Essays & Articles


The Life Cycle of a Technology: Why it is so difficult for large companies to innovate

(Suggested reading links are to the catalog entries, except for one link to the MIT Press web page for my Chapter 2.)

As I wrote “The Invisible Computer,” I was struck by a paradox. On the one hand, there is very substantial agreement that ease of use and understandability are important. Similarly, good industrial design, simple, short documentation, and convenient, pleasing products are superior. I wondered why, if ease of use and understandability seems to important, On the other hand, much of the computer technology today violates all these things, yet the companies prosper. In fact, Apple Computer, the one company that tried hardest to make products that were easy to use, understandable, with sophisticated aesthetics driving both graphical design on the screen and industrial design of the products, failed. (Yes, I know: Apple still exists, with a loyal band of followers who will follow it to its death, alas, But 4% of market share does not constitute success. I gave 5 years of my life to Apple Computer, 4 1/2 of which were the best job I ever had. I sympathize, but sympathy and business success are unrelated.)

So why is it that good products can fail and inferior products can succeed? This became the theme for the book.

The story is complex: it takes a book to explain. But there are three themes.

One: A successful product must be balanced: marketing, technology, and user experience all play critical roles, but one cannot dominate the others.

Two: There is a big difference between infrastructure products, which I call non-substitutable goods, and traditional products, substitutable goods. With traditional goods, a company can survive with a stable, but non-dominant market share. Coke and Pepsi both survive. Cereals and soaps have multiple brands. With infrastructure goods, there can be just one. MS-DOS won over the Macintosh OS, and that was that. MS-DOS transitioned to Windows, and the dominance continued. VHS tape triumphed over Beta. Most infrastructures are dictated by the government, which assures agreement to a single standard. When there is no standard, as in AM stereo or digital cellular options in the US, there is chaos.

Three: Different factors are important at different stages in the development of a technology. In the early days, technology dominates. Who cares if it is easy to use? All that matters is better, faster, cheaper, more powerful technology. In the middle stages, marketing dominates. And in the end, mature stages — where the technology is a commodity. User experience can dominate, user experience and marketing. As in soap and cereal. As in watches. Swatch sells its watches for their emotional appeal, not their accuracy: accuracy is taken for granted.

The computer industry is now mature. The customers want convenience and value for their money. They want ease of use, emotional appeal. But the computer companies are all teenagers, resisting the pressures to grow up. Too bad. The customer is not well served.

To read more about this, see my book, or at least see Chapter 2, which you can get from the MIT Press website: Chapter 2 — Growing Up: Moving from Technology-Centered to Human-Centered Products

My argument is buttressed by the following books, books that I recommend most highly:

Diffusion of innovation: The classic study of the transition from early to late adopters.

Rogers, E. M. (1995). Diffusion of innovations, Fourth edition. New York: The Free Press. (The classification scheme for adopters of innovative technology has a long history. The classic text in this field is Everett Rogers’ Diffusion of innovations, which is now in its fourth edition. The story of the classification of adopters into the categories of “innovators,” “early adopters,” “early majority,” “late majority,” and “laggards” is told in Chapter Seven, “Innovativeness and adopter categories,” pp. 252-280. This is the source of the categories that Geoffrey Moore used in his work “Crossing the Chasm.”).

Figure 2.3 from Norman (1998: The Invisible Computer)

The change in customers as a technology matures. In the early days, the innovators and technology enthusiasts drive the market; they demand technology. In the later days, the pragmatists and conservatives dominate; they want solutions and convenience. Note that although the innovators and early adopters drive the technology markets, they are really only a small percentage of the market; the big market is with the pragmatists and the conservatives. (Modified from Moore [1995]).

Crossing the chasm. The chasm is between those early and late adopters, requiring very different marketing. This is the classic book in Silicon Valley for high-tech industry.

Moore, G. A. (1991). Crossing the chasm: Marketing and selling high-tech goods to mainstream customers. New York: HarperBusiness. The classic marketing book for high-technology companies, widely read and discussed, but almost never followed. Why is it so difficult for a high-technology company to understand that late adopters of a technology are very, very different from the technology enthusiasts who made the company successful? Because the whole culture of the company is based on its wildly successful teen age years, and high-tech companies hate to grow up. Immaturity is embedded in the culture. Technology is easy to change. Culture is hard. (Which is what my consulting business is all about — changing culture.)

Moore, G. A. (1995). Inside the tornado: Marketing strategies from Silicon Valley’s cutting edge. New York: HarperBusiness. The follow-up book to “Crossing the Chasm,” with more specific breakdowns of marketing strategies to follow once your company has crossed the chasm. This is a lot more specific to high-technology companies, and perhaps too simplistic and optimistic about the time course of company and market growth.

The innovator’s dilemma. Why it is so difficult for large companies to bring disruptive technologies to market?

Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Boston: Harvard Business School Press. Clayton Christensen’s book provides a detailed and thorough analysis of this phenomenon. He finds that innovative, disruptive technologies are, at first, perceived as toys. The companies evaluating them and their best customers see them as overpriced and underpowered. In fact, Christensen shows that asking your customers is the wrong approach. In the end, these “toys” dominate, killing those that went before. (E.g., hydraulic shovels, small disk drives, personal computers, …). A very important book

Figure 2.2 from Norman (1998: The Invisible Computer)

The needs-satisfaction curve of a technology. New technologies start out at the bottom left of the curve, delivering less than the customers require. As a result, customers demand better technology and more features, regardless of the cost or inconvenience. A transition occurs when the technology reaches the point where it can satisfy the basic needs. (Modified from Christensen [1997]).

The dynamics of innovation. How industries transform themselves as innovations play out over time. And how and why new players tend to dominate over the older, more established firms.

Utterback, J. M. (1994). Mastering the dynamics of innovation. Boston: Harvard Business School Press. This is the classic text that led the way for such studies as Christensen’s analysis of innovators. One lesson I took home was that there are two different kinds of innovation: product innovation and process innovation.

Companies first innovate in their products, but then, to be successful, they must innovate and refine their processes. Process innovation is essential to mass marketing, to bring price down and quality up. But it also requires standards, procedures, and administration. It is the death of further product innovation. Once process innovation sets in, it puts the whole company into an efficiency mode, with little time, energy, nor inclination to look outside their narrow ways into whole new approaches. This is one reason why the small, nimble new companies can take over: they move faster, they are willing to take risks (in part because they have so much less to lose). The proper way for a large company to fight this trend is to have separate divisions charged with innovation and freed of the tyranny of the quarterly profits-and-loss statement and the need to bring in a fast return on equity. If a company is not failing in its new product attempts, it isn’t doing things right. The lack of failure is a sign of conservative, safe, and eventually, suicidal behavior.

The consumer, commodity stage of a business. In the early days of a technology, buyers want more and more technology. They will overlook instability, difficulty in use, inelegant appearance. At the late stages, as the works above point out, the customer set changes radically. Now consumers want efficiency, pleasure, and convenience. This requires a very different form of product development than can be used in the early stages of a technology. This requires human-centered design. This is what my book is all about.

Norman, D. A. (1998). The invisible computer: Why Good Products Can Fail, the Personal Computer Is So Complex, and Information Appliances Are the Solution. Cambridge, MA: MIT Press.

Figure 2.4 from Norman (1998: The Invisible Computer)

The change from technology-driven products to customer-driven, human-centered ones. As long as the technology’s performance, reliability, and cost fall below customer needs, the marketplace is dominated by early adopters: those who need the technology and who will pay a high price to get it. But the vast majority of customers are late adopters. They hold off until the technology has proved itself, and then they insist upon convenience, good user experience, and value.