The Thread Briefing: cars as digital devices, how culture shapes product and why school is rubbish.

Hello campers and welcome to the latest Thread Briefing. In this edition we cover the gnarly problems of integrating hardware and software, how important corporate culture and business models are in shaping new products and services, as well as mental health, India, parenting and our first book giveaway!

Shall we?..

:: Honest CEO alert! ::

This is an incredible clip of Ford CEO Jim Farley talking about the challenges of getting the software and hardware integration right now that cars are increasingly digital products. It’s rare you see a global CEO be this candid about mistakes the company has made and the size of the challenge facing them.

"To save about $500 per vehicle...we farmed out all the modules that control the vehicles to our suppliers, because we can bid them against each other [for price]…We have about 150 modules with semiconductors all through the car. The problem is that the software is written by 150 different companies. And they don’t talk to each other."

“That’s why, at Ford, we decided for our second-generation [EVs] to completely insource electrical architecture. To do that you need to write all the software yourself. But car companies haven’t written software like this, ever. We’re literally writing the software to operate the vehicle for the first time ever."

“I had to split the company into three pieces, because I kept watching our ICE engineers try to figure out how to do over-the-air updates, or change the software for the vehicle [but] they’re not software people. So we had to attract new talent."

Not all companies will have to navigate the challenges of hardware, but almost everyone is facing the challenge of having to integrate new skillsets and types of expertise into their company as they embrace, and respond to, new technologies. This human aspect of transformation is far more challenging than getting the tech stack right. Yes, everyone rightly talks about getting the right skills and talent into an organisation as part of a transformation, but like Ford, most brands will also have to create a whole new culture in order to make this blend of talent succeed. And this is much less acknowledged. Which is why most transformations efforts fail.

The clip above is at 25mins in but the whole interview is worth listening to. An incredibly impressive leader openly acknowledging the realities of business and the difficult strategic decisions and trade-offs they are having to make.

:: Culture, capabilities and business model rule ::

Coincidentally, around the same time Jim Farley was laying bare his soul, a Californian tech company launched a headset last week and in doing so showed the world what can be achieved when you integrate cutting edge hardware and software that you have designed specifically for a product experience.

For us, the most interesting aspect of the Vision Pro launch was not the frothy-mouthed debate about use cases and price point, but what it says about Apple’s capabilities, it’s culture and business model (vs. Meta’s) and also what it says about society as a whole.

Firstly, this is a product ONLY Apple could make, because they’ve invested in the chips and technology to make it actually feasible and they’ve built a culture and organisation that works at the intersection of hardware and software. Remember when people were telling Apple to buy Netflix? Instead they did something much less exciting and invested in developing their own chips so they didn’t have to outsource to Intel. They then built on this capability to design the R2 chip specifically for the Vision Pro to ensure it doesn’t cause the motion sickness so common in other headsets. It takes the input from 12 cameras, five sensors and six microphones and process the data within 12 milliseconds — eight times faster than the blink of an eye — which is the real-time processing speed necessary to trick the brain into thinking it’s viewing reality and avoid motion sickness. This level of symbiosis between hardware, software and user experience is unprecedented.

In fact, the experience is neither AR nor VR, as Ben Thompson points out, but a combination of the two. The best analogy is probably mirrorless digital cameras: the Vision Pro doesn’t overlay the digital onto the real world but produces a high-fidelity digital version of your field of vision and then overlays other content on top of that digital facsimile of what’s in front of you. 🤯🤯🤯

Roger Martin once said “if the opposite of your strategy isn’t also a strategy, then you don’t have a strategy”. The battle between Apple and Meta in the AR/VR space is no better illustration of this.

Meta are a social network business that makes money through advertising. They need your data to sell it to others. As such their Occulus headset is as accessible as possible at $500. Meta’s vision of AR/VR is inherently social, focused on ‘bringing people together’ and creating ‘social presence’. Designing a predominantly social experience makes it easier for them to leverage what they’re great at (and easier for them to monetise).

In contrast, Apple is a hardware company. They will make their money from device sales and the apps and services those devices enable, and have carefully positioned themselves over the last 5 years as a privacy company, in a direct counter-positioning to Meta and Google. (If you must use a device which constantly monitors your surroundings and eye-gaze, which brand are you going to trust to do this?) Apple’s vision for AR/VR is much more solitary , with more of a focus on productivity and work.

And it’s this last point which is perhaps most depressing of all. A vision of the future where solo workers spend the day isolated in a digitally rendered facsimile of the real world.

:: Smaller morsels ::

Apple and mental health

The Vision Pro got the headlines but Apple also announced a suite of new mental health features, including a mood tracker, a mental health trend report, and psychological assessments you can take from your phone. Mental health is a huge problem, with 19% of American adults experiencing a mental illness like anxiety or depression each year, costing the economy an estimated $1 trillion. Again, if you’re going to use a tech company to help you with this, then Apple’s positioning as a privacy company, and it’s existing success in physical health tracking, makes this a smart and potentially massive move.

Apple’s most important bet is in India, not on headsets.

It’s easy to think Silicon Valley is the world’s epicentre, but this article is a great reminder that Apple’s future might well rely on cracking the Indian market, where iphones currently account for only 4% of smartphones sold.

Tesla reimagine the assembly line

This was a fascinating read on how Tesla are looking to reinvent the assembly line, something that hasn’t changed in 100 years. What jumps out to us in particular is the emphasis on how Tesla are uniquely able to instigate this reinvention because of their culture and business model: they exclusively make EVs rather than using the same plant to make both EVs and ICE cars, their lack of bureaucracy and command-and-control leadership means decisions get made faster, their vertical integration means there are less suppliers to negotiate with (e.g. in contrast to the 150 software suppliers Ford have to manage), and the experience and capability they have in imagining processes from first principles.

Growing the agency of children

As parents we loved this thought-provoking read on how to give young people more agency and why schooling creates a purgatory of busywork until we can find something useful to do with them. Whilst we didn’t necessarily buy the assumption that adolescence needs to be ‘useful’ per se, this line in particular stopped us in our tracks:

The longer we disallow children from having the agency to act on the world, the harder it becomes for them to visualize it in the first place. The result is that we have young adults who have a difficult time adjusting once their life-script changes even a little bit. The path is rigid, yet brittle.

Whilst it doesn’t prescribe a list of solutions, it does ask us to ponder better questions:

I think that it is worth some special reflection as to why programming is now the typical industry for precocious children. In many ways, it has a low bar to entry and is something that parents still allow their children to do despite the hour- demands of systematized schooling. It is one of the few industries with an immensely permissionless culture. You don’t need an audience or patrons. You don’t have to ask anyone. You don’t have to get a building permit or any professional resources. You can just create. The advantages of this, especially for some children who are not allowed to do much else with their time, are immense. We should ask ourselves, slowly, carefully, and often: what else can be like that?

:: Book we enjoyed ::

We were big fans of Matt Watkinson’s previous book The Grid, so were delighted to see his new book recently released, Mastering Uncertainty. We were not disappointed. For anyone trying to navigate uncertainty and take action with sub-optimal levels of information (is there any leader not in this position nowadays??) it’s a pragmatic, evidence-based joy to read. Unlike most of the ‘smart thinking’ non-fiction titles that should have been an article, this is ALL KILLER NO FILLER. We have a few copies to give away so just drop us a line and let us know if you’d like one. First come first served!

Thanks for stopping by.