Part 2: Before and After the Crossover

Defining the criteria for short term benefit and long-term competitiveness 

In Part One I talked about the gap that can occur between users’ expectations for the experience of using a product, application or service, and what can actually be delivered, and about how short-term decisions on improving that experience can become liabilities later. Here I’m going to talk about more effectively making those decisions both before and after the crossover, the point at which experience performance meets experience expectations. (If you haven’t read Part One, doing so will help here as I’ll be referencing terminology and concepts.)

A lot of this discussion will focus on decisions dealing with competition, since user experience is a competitive factor (not just a feel-good one), and can’t be separated from broader strategic decisions for a company as a whole.

Case Study: RIM Blackberry

In Part One I talked a lot about how Apple created a vertically integrated digital music ecosystem (iPod, iTunes and Music Store, deals with music labels, DRM, etc.) to shortcut itself to the crossover. For the time being, Apple is still largely alone at the crossover. The impact of earlier user experience decisions really become apparent, however, once another company also achieves the crossover and customers now have a choice of two high quality experiences. The Blackberry portable email device from Research In Motion (RIM) has been at the crossover alone for some time now, having largely created the product category and established the crossover itself, but is about to face some stiff competition. I’m going to use it as a way of illustrating the challenges and options around user experience once a competitor joins you at the crossover.

The Blackberry of course has become an indispensable tool for connected business people, and is notoriously addictive in nature - perhaps its user experience is too good! Undoubtedly RIM has done an outstanding job of creating a seamless and easy to use experience out of what is technically a very challenging problem. The device has many nice touches in both the hardware and software to make it efficient to use, and once set up it does exactly what you expect it to do.

However, there are four areas where it is vulnerable:

1. It doesn’t work particularly well as a phone. This has improved somewhat with newer models, but reception, form factor and sound quality issues are still problematic
2. Blackberry’s have been functionally driven in their aesthetic, they are not attractive to look at. Newer ones are again better, but the tactile quality of materials is poor compared to similarly priced consumer electronics or cellphones. In the status-conscious world of executives, such things matter once the initial novelty factor of the technology has worn off.
3. The RIM system requires significant investments in time, software, and manpower to get it running on the back-end. It must integrated tightly with software made by a third party in order to work properly - always a dodgy position, especially if the third party is Microsoft, as it is here.
4. There are initial and ongoing costs for set-up and maintenance. These can be substantial for large corporations.
   

The last two are mitigated by the fact that Blackberry’s are used heavily by the executives cutting the checks for the system...nevertheless they present chinks in the armor.

RIM has had this lucrative market virtually to itself, and now two major competitors are about to combine forces against it, and are going after exactly these four factors. Microsoft has been developing a mobile email platform, and Motorola is getting set to launch devices that use it.

Microsoft has the advantage of controlling the whole software chain, while RIM is dependent on compatibility with Microsoft, and Motorola knows a thing or two about making decent mobile devices which, at least recently, look good too. This combination is a modular approach, unlike RIM’s vertically integrated set-up, allowing each manufacturer to focus on what it does best while orienting around agreed standards. Motorola will only be the first of a salvo of device manufacturers to incorporate Microsoft’s platform, and while Microsoft may well not hit the ball out of the park this first time out, they usually get it right eventually (just ask Palm).

What can RIM do? They have a variety of options that I can think of, all of which require wrenching change. If anyone else has additional options please post them here and we can discuss.

1. Arm the enemies. Become a platform by licensing to other manufacturers. This will hurt the core business and very few companies have the nerve to make this transition. It’s not a sure-fire win, but if you can time it right (do it pre-emptively) and you have a monopoly on a market, as RIM does, it can work. Do it too late and you could just make the situation worse.
2. Expand into new markets, such as youth market. (The Danger Sidekick has modest uptake here, which either means it’s a nascent market or a small one. My sense is it’s the former, but it requires a device very different from RIM’s current offerings, and doesn’t play to its strengths. Engineering is RIM’s focus, not hipness, style or community)
3. Be satisfied with niche market, and charge a premium to highly demanding users in that niche. This has been Apple’s fate in its PC business.
4. Get hammered on costs, and try to keep up R&D efforts with reduced margins against competitors with much greater economies of scale
   

If I were RIM, I’d be very worried. I’ve got two large competitors breathing down my neck, I’ve been slow to evolve my product line, and I haven’t expanded beyond my core market (why bother, when it was growing so rapidly and customers are addicted?). My guess is that RIM will follow option four, the same as Palm and Tivo. Things will continue to look OK for a while, maybe even a few years, and then they will go very sour. Option three is a possibility, but my guess is that the overall market size is not big enough to support niche players (as is the case with PC’s), especially given its dependence on Microsoft compatibility. I don’t have any insider knowledge, but going by public statements by RIM executives there is a strong not-invented-here culture to the company (ironic if the patent lawsuit is an indication) and a sense of invincibility, which are not good qualities to have as you navigate the crossover. In RIM’s case, such attitudes pretty much take options one and two off the table.

Back to the Beginning

So that’s what after the crossover looks like. Not a pretty picture, is it? But what about before it, if you’re just starting out in those heady days of blazing new trails?

Say you’re a start-up or a skunkworks in an established company looking to enter a new market, or even create a new product category. How should you make decisions about what parts of the UE to keep in-house, and which parts you can farm out?

First you have to assess the size of the gap between expected experience and what can actually be delivered or is being delivered today (if anything). You also have to judge how far away the crossover is and how rapidly commoditization of the experience will happen once the crossover is established. There are no hard and fast rules to making these judgments, and they can be fairly subjective. Triangulation is the best method:

1. People who are close to the customers, whether user researchers or sales people or in-house users, have to be the ones to assess the size of the experience/expectation gap. This is not something that can be easily asked of customers directly, since they usually can’t articulate something for which they have no frame of reference. You have to read between the lines and develop an intuitive sense of what the "ideal" experience would be like, then visualize and make it concrete for others to experience in prototype form. This runs counter to the data and benchmark driven culture of many companies (I wrote about this in Rain Man to Spiderman). This is something Apple excels at. They do little or no user research early in development, though they do do usability testing for refinement later on. But it has its risks - Apple has missed the boat on a number of occasions, such as ignoring the mp3 market for a year while Jobs was focused on home movies.
2. People who approach it from a technology point of view have to assess how quickly technology improvements will enable closing the gap. In other words, how much of a head start will you have?
3. People who approach it from a business point of view have to assess relative merits of coming quickly to market, against the possible retardation of customer base growth with a sub-optimal experience. Whole books have been written on this subject, it’s too complex to go into here
   

Once you’ve done these analyses, you have to decide which elements of the user experience are mission critical and need to be kept in-house for development, and to help ensure long-term competitiveness. If you’re in a purely software venture you don’t have to worry too much about manufacturing partners, but any reasonably complex hardware/software product is going to involve outside vendors, so you want to think about what you can farm out.

A key trait to look for is to find partners who are willing to collaborate, who can be flexible as you define what the quality of experience is you’re trying to achieve. This may seem obvious, but it’s surprising how often this is ignored.

I read a review of a Sony laptop a couple of years ago, and it talked about how it came with three different applications, all from different vendors and with different UI’s, to handle different links of the video editing chain (as opposed to Apple’s one, iMovie). Such careless bundling is not uncommon, and the customer’s blame will fall on the master brand (Sony).

In this the applications were made by obscure third parties. You can also go with an established brand to work with, and this can have upsides and downsides. Two questions to ask on this are:

1. Will that brand be able to make its own competitive entry once you’ve helped establish the market?
2. What proportion of the total user experience is this other brand responsible for.

Apple didn’t choose a prominent brand such as Logitech as its partner for making the interface control on the iPod (touchpad technology from obscure Synaptics was used). Logitech has a reputation for excellent ergonomics and product design, but could have credibly entered the mp3 market itself and would have presented a future competitive threat. Also, the two brands would have competed against one another within a single product, and neither likes to play second banana.

On the United airlines flight I’m on as I write this, they are “Proudly brewing Starbucks”. Starbucks is unlikely to get into the airline business (though Sir Richard Branson makes both cola and airlines, among many other things, so you never know!), and the coffee is a very small part of the overall experience. Unfortunately the poor quality of the coffee means neither brand is getting helped. This is a potential downside of brand association.

A more successful example can be seen with automotive companies’ collaborations with established home hi-fi brands, such as Bose, Harmon/Kardon (under its own name, as well as it subsidiaries JBL and Mark Levinson). Audi is offering a Bang & Olufsen option in its top-of-the-line S8, and charging a $7500 premium for it. Talk about a halo effect!

These match-ups work because the hi-fi companies are unlikely to become car manufacturers, audio represents a fairly small portion of the overall car ownership experience, and each brand has the space to do what it does best and is enhanced by the association. The most successful implementations come from true collaborations, where the auto company modifies the car interior to meet the needs of the audio system, and the hi-fi manufacturer does acoustic analysis of the cabin layout and materials. There are downsides, however: Bose is profligate with who it develops for, which weakens the competitive differentiation amongst the car companies themselves.

Sum Up

Hopefully this has been a useful discussion. There are many nuances to this issue, and many other examples that could be discussed (and as I think of relevant ones I’ll continue to post about them). The core message I’m hoping to communicate is that decisions about user experience can’t be separated from broader business strategy decisions, which is unfortunate as often they are discussed in isolation. User experience advocates talk about the (very real) benefits of improving UE, but a deeper analysis of how to achieve this can be lacking. Likewise, writers on business often treat UE as a peripheral topic. In today’s economy, though, your business is your brand, and your brand is your user experience. So goes one, so goes the other.

I'm not planning on making it a habit to review products on this blog, but if you're an inveterate article clipper like I am, I want to commend you to these single sheet cutters from Levenger. They are small, as you can see in the photo, so can be kept in your pocket (without damage), and have a small ceramic tip that protrudes ever so slightly from one edge. This is just enough to slice through a single sheet of paper, leaving the paper underneath untouched (well, you can't press too hard, and it helps to be on a flat even surface). Very handy and much neater than a pair of scissors.

I was reminded of the above line from Spinal Tap while reading an article in the October 2005 Technology Review called, "The Customer is Sometimes Wrong." It's about Salesforce.com, the company which does web-based Customer Relationship Management software. In case you're not familiar with it, this is software that allows sales people in companies to track contacts, leads, and manage accounts, and it's really a very big industry. Traditional CRM systems are sold by companies such as Oracle, IBM and Siebel, and can be, as the article says, "complex, expensive and temperamental." Marc Benioff left Oracle to start Salesforce.com, and he had a vision to remove all that complexity, and the attendant annual costs of servicing and equipment and upgrades and training, and shift everything over to a web-based application with the data stored remotely.

This meant that instead of all the data residing inside the computers belonging to the owner of the software, it would now be stored by Salesforce.com. It's the difference between using an email application like Outlook, and using Hotmail - one is kept local, the other remote. This caused, to say the least, a lot of skepticism, since much of this data was a) very sensitive if it were to get in the wrong hands, and b) very critical to have access to at all times, for large companies had sales people all over the world that needed it 24/7. Buyers of CRM software wanted 100% control of their information, 100% of the time, even though it meant a lot of pain in other areas.

How do you decide that when a customer says something is stupid, they actually will think it's clever when they see it, and vice versa? 

Salesforce.com made a very conscious decision to ignore what its potential customers were saying they wanted.

They were not the only ones pursuing hosted approaches to data: VC's in Silicon Valley were funding a lot of companies doing similar things. They were telling the companies they were investing in to give customers options, hosted and non-hosted. Benioff didn't buy it, and made a bet-the-farm decision to go purely hosted. As the article says (emphasis mine):

"Benioff and his small staff - working mostly out of Benioff's home - considered it a bad idea to grant their customers the in-house option. So they did the unthinkable: they walked away from the prospective investors who insisted on the 'choice' model."

On the face of it, this goes completely against the grain of user-centered design, where it is considered arrogant to say you know better than customers what they want, and you should get as close to them as possible and understand their every need. As it turned out, Benioff was right, and the customers (and the common wisdom) were wrong, and many of those same customers are now subscribers to Salesforce.com.

How do you decide that when a customer says something is stupid, they actually will think it's clever when they see it, and vice versa? For someone like me who does a lot of user research, this is the sort of thing that causes sleepless nights.

I saw a talk years ago by the late Rolf Faste, who was a professor of design and engineering at Stanford. He drew a bellcurve on a chalkboard and talked about how the quality of ideas follows it. Most are pretty average, while some are very clever and some are very stupid:

Hopefully you only purse the cleverist ones and leave the stupidest ones behind. But how do you tell the difference? The difficulty is, the line between stupid and clever is not stable.

Here's an example: In the early days of the Palm Pilot, they did usability testing to see what features people wanted on it. Palm thought that wireless email would be the killer app. In fact, it was a bomb. No-one wanted it. At that time, people got very little email and they checked it only a few times a day (this was way back in the early 90's), and having it wireless seemed totally, well, stupid. (There's an outstanding interview with Palm's software architect, Rob Haitani, in the book Information Appliances and Beyond, that has many nuggets of insight about creating great, usable, useful products that applies across all product types. Highly recommended.)

Five years later, RIM launched the Blackberry to do exactly that same task, and they had a huge hit. Very clever. (Assuming they don't get shut down by the patent infringement suit, which would give a lot of people a very bad day.)

This brings us back to Rolf Faste and his bell curve. What he did next was to extend the curve into three dimensions, which makes it look rather like a UFO (I've recreated his chalkboard drawing in a more modern medium):

What becomes evident, then, is that in fact the stupidest ideas and the cleverest ideas can be one in the same! What makes the difference can simply be time: ideas that make sense in one context at one time, become really bad ideas in another context at another time.

Faste then drew a number of other UFO shapes around, like they were flying over a landscape, illustrating how these groupings of ideas can all be floating around, moving through time together, increasing and decreasing in stupidity or cleverness, merely by the progression of time:

This doesn't help answer the question of how to tell which side of that fine line between stupid and clever you're on, but it should at least prompt us to keep an open mind. In the case of Salesforce.com, such open-mindedness has taken their share price from $11 at their June 2004 IPO to $40 today, and given them almost a 10x increase in customers over the last 4 years, while Oracle and Siebel's CRM businesses have struggled.

Maslow's pyramid traditionally has the wide end of the pyramid at the bottom, with Physiological needs being the biggest layer, and self-actualization being the smallest. In the western consumer world, this now seems upside down. We have very few needs (shelter, food) and a superfluity of wants and desires (five billion people do not having this luxury of course). In fact, as each layer goes up, it multiplies the number above. Example: Love and belonging lead to esteem in many ways - low-fat lattes and gym memberships are two means of satisfying those. One of the critiques of Maslow is that he took an overly Platonic view of "actualization", where each person strove to achieve their single utmost goal in life, hence it being at the "peak". (One of the other critiques is he didn't define very well what actualization actually meant...). Today our cup runneth over with shelf-loads peak experiences, each competing to out-peak the next. You can even get peak experiences for satisfying Love/Belonging (Table For Six and eHarmony.com), Esteem (day spa's) and Actualization (yoga retreats).

In the US, muscle cars are back, in a big way.

Sales of the Ford Mustang and the Chrysler 300 have been strong, and retro styling themes have been cropping up in numerous production cars as well as show cars, reflecting on past glories of American V8’s and fins. (And this is leaving out other brawny retro creations such as the Ford GT40, which looks almost identical to the original on the exterior.)

At the Detroit Auto Show last week there were a couple of big concept car announcements along these lines, the Chevrolet Camaro and the Dodge Challenger. The Camaro of course is a revival of a nameplate that’s been absent for a few years, while the Challenger hasn’t been seen for a lot longer. Of the two new concepts, the Camaro is by far the more interesting and successful design, clearly harking back to the very first model from 1967-9, regarded by many (including myself) as the best looking of all. The proportions, surfacing and detailing are all more modern, however.

The Challenger is, well, Peter Lorenzo at Auto Extremist sums it up nicely:

First of all, the Challenger, though obviously calculated to be an improvement on the original in every respect, was far too literal in the flesh. Yes, it was cool and everything, but Chip Foose could have easily created something just like it in his shop. And the fact that Chrysler designers went around “fixing” all of the things that were wrong on the original and stopped there, left them no room to take the car further or “reach” with it in the future. The Challenger garnered lots of attention for Chrysler in the weeks leading up to the show, but by the time the actual media days arrived, it came off as a one-off custom hot rod designed to add a little eye candy to the Dodge display - and nothing more.

Why are American cars getting so muscle-bound? Perhaps it’s an after effect of 9/11, a “fuck you, get outta my way” statement. These cars are retro-actively bringing back idyllic times of 30 years ago where cars were about emotion and soul and Saturday nights. (A time that a lot of the young designers working on these cars will have no first hand memory of, if they had even been born by then.)

Ah yes, the heady days of the early 70’s. 

But the world is more complicated now, and getting caught up in chest-thumping and nostalgic recollections of simplistic Americana is counter-productive.

The other thing people were doing a lot of in the early 1970’s was waiting in line at fuel pumps. Japanese companies with odd sounding names like Toyota introduced cars that looked kinda funny and weren’t that good, but they were inexpensive, reliable and got great economy. They learned fast, and have continued to do so.

Now Toyota is introducing hybrids that are (more) expensive (than equivalent non-hybrids), but are (just as) reliable and sip (even less) gas. To date they have looked kinda funny, which has made them stand out and made them iconic in Leonardo-drives-one kind of way. But in certain sectors of the country they have six month waiting lists. At the Berkeley, California Toyota dealership, near where I live, over 50% of their sales are Prius hybrids. These are considered fringe whacko people by magazines like Car and Driver, but that’s about to change, and change in a big way.

At the same show as the Camaro concept, Toyota also introduced its most mainstream hybrid yet, a new Camry, which will be available with its Hybrid-Synergy Drive. The hybrid engines require very sophisticated technology and Toyota and Honda have a multi-year jump on the American companies, and the gap is only getting bigger (so much so that Ford is licensing the hybrid technology for its SUVs from Toyota). One can imagine a world of “Toyota Inside” where engines are sold like CPU’s because they are too complex for most companies to bother developing internally. (And Toyota collects revenue from all its competitors.) These are brainier engines, not just brawnier ones, developed by companies that embrace braininess, not just brawniness.

Cars like the Camry will take the technology mainstream, since it is about the best selling car in the US of A. The Camry is the epitome of the anti-muscle car: family, boring, predictable. Or is it? Past versions have certainly been so, but with the new model Toyota has significantly boosted the testosterone level on the styling in order to appeal more to male buyers. It doesn’t get your heart pumping the way the Camaro does, but…

Brains vs. Brawn. Today American companies (and probably most consumers) see these as self-excluding opposites. I’m willing to bet that in five years, if not less, Toyota or Honda will prove them wrong and we’ll see true sports cars getting 50mpg.