Posts Tagged ‘stalled economy’

How Fast can You Change?

May 12, 2013

A friend asked me, “Brian, why has the economy seemingly stalled?” My spontaneous answer was, “Well, I don’t think that people can change their behavior fast enough to take advantage of the changes happening all around them. I think that people are overwhelmed today by the chaos. The consumer has been left behind.”

The puzzled look on my friend’s face told me immediately that he did not see the connection I was making at all. Rather than taking a step backward, or taking a second step forward hoping to see indications of understanding, I let the conversation take a different course. Let me peel the onion that I did not peel that afternoon – let me make a few observations…

1) Product innovation that is too rapid leaves the consumer behind. Have you ever stopped upgrading software because the new features were not obviously of any use to you? Still using Windows XP? Well, the product innovation left you behind.

Perhaps the new features were not well thought out, and they were in fact duplicative or of no practical use to you. Phewy – why spend money for something you can’t use and don’t need for anything? That’s not a problem with you – blame the product designer for the ridiculous.

Perhaps, though, those new features are so different from what is familiar that you don’t see how they are useful. Even if someone points out how the new features are significant improvements on what was – significantly better tools, you might reason that if you don’t need those new features for what you do today, then why learn how to use them – nope, pass the upgrade by. Maybe that IS a problem with you. But you, my friend, are not alone if you fall in this second camp of consumer.

In the case of Windows, product innovation has left the consumer behind for a combination of both of the above reasons. If you discount Windows OS sales associated with new computers purchase, consumer upgrades from XP to Vista to 7 to 8 has been lethargic and reluctant and even painful – and getting more so with each successive release of the OS – and terribly disappointing for Microsoft financial results. Windows OS product innovation has left the consumer behind. And the Windows economy has stalled.

2) Product innovation that suddenly presents too many alternative products to the consumer leaves less room for a runner-up to succeed, and a bubble may emerge. Or a monopoly may emerge. How many consumers do you imagine shop for a large screen TV because of the 3D feature? In the near term, a crowded market quickly turns into a price-competitive market that squeezes new entrants out of the marketplace before a product sells a threshold amount that justifies the next cycle of innovation. Truly good products can disappear from a crowded market for no rational reason visible to the consumer. Companies fail. Innovators lose confidence and backers. In the near term, the good products in a crowded market don’t always win unless one product in particular is a true standout (Apple’s iPod). In the near term, this kind of market may become a bubble that bursts.

In the long term, mediocre products may be the only survivors simply as a result of deeper pockets of cash with their manufacturer, and being perceived as the least risk choice for the consumer. Monopolies of lackluster products may develop, and monopolies are inefficient markets over time. Inefficient markets full of ineffective products are not “vibrant” by any measure, and those markets will eventually stall or become declining markets. Monopoly markets are incredibly hard to upset with exciting competing products – after all, how fast can the consumer actually change?

Back to the question: How fast can you change?

I am a technology product manager. Once I launch a new product – a challenge in itself, I immediately plan for the innovation path. The problem for me in a nutshell is to innovate fast enough to challenge and out do the community of competitors, but slowly enough for the consumer to be able to appreciate the coming innovation, desire the coming innovation, and be able to change their behavior to utilize the coming innovation.

Apple succeeds in no small measure through evangelists. Apple recruits evangelists from their consumer population by engaging the consumer. Apple hosts developers conferences, hosts user forums, offers training in their stores, offers personalized shopping experiences, offers one-on-one services, etc. Apple has “genius” evangelists at every store to explain product features by way of solving customer problems. At every turn, Apple is working to propel the consumer forward through evangelism faster than if the consumer was left to their own devices.

Apple succeeds in no small measure by taking small incremental steps with their software. How different is MacOSX 10.8 from 10.7? 10.7 from 10,6? If you look at the release notes for the OS releases, Apple consistently touts more than 200 or 250 new features, but only several are significant, and the rest are nuances and polish. Apple sells the value of so many new features, but genuinely challenges the consumer to change their behavior on just a few. And how much is that new OS? Just $30 most recently… Heck, why not! Apple takes small steps with their current products.

Apple succeeds in no small measure by selling entire ecosystems that are smoothly integrated and virtually flawless. MacOSX / IOS / App Store / iTunes Store / iTunes Match / AppleTV / AirPlay / Photoflow / Bonjour is just one ecosystem. Apple has a communicator ecosystem (the iPhone is part), a developer ecosystem, an office productivity ecosystem, a hobbyist AV ecosystem, a pro AV ecosystem, an enterprise ecosystem. Apple sells a range of outstanding hardware platforms to suit these ecosystems. Apple ecosystems are all almost flawless – “and it all just works.”

Microsoft, on the other hand fails on all these strategies. Transitioning from Windows 7 to Windows 8 has compatibility headaches, fractured ecosystems, radical user interface changes (and challenges), steep pricing, and there is no one to sell the “goodness” or pull the consumer gently forward.

When I look around me, I see market after market filled with “Microsofts”, and not “Apples”. The consumer sees what I see, though they may nor comprehend what they see in the same way I do. The consumer sees a dizzying range of confusing products and services they don’t understand, fail to appreciate, and can’t really afford, and they are keeping their money in their pockets. How much money will YOU spend on a “flash in the pan” gimmick (if that’s how you perceive it)?

And by the way, more and more consumers over the past decade in particular are keeping more and more money in their pockets for essentials like food, shelter, medical care and transportation that combined are more and more often exceeding their incomes… You can’t understate this factor.

So, in summary, my friend, the economy is stalling because the vast middle class faces shrinking disposable incomes and mind-numbing, confounding choices in the market. There are exceptions, of course: the 1% is doing quite well, and there are in fact some excellent products and services in the market. But the 99% is largely keeping what little disposable income they have in their pockets (and not expanding their consumption of credit) because there is not much that is compelling to purchase.

Well, that’s my view when I wear my product manager hat!

Update – a follow-up question: “What do you think about Windows 8?”

I think Windows 8 is the most innovative Windows release in many, many years. The ability to flip from app to app with a swipe and the constant updating of the summary display with notifications are all terrific innovations I wish my iPhone had. This user interface is not quite ready for the desktop; however. And this user interface is a huge leap that brings too many changes too fast for the majority of consumers. I like it!

How fast can you change? Most consumers want to change rather slowly…