The Tyranny of Either-Or

As one reads some of the common wisdom about product and service innovation these days, it is easy to get the impression that the product and technology itself is not only irrelevant, but may be an impediment to success.  No less than Steve Bennett, CEO of Intuit, opined that customer-driven innovation wins consistently against technology-driven innovation in April 16th edition of the Wall Street Journal.  Yet, something seems to be lost in such rhetoric.

James C. Collins, in Built To Last, discusses the notion that great companies are not those that choose wisely between A or B.  Rather, Collins contends that great companies are those that find the way to do both A and B.  In the case of innovation, that means companies’ innovation programs should be both customer-driven and technology-driven.  This doesn’t mean finding a balance between the two approaches; it means being completely focused on both aspects of innovation.

But why should we worry about technology-driven innovation when some are calling for a retreat from this approach?  Simply put, because no one seriously hoping to be an innovation leader can afford to turn a blind eye to the insights that technology provides to customer and market opportunities.  Don’t believe it?  Let’s consider a product that is very popular in the innovation world these days: the iPod.

I have always found the most interesting part of the iPod story to be not what Apple did, but what Sony did not do.  That’s right; the real story of the iPod is the object lesson of Sony’s lost opportunity and failure to see the writing on the wall.  Sony, the unassailable king of the Walkman, was the heir apparent of the iPod phenomenon.  All the information required to forecast the emergence of the entire iPod ecosystem we see today was available to Sony fully ten years before the first iPod hit the market.

Had Sony thought to conduct a simple exercise in high-level functional modeling of the Walkman and derive an abstraction of the main system function, it would have been quite clear that the Walkman’s purpose was not to be a portable tape or CD player, but to be personal entertainment delivery system.  This conceptual view of the Walkman might have lead to a very different product evolution.  Sony could have used this insight to initiate some directed customer investigation to better understand the job that customers’ would want filled by such a system.

Another piece of important information was the path of evolution of the media.  Audio delivery had already progressed from inflexible delivery media (physical etchings in vinyl discs) to the more flexible delivery mechanism of electronic signals stored on magnetic media.  Given the natural technical evolution of such systems, it was abundantly clear that the future would mean more efficient delivery means that would dispense with the physical distribution components.  Not only was this observable in the current state of the art at the time, but this notion was further validated by the then new MP3 standard.

With the insights noted above, it would not have taken any great sophistication to understand that the future of the Walkman should be moving aggressively in these directions.  Had Sony pursued these lines of action, they would have been forced to consider the opportunity around creating a virtual market place for the distribution of the media content.  This consideration would have easily exposed the unfolding opportunity space.

Of course, it is easy to point these things out in hind sight.  But, that does not change the fact that the entire opportunity represented by the iPod ecosystem was part of Sony’s visible future.  Unfortunately, Sony failed to employ proper innovation best practices, and thus missed a huge opportunity. 

Hopefully, we can all learn from Sony’s mistake and make reading the technology tea leaves a formal part of our innovation disciplines.  When solid technology understanding is coupled with strong understanding of customer goals, organizations will have no problems recognizing the latent opportunities that are within their grasp.  Don’t be constrained by thinking you must choose between being either a customer or a technology driver organization.  Instead, develop the capability to be a master of both disciplines.  Someone else’s blue ocean might actually fall within your red ocean.  By leveraging your strengths you may be able to dominate a new market far more easily than other new entrants.

Comments

[Paul R. Williams]

Jim:

You are right on target with this...technology innovation advancements merely serve as the vehicle for solving the customer's need (real, perceived, yet to be discovered, etc.). Anyway you look at it, it is still needs to be customer focused at the core. Great and thought-provoking blog entry as usual!!!

[James Todhunter]

Yes, Paul.

But there is another nuance that should not be missed here. Pursued properly, the process of technical innovation can be a tremendous source of understanding and a powerful tool to identify customer goal insights.