The Change Function

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

From: Issue 105 | May 2006 | Page 27 | By: Pip Coburn | Illustrations by: 
Hellovon

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.

The Change Function: Why do people adopt new technologies?

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).

Copyright © 2006 Mansueto Ventures LLC. All rights reserved.

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