When to be Visionary, When to Adjust

[Another book work-in-progress sneak peek here. This is from the chapter on Adaption — making continuous adjustments to strategy and offerings based on ongoing monitoring of the changing environment.]

We have all seen an intriguing new idea shot down prematurely. New ideas are inevitably rough, full of holes, unproven. The more radical the idea, the more this will be true. If an organization is set up for incremental innovation, the bias will be to poke the holes rather than support the promise. Often a charismatic and influential leader is necessary to shepherd the ideas along and provide the high-level guiding vision.

But the best leaders also recognize that in a complex world sticking to a vision come hell or high water can also be a recipe for disaster. In the face of rapid change, effective adaption requires an understanding of the gap between how the world is, and our aspirations for how it could be. But it can often be hard to conceptually bridge that gap.

The problem, of course, is that it is often hard to tell the wheat from the chaff ahead of time. To quote another sage, St. Hubbins (that would be David St. Hubbins, of the fictional heavy metal band Spinal Tap), “It’s such a fine line between stupid and clever.” This basically sums up the paradox. How do you deal with the fact that sometimes clever and stupid are the exact same thing, it is just a matter of timing that determines whether you are a hero or a zero? (This post from a few years ago goes into more detail.)

So is it better to adhere closely to a vision and ignore the brickbats of stick-in-the-muds, or to adapt the concept based on feedback from experts and customers, and changes in the competitive context?

A simple diagram illustrates the capriciousness of this dilemma:

These well-known examples show that both staying true to the vision and adjusting it can result in hits or flops.

Jeff Bezos had a vision for 1-Click which met initial resistance from customers when tested, but by making some small changes they turned it into a very popular feature.

By contrast, New Coke, one of the most famous big flops in all of business, was chasing a need that did not exist — Coca-Cola was simply responding to the taste tests that Pepsi were running on television. Coca-Cola lacked conviction behind the new product, and it was not truly rooted in what customers wanted.

Like New Coke, “Betamax” has become a synonym for product failure, albeit one that hung on for ten years or so before giving up the ghost. Sony’s vision for Betamax focused on recording TV-shows, but its one-hour recording time was too short for movies or lengthy sporting events. Furthermore, Sony did not see the opportunity in selling tapes pre-recorded with movies. JVC’s competing VHS format addressed both these issues. After launch, Sony did not adequately adjust to respond to emergent customer needs, costing it its first-mover advantage.

During development and the run-up to product launch we want to be triangulating on the emerging problem definition (i.e. the problem the product is intended to solve) from as many angles as possible to give ourselves a full picture and confidence that the vision is indeed on target. Negative comments from customers must be put in that broader context.

We do not want to get in the trap of being led around by the nose by customers. As my colleage Albert Tan observes, focus groups were originally called that because they were intended to focus the research; they were never intended to be the research. Unfortunately at many organizations, focus groups have become a substitute for taking ownership of the vision, as was the case at Coca-Cola when they introduced New Coke.

After launch, we should stay deeply immersed to pick up the signals, large and faint, that indicate how close we were to the mark. Chances are, we did not get it exactly right the first time — with an X-problem you almost never do. So we need to see where the gaps are between what people want and what the product can do, but again filtering this through the lens of an expertise-informed vision of the future. As customers adapt to our new offering, we want to see how they change their habits and what new needs emerge. Doing so will avoid being the next Betamax.

Sadly, there is no pat answer whether to stay unwavering to your vision, or adjust it based on feedback.

Passion and Compassion

Another frog colleague, Mark Olson, suggests a nice way to think about it. First, do you have passion for the vision? That is, are you truly committed to it because you believe in its potential? Do you see promise where naysayers only see faults? Do you see the clever-ness where others see stupidity? Second, is the vision rooted in compassion for customers? In other words, is it based on a deep understanding of underlying customer needs, perhaps ones that they have not expressed explicitly?

If both of these are true, then staying close to the vision may be the correct course. (That does not mean that particulars of the instantiation of the vision cannot be adjusted based on feedback, however.)

If only one or the other is true, then you should stay open to new possibilities for what the vision is, or what customers truly need.

More book details >

Focusing a product portfolio

Another work-in-progress book sneak-peak here. As always, comments and feedback welcome, either through comments on the form on right side of the About Me page.

I’ve been thinking about how companies focus their product portfolios so that they do not run into the peanut butter problem that Yahoo infamously was accused of. One company that has successfully managed to maintain a quite diverse portfolio that also hangs together nicely is Logitech. Logitech must constantly enter new product categories as every category it goes into get commodified fairly quickly.

Having as diverse portfolio as Logitech can lead to a company becoming unfocused. John Hagel and John Seely Brown argue that, “Without some sense of long-term position, movement rapidly degenerates into random motion… Companies lacking a sense of direction usually fall into reactive approaches, pursuing too many options at the same time. The result is that resources are spread too thinly and performance impact diminishes because all the initiatives are under-resourced. In times of increasing uncertainty and rapid change, reactive approaches can become significant traps.”

Logitech’s success shows that it is important to have a clear understanding of your values, your priorities, and what you bring to the table. Logitech’s product line is diverse but looking at it we can see some clear criteria that have guided its expansion:

• Focus on products that involve human interaction. Hands-off products like wireless routers, for example, would not be a fit for Logitech.
• Look for categories that are just emerging from the bottom of the S-curve and are poised for mainstream growth and maturity. Logitech is not a pioneer of categories, but is very good at sensing early possibilities and getting in early. It can also use its design, manufacturing, distribution and marketing prowess to thrive once the category gets mature and margin-squeezed.
• There must be opportunities for innovation, particularly in the areas of customer experience, design, ergonomics, and technologies that Logitech is familiar with (optical, ASICs, sensors, microcontrollers) or unfamiliar ones that do not require large R&D investment (e.g. software design)
• Not every category has to be a mass category. Logitech has some fairly exotic products, like specialized devices for controlling 3-D computing environments. But Logitech can make them work if they fit the criteria of demanding users who will pay a price premium, the product life-cycles are not annual or fad-driven, and there is enough of a market to support them without requiring large marketing effort.

Did Logitech start out years ago with these principles? Unlikely. It takes time to discover one’s strengths and weaknesses as a company through a process of trial and error. Just as customers have a hard time abstracting their unmet needs, companies have a hard time abstracting what they do well or not do well. It is often not until a portfolio expansion works well or fails that a company discovers where its true competencies lie. Like a rock climber, you have to fall off before you realize your limits.

Some of Logitech’s divergence guidelines could be considered core competencies, such as knowing how to spot a promising new product category and jump in at just the right time. This doesn’t involve technological competency, but it is valuable capability nevertheless, and Logitech’s consistent success at it cannot be just chance.

How Google Pulls the Plug

Google pulled the plug on several products recently which were not doing so well, including competitors for Twitter and Second Life. Does Google have a similar intent as GE, where if they are not number one in their industry then they pull out? Things are probably not that draconian at Google, but an article on the NY Times sheds some light on how they choose what to continue and what to cancel:

When evaluating nascent projects, Google takes a hard look at interest — and in these cases, the interest simply wasn’t there.

“There’s no single equation that describes us, but we try to use data wherever possible,” said Jeff Huber, the company’s senior vice president of engineering. “What products have found an audience? Which ones are growing?”

All of the shuttered projects failed several of Google’s key tests for continued incubation: They were not especially popular with customers; they had difficulty attracting Google employees to develop them; they didn’t solve a big enough problem; or they failed to achieve internal performance targets known as “objectives and key results.”

The expected metrics of advertising revenue, uptake by users, and strategic fit are obvious enough. The one that I was struck by was the internal measure of whether employees were fired up about the product and flocked to it. Google’s employees thus have a Darwinian effect on what continues to be developed, with the assumption being that their interest level reflects a maximum potential interest level in the market.

I wouldn’t want to go so far and say that it’s an example of crowdsourcing (which only works effectively if there is a definitive, objective answer), but obviously Google pays attention to the group’s collective consensus about whether a product has legs.

This isn’t for everyone - it really depends on how well your staff’s interests align with your customers’. Ideally they are a very close match, but people get excited about products for lots of different reasons that have little to do with whether customers will want them. And if you are a smaller organization then you won’t have the scale of a large corporation and its bell-curve of perspectives on a particular product under development.

Nevertheless, it’s a metric worth considering when deciding whether to drown a puppy.

Related articles:

• NY Times: How Google Decides to Pull the Plug
•  Google’s Innovation Surplus