The Network Garden - Mark Sigal's Blog

Dynasty's End: Thoughts on Los Angeles Lakers

I am a die-hard Lakers fan. I remember when the Lakers were a middling team coached by Jerry West with Kareem Abdul-Jabbar as their star, and not much else.

I remember when Magic Johnson joined the team (with West as GM), and the rise of Showtime. I remember Magic Johnson's shocking retirement, and the fallow period that took place before Shaq and Kobe made the Lakers great again.

I remember the inevitable fall and then the unlikely rise to two more championships, flanked by a still-dominant Kobe and an inspired, skilled giant in Pau Gasol.

In this time, there have been so many tears (of joy and disappointment), so many clutch shots, incredible runs, controversies, injuries, trades and no shortage of drama.

Last night, the Lakers played the Oklahoma Thunder, their first true measuring stick game, and had their hearts ripped out. It's been that kind season.

According to ESPN's Ric Bucher, Kobe noted after the game, "Times change. That used to be us," which Bucher took as a waving of the white flag, and acknowledgement by Kobe of a window that is probably closed.

Distraught, I finally wrapped my head around what bugs me so much about this team this year. There is no a single game that comes to mind this year where the Lakers played a complete game for all four quarters.

They will show a brilliant quarter, or even a great half, but never all four, which leaves a perpetual sense of dread that the other shoe can drop at any time. 

It's little surprise that they lead the league in games decided by 5 points or less, all of which speaks to a talent gap, aging roster, coaching challenges, and a dearth of discipline and will. 

All Dynasties End

We have had a great run, but I suspect it's the end for this unit, barring significant structural change (i.e., shifting to a more bigs focused game, where you use your point guard as a point guard, and Kobe plays off the ball). 

Yet, when I go to my favorite Lakers discussion board, Forum Blue and Gold, and read the anger, the vitriol and the finger pointing, I am left not mad at the Lakers for blowing it, but resigned to the hard truth: Dynasties rarely end well.

Sportswriter Roland Lazenby puts it best, noting how sports is a game of patterns, repetition, trust and practice, and when you SIMULTANEOUSLY change a coach, a system and deal with a difficult transition from one Alpha dog to the next (esp. because while Lakers Center Andrew Bynum may be ready talent-wise to be the guy, he lacks the maturity, hunger and aggression that Kobe brings), the process is inherently fraught with peril, and takes time to foment.

My only point is that it’s easy to blame the new coach for not being the old coach; it’s easy to blame the son for not being like the father; it's easy to blame the front-office for not being able to turn lead into gold, and it's certainly easy to blame the aging superstar for not embracing the emerging star, but ask yourself this.

How often does it work out when the new coach replaces the old legend, or the boy wonder steps into the superstar's shoes?

How often do teams get old and then magically renew without missing a beat? How often does the untrained son take over the family business from dad, the legend, and tomorrow is better than today?

Simply put, a lot of the angst for long-time Lakers fans like myself comes from knowing that these things rarely end without blood and carnage, and that is what sports is all about. 

Related:

1. Repeat Champs: Lakers Seize Game 7, beat Boston, Win Series!
2. The Tiger’s Stripes: Why the Lakers Will Not Repeat as NBA Champions
3. The Anaconda Squeeze: Why the Lakers Will Beat the Magic
4. Lakers-Celts and the Sporting Metaphor

The impact of Steve Jobs in 50 words

Reading Walter Isaacson's excellent HBR piece on 'The Real Leadership Lessons of Steve Jobs,' I was struck by the following nugget, which took all of 50 words to sum up the amazing accomplishments of the 'Edison, Ford and Disney' of our age: 

"Jobs helped to transform seven industries: personal computing, animated movies, music, phones, tablet computing, retail stores, and digital publishing. The output of this transformation was the following hits: iMac, iPod, iPod nano, iTunes Store, Apple Stores, MacBook, iPhone, iPad, App Store, OS X Lion—not to mention every Pixar film."

If we are to judge one's accomplishments by the outcomes that they delivered, that is a pretty amazing set, with no arm-waving superlatives necessary.

A couple of other nuggets from the piece:

1. SIMPLICITY: “To be truly simple, you have to go really deep,” Jony Ive
2. DISRUPTION: In looking for industries or categories ripe for disruption, Jobs always asked who was making products more complicated than they should be. 
3. IMPUTING VIA PACKAGING: “Mike Markkula taught me that people DO judge a book by its cover.”
4. MANAGING PEOPLE: “I’ve learned over the years that when you have really good people, you don’t have to baby them. By expecting them to do great things, you can get them to do great things."

Related:

• The price of greatness: Three takeaways from the biography of Steve Jobs (O'Reilly)

"Synchronicity": The case for a 'customer dividend' for lovers of all things Apple

Apple has announced a conference call on Monday morning to reveal the outcome of their internal discussions regarding a rather beefy $100 Billion cash balance that's 'gathering dust' by their tool shed.

So, it's 'speed round' to guess what they are going to announce because Apple chose to announce this at 6 AM Pacific (9 AM Eastern) on Monday. (A tad hastily, for Apple, don't ya think?)

Conventional wisdom says that Apple is going to announce a dividend because they have more money than they reasonably need, and as such, will return some of that cash to investors.

But as I said HERE and HERE, Apple doesn't follow the logic of conventional wisdom, and won't start to do so now.

Why not? Apple has been the top-performing stock for a decade plus, and show no signs of slowing down. They trade at a relatively low P/E, and heretofore, have avoided all of the typical optics that public companies tweak to lure new investors. If they wanted a higher stock price, there are other things that they could do.

Besides, cash allows them to do whatever they want, whenever they want, and history has taught them that rainy days do come. 

As such, the only scenarios that make strategic sense to me are:

1. Do nothing: No change in cash strategy;
2. Capital expenditure that increases the long-term health of the business; 
3. Major acquisition that changes the composition of the business;
4. Customer dividend that moves more Apple gear plus creates a secondary catalyst for customer loyalty. 

You can pretty safely rule out scenarios #2 and #3, as Apple wouldn't announce something so strategic with virtually no advance media runway so early in the morning.

Scenario #1 makes a lot of sense, but then why did they go out of their way to broach the subject in the last earnings call?

It's not like Apple has felt the need to assuage investors regarding what they're going to do with their cash in the past.

Hence, my best guess is that Apple is going to offer a dividend, but NOT one that is the traditional cash variety.

Rather, they'll pursue one that is a win for lovers of "all things Apple."

Specifically, I am betting on a dividend that is only redeemable at Apple Stores (online or retail) in the form of gear, apps, music, movies and/or books.

UPDATE: In the first sign (of many?) that this is now Tim Cook's Apple, and not a continuation of the global philosophy that Steve Jobs set forth, Apple has announced a dividend AND a stock-buyback. The market obviously loves this (the stock is up $14), but I consider this move a bit of a bearish indicator. Why? When a company that has repeatedly avoided going out of their way to feed the trough of investors, who are notoriously short-sighted, turns tail so fully, it is worrying. Simply put, it represents another mouth that the company is now committed to feeding, and one whose interests aren't fully aligned with Apple's. As such, it changes the context "a bit" about how the company sees its constituency, and the compass that it follows. Heck, why didn't they go for the trifecta, and announce a stock-split as well? Not a fan of this decision for those reasons.

Related:

1. It’s Time to ‘Think Different’ because Conventional Wisdom is Dead: Thoughts on Apple’s Q1 Earnings Call
2. Apple's Segmentation Strategy (and the Folly of Conventional Wisdom) 

Quick Take: Five Takeaways from Apple's new iPad Launch

1. If you STILL think iOS vs. Android is Mac vs. Windows, then you weren't there: You remember the axiom about the '60s, that if you could remember it, then you weren't there? Well, if you still believe that iOS vs. Android is destined to be Mac vs. Windows, then you weren't there at the rise of the PC...when Apple got outflanked and out-executed by Microsoft. Apple remembers all of the lessons about over-promising and under-delivering, relying on lazy sales channels, failing to court developers, leaving pricing overhang, and failing to maintain clear differentiation and clear positioning. In this regard, the new iPad is like a walking bullet point list of, "We remember, and we'll never forget."
2. Outflanking the PC and the Xbox: There were two disparate comments that I found noteworthy and telling about how well-positioned Apple is with iPad. One, was by Apple CEO Tim Cook, when he noted that the iPad, which he calls, "the Poster Child for Post-PC" sold 15.4M iPads in Q4, which was more than any PC maker sold of PCs in the same quarter. This is stunning and uparalleled for a product that is less than two years old. Two was a comment by the Epic Games exec demoing their new game on iPad, where he noted that the new iPad has more memory and higher screen resolution than an Xbox 360 or PS3. While memory and screen resolution alone do not equate to what makes an Xbox an Xbox, it certainly foreshadows Apple's expansion path into the living room. Along those lines, given the decision to simultaneously announce the new Apple TV at the same time as the new iPad, it left me wondering if there was some anticipated tie-in between the two that failed to come together at the 11th hour. Otherwise, the dual announcements felt orthogonal and bolted on to one another.
3. Apple has grabbed the mantle of being the Post-PC company, and it's unclear what Google can do with Android to change the narrative. This narrative from Tim Cook during the event is particularly telling about Apple positioning: "We're talking about a world where the PC is no longer the center of your digital world. A world where the devices you use the most need to be more personal and more portable than any PC has ever been. We have 3 Post-PC products. The iPod...the iPhone, and the iPad. Now any company would be thrilled to have just one of these devices. At Apple we're fortunate to have all three...Our Post-PC devices made up 76% of our revenues...We have our feet firmly planted in the Post-PC future." The net takeaway is that through product leverage and integration, through a multi-service focus, through a device, app, media and cloud focus, and through intelligent channels, Apple has defined the 'IT' that makes a Post-PC worth aspiring for, and they keep coming back to all of the various ways that they live and breath that IT. It's the reason that when they tout 315M iOS devices (and 62M in the last quarter), it REALLY means something. By contrast, the next time you watch a commercial for an Android device, note how dis-integrated the story is; it's about speeds and feeds, and the want for more speeds and feeds, as opposed to any specific outcome. Part of me believes that Google knows this, and understands that their success on phones is fools gold. But, a bigger part of me wonders if the ramifications of how disparate their core strengths are to what it takes to succeed in Post-PC relegate them to also-ran status at a time when Apple has every incentive to neutralize Google's footprint on those same 315M iOS devices.
4. Apple Segmentation speaks volumes: I thought that it was telling that just as Apple didn't retire iPhone 4 when they launched 4S, they didn't retire iPad 2. This sends three primary messages to market. One, is that if you don't need this year's model, you can get last year's model at a superior price point (i.e., no pricing overhang). Two is that we are so confident that last year's model is BETTER than anything the competion is offering even with their latest and greatest that we know it will sell like hotcakes. Three is that we know this year's model represents such an improvement over last year's model that we're unafraid to put them side-by-side in the market.
5. We're Just Getting Started: As impressive as the new iPad is (Retina Display, Faster Processor + Graphics, Better Camera, HD Video, Voice Dictation), what stuck with me was Tim Cook's closing summation: "Across the year you’re going to see a lot more of this kind of innovation, we are just getting started. Only Apple could deliver this kind of innovation in such a beautiful, integrated way. It's what we love to do. It's what we stand for." Does that sound like a company that is content to rest on its laurels to you?

Related:

1. You say you want a Revolution? It's called Post-PC Computing (O'Reilly)
2. Apple's segmentation strategy, and the folly of conventional wisdom (O'Reilly)
3. Five reasons iPhone vs Android isn't Mac vs Windows (O'Reilly)
4. Retail needs a Reboot to Survive (GigaOM)