The Change Function

Technologists think, "Build it, and they will come." But they're building plenty of cool stuff, and consumers aren't coming.

Funny what you remember. As global technology strategist at UBS, I had a ringside seat for the late-1990s boom. I was in on countless meetings with visiting management teams trying to explain why their tech startups would be the next hot initial public offering.

Looking back, here's the movie looping in my head: All those companies trekking through our office? Most had little to say that wasn't about them. The marvelous product or Web-based service they had come up with. Their can't-lose plan to get eyeballs. Their depth as a team. It was a rare thing indeed in those days to hear someone talk about his customers. Most of the companies couldn't have told us what their end users really wanted if we'd asked. "Build it and they will come," they believed. They turned out to be rather wrong.

Former Intel chief Andy Grove was widely known for his pat aphorism "Technology happens." If you give technologists enough time and money, he believed, they'll create miracles—and Moore's law of cost reduction will take care of the rest. The problem: The technologists' miracles too rarely yield commercial success. They build it, but we don't always come.

The tech industry has lost focus on the most important constituency of all—its customers. It is only when users take out their wallets and spend money that we move from hobbies to actual commerce. Most technology fails to make that leap; that's as true today as it was during the dotcom party.

Why do people adopt new technologies? People change habits when the pain of their current situation exceeds their perceived pain of adopting a possible solution. I call that the "change function." It may seem simplistic. It's supposed to be.

Change = f (level of current crisis, perceived pain of adoption)

When technologists see their products fail, they often blame it on price. But there's no market-clearing price for an ugly shirt. Or they'll say that the technology wasn't ready for prime time. But that's not it either. Technologists routinely deliver workable miracles without commercial success. The change function assumes neither is the problem and asks, Is there another reason this technology might have failed?

Consider the Internet refrigerator.

Is there a crisis users are experiencing that a connected fridge addresses? Short answer: no. My refrigerator works fine, even if I can't surf the Web while looking for tomato juice.

Is buying an intelligent refrigerator perceived as painless? Again: no. You have to waste a morning waiting for delivery and connection, and then, inevitably, more time listening to Barry Manilow while waiting for telephone tech support.

For most earthlings, the payoff doesn't justify all that. Technologists think we'll gladly adopt an innovation when it's manifestly smarter. But change is an emotion-laden process. Disrupting, game-changing technologies? No way. Most of us despise being disrupted and don't wish to be game-changed.

The technologies that stand the best chance of winning us over are enhanced editions of products we already understand. Flat-panel televisions, for example, are much better televisions with low perceived pain of adoption. Everyone "gets" what a basic television is all about. There's nothing to learn. At the same time, flat-panel TVs address a powerful need. True, it's both subtle and self-fulfilling: It's the psychic pain we feel for not having one. Since 19% of televisions sold in 2005 were flat panels, the technology appears set to hit a societal tipping point. Anyone who doesn't have one will feel deeply embarrassed about it. If that's not a crisis, I don't know what is.

A technology's success or failure is not merely fated. Instead, it demands action of one of two varieties. Technologists can identify and intensify a customer crisis. Or they can reduce the perceived pain of adoption.

That's not just a technology problem, of course. Marketing, for one thing, is crucial. Great marketing causes epiphanies; it can help customers think one of two things: "Ah. I see! I really want that! In fact, I need it!" (This is raising crisis.) Or: "Oh. It isn't nearly as hard as I thought. I'll do it!" (This is lowering the perceived pain of adoption.)

The tech industry has lost focus on the most important constituency of all—its customers.

The alternative is all too familiar to execs at TiVo, who have utterly failed to convince people that their otherwise great product is actually easier to use than a VCR. It's familiar as well to Wal-Mart, which hasn't managed to compel its suppliers to tag every item with radio frequency identification (RFID) before it reaches a store. Why? Because bar codes work just fine!

Most of the tech world seems to be headed toward more groveling in the dark, and more failure. I was at an off-site meeting last fall when a noted technologist said, "We have to build products for morons." This person, probably frustrated by his inability to change his customers' habits, long ago gave up trying to understand them. How sad. Technologists who could revolutionize the world have thrown in the towel.

Adapted from The Change Function: Why Some Technologies Take Off and Others Crash and Burn (Portfolio, June).

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