categories: your own reaction, opponent’s negative emotions, opponent’s negotiate habits, opponent’s skepticism about the benefits of agreement, and opponent’s perceived power.

William Ury invents an all purpose five step method called “breakthrough negotiation strategy”. This strategy specifically addresses the five common challenges in negotiating under adverse conditions. I will talk about key concepts of each step in the following entries. A summary of the particular step will be given at the end of each entry as well.   

The first step of the “breakthrough negotiation strategy” is called “GO TO THE BALCONY”.  Basically, it means that when your opponent plays hard ball (obstructive, offensive, deceptive tactics or all of them)   with you, you have to stay calm. Don’t react to these tactics. Generally, we have three natural reactions to difficult negotiation. They are striking back (you are going to pay for this!), giving in (ok ok, I will accept your demand, I just want to make the deal quickly. That is me unfortunately) and breaking off (I don’t want to deal with you anymore, go away!).   

Getting Past No: Negotiating In Difficult Situation (1/6)

                                                              
                                                                                
                                                                            
Negotiation is an essential and  important activity in our daily lives. We unknowingly picked up  negotiation skills during our childhood.  When we wanted new toys for our birthdays, we used many different methods to negotiate with our parents. Then, we adjusted our methods according to the outcome of the negotiations. As we grewolder, we started to learn to negotiate with people other than our families. We soon started to recognize that we have to negotiate with people, who have different personalities and interests.  Usually , we are well capable to negotiate with nice and honest people, because our families have provided day to day training for us since young.  However, when we are faced with  difficult or “unreasonable” people, we often lose theability  to get what we want.  And of course, I am no different.

I realized this shortcoming when I studied a negotiation subject from my Masters of Entrepreneurship. I realized that I performed very well, when the opponent was cooperative. However, once the opponent played hard ball on me, I was unable to  get through them at all. My natural impulse would be to give up and leave the situation as soon as possible. Therefore, nine out ten times the opponent would rob me empty.   

Grand Opening

Welcome to my first ever blog! My friends have been asking me to start writing a personal blog or blogging for years. I have been very reluctant to start a blog, because blogging needs commitment and effort. For a long period of time, I have not been able to find a theme or topic of my interest.I could not find a theme or topic, which I was interested to write for long period of time.

Until recently, two events inspired me to start a blog. The first event was my housemate’s graduation ceremony at my current university, Swinbune University of Technology. I saw a lot of happy faces of graduates, their friends and families inside the ceremony hall. The atmosphere was very warm and casual. When the  graduates started to be honored for their certificates on the stage, their families and friends were busy taking photos or videos of the graduates  while a few clapped.  Most of the audiencewere talking amongst themselves or playing games on their phones. The same social interactions happened, when the master graduates started to get on the stage.  Interestingly, when the Dean of business school announced that ,“We have three doctorate graduates today.” The people in hall wnt silent and looked up at the stage that very instant. When the Dean honor ed those Phd graduates, all the people in the hall were clapping. Thatkind of recogintionand respect motivated me to pursue my education career further. I hoped that I can  get my doctorate degree in the future.  That would be one of the biggest achievements in my life.

The second event was a phone conversation with a high school friend from Hong Kong. We discussed a book which he sent to me.  The book was called Sun Tzu Strategy, which is one of the greatest classic strategy book of all time. We talked for hours about the applications of historical warfare in the modern business world. My friend and I were amazed by some of our  findings. My friend told me that I should put them on a blog and share them with other people. Some people could  benefit from that.     

These two events have given me a very clear theme for my very first blog. The purpose of this blog is to  track and record  what I have read, seen and experienced throughout my journey to obtain one of the biggest achievements in my life, a Phd in Human Resource Management. As for the readers, I will select and recommend some practical and useful books and journal articles with my personal summaries and reviews. Constructive comments and discussions are highly encouraged and welcomed. I hope that everyone in this journey can get something useful and positive out of it.