Embracing Failure:

Embracing Failure: Creative Destruction and Its Consequences2011 Swedish Schumpeter Lecture

William B. GartnerDoes the Past Work?Has it failed?Traditions:Are solutions to yesterdays problems.

- William B. Gartner Past as Prologue:Will what we learned about yesterday work today?George SantayanaThose who do not learn from history are doomed to repeat it

Clarence Darrow History repeats itself, and that's one of the things that's wrong with history. Philip GuedallaHistory repeats itself. Historians repeat each other.

Karl Marx History repeats itself, first as tragedy, second as farce. 1975Inflation - 9%Unemployment 9%1975http://www.youtube.com/watch?v=q_qgVn-Op7Q

Yogi Berra This is like deja vu all over again. Joseph SchumpeterThis process of Creative Destruction is the essential fact about capitalism. Fortune 500: 1955-2010http://fathom.info/fortune500/

FailureIs the business environment.Apple ComputerAPPLE Stock Price 1984 - 2011Apple Product Time Line

AppleFinancial periodNet sales (Mil USD)Net profits (Mil USD)Revenue growthReturn on net salesFY 1981335unknown------FY 19825836174%10%FY 19839837769%8%FY 19841,5166454%4%FY 19851,9186127%3%FY 19861,902154-1%8%FY 19872,66121840%8%FY 19884,07140053%10%FY 19895,28445430%9%FY 19905,5584755%9%FY 19916,30931012%5%FY 19927,08753012%7%FY 19937,9778713%1%FY 19949,18931046%3%FY 199511,06242420%4%FY 19969,833-816-11%-8%FY 19977,081-1,045-28%-15%FY 19985,941309-16%5%FY 19996,1346013%10%FY 20007,98378630%10%FY 20015,363-25-33%0%FY 20025,24765-2%1%FY 20036,2075718%1%FY 20048,27926633%3%FY 200513,9311,32868%10%FY 200619,3151,98939%10%FY 200724,5783,49527%14%FY 200837,4916,11953%16%FY 2009[60]42,9058,23514%19%FY 201065,22514,01352%21%Apple1976: Apple 1

Apple1977: Apple II

Apple1980: Apple III

Apple1984: MacIntosh (9/84 - $25.12)

Apple1985: MacIntosh XL (9/85 - $ 15.75) *1986: MacIntosh Plus (9/86 - $ 33.50)1987: MacIntosh II (9/87 - $ 56.50)

Apple1988: (9/88 - $ 43.25)1989: MacIntosh Portable (9/89 - $ 44.50)1990: MacIntosh Classic (9/90 - $29.00)*

Apple1991: Quadra + Powerbook (9/91 - $ 49.50)1992: (9/92 - $ 45.13)1993: Newton (9/93 - $ 23.27)

Apple1994: (9/94 - $33.69)1995: (9/95 - $37.25)1996: (9/96 - $22.19)*1997: G3 (9/97 $21.69) **

Apple1998: (9/98 $38.13)1999: IBook (9/99 - $63.31)2000: (9/00 - $25.75)

Apple2001: IPod (9/01 - $15.51)2002: (9/02 - $14.50)2003: ITunes (9/03 $20.72)

Apple2004: (9/04 - $38.75)2005: (9/05 - $53.61)2006: MacBook (9/06 - $76.98)Apple2007: IPhone, Nano, Touch (9/07 - $153.47)2008: IPhone 3G (9/08 - $113.66)2009: IPhone 3GS (9/09 - $185.35)

Apple2010: IPad (9/10 - $283.75)2011: IPad 2 (9/11 - $381.32)

ApplePersistence pays off?AppleSuccess comes out of failure?AppleAll good things must come to an end.

Michael Jordanhttp://www.youtube.com/watch?v=45mMioJ5szc

SportsPlay by RulesCompetition is VisibleUnderstandable Score KeepingFailure is not Devastating (You Play Again)

Suggestions For FailingTransparency of Process (Know That You Are Failing!)Suggestions for FailingAffordable LossSuggestions for FailingMeasurable Milestones (Outcomes)Suggestions for FailingUncertainty and Ambiguity Requires ExperimentationSuggestions for FailingIn Order to Fail You Have to Try.Innovation Requires DiversityEvolution begins with variation.Winners and Losers

Heinz von FoersterAct always so as to increase the number of choices.

Handle stets so, da die Anzahl der Wahlmglichkeiten grer wird.

Creative DestructionEvolution is not progressive.

There is no inevitability that we will be better off.