by Adam Hartung | Feb 12, 2015 | Current Affairs, Disruptions, Innovation, Leadership, Web/Tech
Despite huge fanfare at launch, after a few brief months Google Glass is no longer on the market. The Amazon Fire Phone was also launched to great hype, yet sales flopped and the company recently took a $170M write off on inventory.
Fortune mercilessly blamed Fire Phone’s failure on CEO Jeff Bezos. The magazine blamed him for micromanaging the design while overspending on development, manufacturing and marketing. To Fortune the product was fatally flawed, and had no chance of success according to the article.
Similarly, the New York Times blasted Google co-founder and company leader Sergie Brin for the failure of Glass. He was held responsible for over-exposing the product at launch while not listening to his own design team.
Both these articles make the common mistake of blaming failed new products on (1) the product itself, and (2) some high level leader that was a complete dunce. In these stories, like many others of failed products, a leader that had demonstrated keen insight, and was credited with brilliant work and decision-making, simply “went stupid” and blew it. Really?
Unfortunately there are a lot of new products that fail. Such simplistic explanations do not help business leaders avoid a future product flop. But there are common lessons to these stories from which innovators, and marketers, can learn in order to do better in the future. Especially when the new products are marketplace disrupters; or as they are often called, “game changers.”
Do you remember Segway? The two wheeled transportation device came on the market with incredible fanfare in 2002. It was heralded as a game changer in how we all would mobilize. Founders predicted sales would explode to 10,000 units per week, and the company would reach $1B in sales faster than ever in history. But that didn’t happen. Instead the company sold less than 10,000 units in its first 2 years, and less than 24,000 units in its first 4 years. What was initially a “really, really cool product” ended up a dud.
There were a lot of companies that experimented with Segways. The U.S. Postal Service tested Segways for letter carriers. Police tested using them in Chicago, Philadelphia and D.C., gas companies tested them for Pennsylvania meter readers, and Chicago’s fire department tested them for paramedics in congested city center. But none of these led to major sales. Segway became relegated to niche (like urban sightseeing) and absurd (like Segway polo) uses.
Segway tried to be a general purpose product. But no disruptive product ever succeeds with that sort of marketing. As famed innovation guru Clayton Christensen tells everyone, when you launch a new product you have to find a set of unmet needs, and position the new product to fulfill that unmet need better than anything else. You must have a very clear focus on the product’s initial use, and work extremely hard to make sure the product does the necessary job brilliantly to fulfill the unmet need.
Nobody inherently needed a Segway. Everyone was getting around by foot, bicycle, motorcycle and car just fine. Segway failed because it did not focus on any one application, and develop that market as it enhanced and improved the product. Selling 100 Segways to 20 different uses was an inherently bad decision. What Segway needed to do was sell 100 units to a single, or at most 2, applications.
Segway leadership should have studied the needs deeply, and focused all aspects of the product, distribution, promotion, training, communications and pricing for that single (or 2) markets. By winning over users in the initial market Segway could have made those initial users very loyal, outspoken customers who would recommend the product again and again – even at a $4,000 price.
Segway should have pioneered an initial application market that could grow. Only after that could Segway turn to a second market. The first market could have been using Segway as a golfer’s cart, or as a walking assist for the elderly/infirm, or as a transport device for meter readers. If Segway had really focused on one initial market, developed for those needs, and won that market it would have started a step-wise program toward more applications and success. By thinking the general market would figure out how to use its product, and someone else would develop applications for specific market needs, Segway’s leaders missed the opportunity to truly disrupt one market and start the path toward wider success.
The Fire Phone had a great opportunity to grow which it missed. The Fire Phone had several features making it great for on-line shopping. But the launch team did not focus, focus, focus on this application. They did not keep developing apps, databases and ways of using the product for retailing so that avid shoppers found the Fire Phone superior for their needs. Instead the Fire Phone was launched as a mass-market device. Its retail attributes were largely lost in comparisons with other general purpose smartphones.
People already had Apple iPhones, Samsung Galaxy phones and Google Nexus phones. Simultaneously, Microsoft was pushing for new customers to use Nokia and HTC Windows phones. There were plenty of smartphones on the market. Another smartphone wasn’t needed – unless it fulfilled the unmet needs of some select market so well that those specific users would say “if you do …. and you need…. then you MUST have a FirePhone.” By not focusing like a laser on some specific application – some specific set of unmet needs – the “cool” features of the Fire Phone simply weren’t very valuable and the product was easy for people to pass by. Which almost everyone did, waiting for the iPhone 6 launch.
This was the same problem launching Google Glass. Glass really caught the imagination of many tech reviewers. Everyone I knew who put on Glass said it was really cool. But there wasn’t any one thing Glass did so well that large numbers of folks said “I have to have Glass.” There wasn’t any need that Glass fulfilled so well that a segment bought Glass, used it and became religious about wearing Glass all the time. And Google didn’t improve the product in specific ways for a single market application so that users from that market would be attracted to buy Glass. In the end, by trying to be a “cool tool” for everyone Glass ended up being something nobody really needed. Exactly like Segway.
Microsoft recently launched its Hololens. Again, a pretty cool gadget. But, exactly what is the target market for Hololens? If Microsoft proceeds down the road of “a cool tool that will redefine computing,” Hololens will likely end up with the same fate as Glass, Segway and Fire Phone. Hololens marketing and development teams have to find the ONE application (maybe 2) that will drive initial sales, cater to that application with enhancements and improvements to meet those specific needs, and create an initial loyal user base. Only after that can Hololens build future applications and markets to grow sales (perhaps explosively) and push Microsoft into a market leading position.
All companies have opportunities to innovate and disrupt their markets. Most fail at this. Most innovations are thrown at customers hoping they will buy, and then simply dropped when sales don’t meet expectations. Most leaders forget that customers already have a way of getting their jobs done, so they aren’t running around asking for a new innovation. For an innovation to succeed launchers must identify the unmet needs of an application, and then dedicate their innovation to meeting those unmet needs. By building a base of customers (one at a time) upon which to grow the innovation’s sales you can position both the new product and the company as market leaders.
by Adam Hartung | Mar 26, 2010 | Current Affairs, Defend & Extend, Innovation, Web/Tech
General Motors and Segway have teamed up to do a new product launch. The new product is described at Freep.com in "GM, Partner to unveil 2-seater" and is called the EN-V. And there's almost no hope it will succeed. Too bad, because both companies desperately need a winner. But the process they used to develop and launch this product was all wrong – and it would be a miracle if the arrow hits a bulls-eye.
Segway is the long-running story of a company with what looks like a great idea, but it never takes off. The original Segway seemed really neat. But people struggled to figure out why they would buy one. There is walking, there are bicycles, there are motorcycles and there are cars. Segway never defined who was under-served, or unserved, and therefore had a real need to use their new product. Segway management did a great job of public relations, because we all saw them on TV, in the news, and learned the name. But the product was developed internally, not in response to a market need. As a result, sales never materialized and Segway slipped into the business history file as another case study.
General Motors has no new product development process to create products for the future. For decades GM has attempted to defend and extend its 1940's approach of designing updated products, and hoping people will keep buying. It's been many years since GM launched a new product that people said "wow, that's just what I needed – and I wasn't even aware I needed that."
Now the two companies have teamed up to launch a 2 passenger Segway. They have identified the use they think this fits, and they think they know a target. But the problem is that this is just another "idea" designed and built without significant market input. Instead of developing a scenario of the future with deep insight to what people will want, and then making that product, they have said "wouldn't this be neat – and can't we imagine who might buy?" Interesting lab work, but unless they are very, very lucky the odds are greatest that people will think it's cute, but won't buy. After all, with the plethora of current solutions across a huge price range from many competitors means nobody is living without transportation. Why should potential customers inherently think this is a good idea.
Phoenix companies don't design products from inside the company outward. Instead, they use market input to discover the unmet needs, and they fulfill them. Especially when it's clear that competitors aren't jumping in to fulfill the need. They intend to Disrupt the marketplace not by some splashy introduction and hoping people will switch, but rather by identifying the under-served customers and giving them a solution they didn't have. Then the company learns, adapts and keeps pushing toward an ideal product that meets ever more needs. From this initial small success the market grows.
Segway never understood this. They don't define unmet needs, nor competitor inabilities – and thus they have great ideas but they fail to Disrupt the marketplace and their innovations have gone nowhere. GM works hard to avoid innovations that might be market disruptions, instead offering sustaining innovations hoping to defend their old business model.
This new type of vehicle might have a chance of success. But the only hope is for both companies to ignore the PR. They should set up a White Space team, and give that team a year to really understand the unmet needs in the marketplace. Then go back to the original design and make it very explicitly meaningful to people who have unmet needs. Launch small, make money, learn and grow.
But given the approach this dynamic duo is taking, only luck will keep this from being another missed opportunity for both struggling companies.
by Adam Hartung | Apr 14, 2009 | Books, Current Affairs, Disruptions, General, In the Rapids, Innovation, Leadership, Lifecycle
Last week I blogged about how Segway and GM were taking all the wrong steps in launching the PUMA. Today let me explain why Amazon is the mirror image – doing the launch of Kindle correctly. Kindle is the new "electronic book" from Amazon which allows people to download whole books, or parts of books, onto a very small, light and thin device where they can read the material, notate it and even convert it to audio. Even Marketwatch.com is bullish in its overview of the product "Amazon's Kindle, e-books are future of reading."
Firstly, Amazon recognized it had a Disruptive innovation and didn't pretend this was a small variation on printed material. Perhaps "over the top" a bit with the PR, Mr. Bezos called Kindle the biggest revolution in reading since Gutenberg invented the printing press. This bold claim causes people to realize that Kindle is something very different than anything prior. Which it is. Kindle is not like reading on a PC, nor is it like reading a book, nor is it like reading a magazine or newspaper (should you download those). It's different, and it requires buyers change their habits. By highlighting the uniqueness of the product Amazon doesn't undersell the fact that users really do have to change to enjoy the product.
Secondly, the product isn't being run through some high volume distribution that will struggle with the uniqueness and potentially low initial volumes. Amazon isn't trying to sell the product today at Best Buy or Wal-Mart, which would demand instant volume in the millions supported by huge ad spending. Something which would not only be expensive, but probably would not meet those retail expectations. Instead, Amazon is selling the product itself and closely monitoring volumes.
Thirdly, Amazon isn't pushing Kindle as a product for everybody. At least not yet. Amazon isn't offering Kindle for $20, losing a huge amount of money, and saying everyone needs one – which would likely lead to many people buying a Kindle, deciding its not for them, and then throwing it away to wait a very long time before a repurchase – with lots of negative comments. Instead, Amazon prices Kindle at $359 and targets the product at early users who will really benefit. Like the heavy volume book reader. This allows Amazon to build a base of initial users who will use the product and provide feedback to Amazon about how to modify the product to make it even more valuable. Amazon can cycle through the learning experience with users to adapt and develop the product for a future mass market.
Fourthly, the Kindle doesn't come with 30 options to test. It has just a few. This allows Amazon to learn what works. And add functionality in a way that tests the product. Amazon can add features, but it can also drop them.
Will Kindle be the next MP3 device. Probably. How long will it take? Probably not as long as people think. Because Amazon is introducing this innovation correctly. Publishers, authors, book readers and other application users are all learning together. And while traditional paper publishers (from books to newspapers) are waiting to see, Amazon is preparing its new products to "jump the curve" on these old publishers. It's not hard to imagine in 3 or 4 years how authors might go straight to Amazon with their writing, for publication as a Kindle-only product. This would be incredibly cheap, and open the market for many more authors (books or periodicals) than have access today. Since the cost of reading drops precipitiously (due to no paper) the pricing of these new books and periodicals may well be a few dollars, or even less than a dollar. Thus exploding the market for books the way the internet has exploded the market for short-form blog writers.
Even in a recession, people look for new solutions. But capturing those new customers takes careful understanding of how to reach them. You can't act like Segway and dump a strange new product onto users with mass distribution and a PR highlight reel. You have to recognize that Disruptive innovations take better planning. You have to find early customers who will enter White Space with you to test new products, and provide feedback so you both can learn. You have to be honest about your Disruptive approach, and use it to figure out what the big value is – not guess. And you have to be willing to take a few months (or years) to get it right before declaring your readiness for mass market techniques.
Amazon did this when it launched on-line book selling. It didn't sell all books initially, it mostly sold things not on retailers shelves. It didn't sell to everyone, just those looking for certain books. And it learned what people wanted, as well as how to supply, on its journey to Disrupt book retailling – later about all retailing – and build itself in to the model for on-line mass retail. Following that same approach is serving Amazon well, and portends very good things for Kindle's success.
by Adam Hartung | Apr 7, 2009 | Current Affairs, Defend & Extend, General, In the Whirlpool, Innovation, Leadership, Lock-in, Science
"GM, Segway unveil Puma urban vehicle" headlines Marketwatch.com. The Puma is an enlarged Segway that can hold 2 people in a sitting position. Both companies are hoping this promotion will create excitement for the not-yet-released product, thus generating a more positive opinion of both companies and establish early demand. Unfortunately, the product isn't anything at all like the iPod and the comparison is way off the mark.
The iPod when released with the iTunes was a disruptive innovation which allowed customers to completely change how they acquired, maintained and managed their access to music. Instead of purchasing entire CDs, people could acquire one song at a time. You no longer needed special media readers, because the tunes could be heard on any MP3 device. And your access was immediate, from the download, without going to a store or waiting for physical delivery. People that had not been music collectors could become collectors far cheaper, and acquire only exactly what they wanted, and listen to the music in their own designed order, or choose random delivery. The source of music changed, the acquisition process changed, the collection management changed, the storage of a collection changed – it changed just about everything about how you acquired and interacted with music. It was not a sustaining innovation, it was disruptive, and it commercialized a movement which had already achieved high interest via Napster. The iPod/iTunes business put Apple into the lead in an industry long dominated by other companies (such as Sony) by bringing in new users and building a loyal following.
Unfortunately, increasing the size of a product that has not yet demonstrated customer efficacy, economic viability or developed a strong following and trying to sell it through an existing distribution system that has long been decried as uneconomic and displeasing to customers is not an iPod experience. And that is what this GM/Segway announcement is trying to do.
Despite all the publicity when it was first announced, the Segway has not developed a strong following. After 7 years of intense marketing, and lots of looks, Segway has sold only 60,000 units globally – a fraction of competitive product such as bicycles, motorized scooters, motorcycles and mass transit. Segway has not "jumped into the lead" in any segment of transportation. It has yet to develop a single dominant application, or a loyal group of followers. The product achieves a smattering of sales, but the vast majority of observers simply say "why?" and comment on the high price. Segway has never come close to achieving the goals of its inventor or its investors.
This product announcement gives us more of the same from Segway. It's the same product, just bigger. We are given precious little information about why someone would own one, other than it supposedly travels 35 miles on $.35 of electricity. But how fast it goes, how long to recharge, how comfortable the ride, whether it can carry anything with you, how it behaves in foul weather, why you should choose it over a Nano from Tata or another small car, or a motorscooter or motorcycle — these are all open items not addressed.
And worse, the product isn't being launched in White Space to answer these questions and build a market. Instead, the announcement says it will be sold through GM dealers. This simply ignores answering why any GM dealer would ever want to sell the thing – given its likely price point, margin, use – why would a dealer want to sell Puma/Segways instead of more expensive, capable and higher margin cars?
Great White Space projects are created by looking into the future and identifying scenarios where this project – its use – can be a BIG winner that will attract large volumes of customers. Second, it addresses competitive lock-ins and creates advantages that don't currently exist and otherwise would not exist. Thirdly, it Disrupts the marketplace as a game changer by bringing in new users that otherwise are out of the market. And fourth it has permission to try anything and everything in the market to create a new Success Formula to which the company can migrate for rapid growth.
This project does none of that. It's use is as unclear as the original Segway, and the scenario in which this would ever be anything other than a novelty for perfect weather inner-city upscale locations is totally unclear. This product captures all the current Lock-ins of the companies involved – trying to Defend & Extend one's technology base and the other's distribution system – rather than build anything new. The product appears simply to be inferior in almost all regards to competitive products, with no description of why it is a game changer to other forms of transportation. And the project is starting with most important decisions pre-announced – rather than permission to try new things. And there is absolutely no statement of how this project will be resourced or funded – by two companies that are both in terrible financial shape.
The iPod and iTunes are brands that turned around Apple. They are role models for how to use Disruptive innovation to resurrect a troubled company. It's really unfortunate to see such wonderful brand names abused by two poorly performing companies without a clue of how to manage innovation. The biggest value of this announcement is it shows just how poorly managed Segway has been – given that it's partnering with a company that is destined to be the biggest bankruptcy ever in history, and known for its inability to understand customer needs and respond effectively.
The Fire Phone had a great opportunity to grow which it missed. The Fire Phone had several features making it great for on-line shopping. But the launch team did not focus, focus, focus on this application. They did not keep developing apps, databases and ways of using the product for retailing so that avid shoppers found the Fire Phone superior for their needs. Instead the Fire Phone was launched as a mass-market device. Its retail attributes were largely lost in comparisons with other general purpose smartphones.
Microsoft recently launched its Hololens. Again, a pretty cool gadget. But, exactly what is the target market for Hololens? If Microsoft proceeds down the road of “a cool tool that will redefine computing,” Hololens will likely end up with the same fate as Glass, Segway and Fire Phone. Hololens marketing and development teams have to find the ONE application (maybe 2) that will drive initial sales, cater to that application with enhancements and improvements to meet those specific needs, and create an initial loyal user base. Only after that can Hololens build future applications and markets to grow sales (perhaps explosively) and push Microsoft into a market leading position.