The Change Function: Why Some Technologies Take Off and Others Crash and Burnby Pip Coburn
Pip Coburn became famous for writing some of the liveliest reports on Wall Street. He quoted everyone from Machiavelli to HAL, Anaïs Nin to Yoda, Einstein to Gandhi. But along with the quirky writing, he consistently delivered sharp insights into technology trends and/b>
The ultimate guide to predicting winners and losers in high technology
Pip Coburn became famous for writing some of the liveliest reports on Wall Street. He quoted everyone from Machiavelli to HAL, Anaïs Nin to Yoda, Einstein to Gandhi. But along with the quirky writing, he consistently delivered sharp insights into technology trends and helped investors pick stocks with long-term potential.
After years of studying countless winners and losers, Coburn has come up with a simple idea that explains why some technologies become huge hits (iPods, DVD players, Netflix), but others never reach more than a tiny audience (Segways, video phones, tablet PCs). He says that people are only willing to change when the pain of their current situation outweighs the perceived pain of trying something new.
In other words, technology demands a change in habits, and that’s the leading cause of failure for countless cool inventions. Too many tech companies believe in "build it and they will come"— build something better and people will beat a path to your door. But, as Coburn shows, most potential users are afraid of new technologies, and they need a really great reason to change.
The Change Function is an irreverent look at how this pattern plays out in countless sectors, from computers to cell phones to digital TV recorders. It will be an invaluable book for people who create and invest in new technologies.
Consider the cool new things that have been immediately successful: Apple's iPod, the flat screen television and Netflix. Now, switch gears and think about the major failures: the picturephone, the Segway and the Tablet PC. Billions of dollars ride on this question: Why do some new technologies succeed and others fail?
We've all heard it before: "Build it and they will come." Well the last six years have proven that at least in the technology industry, that maxim is shockingly — and expensively — untrue. But there's an alternative approach, one that is user oriented and not so supplier-centric. That's what The Change Function is all about; technology companies need to become riveted to the needs and wants of the users they seek. Users are in charge of what they spend their money on — and they always have been. The technologists may be the magicians, but the users have the checkbooks.
According to Steve McMenamin of Atlantic Systems Guild, "People hate change … and that's because people hate change … I want to be sure that you get my point. People really hate change. They really, really do." Back in 1962, Thomas Kuhn wrote Structure of Scientific Revolutions. Kuhn suggested that the entrenched interests in an old paradigm will resist change as long as they can until their own theories start to encounter massive holes in explaining the phenomenon at hand. Crisis precedes change. It takes crisis because change is difficult!
What are some ways folks have crisis in technology? What do folks want so desperately that they might consider their situation a crisis? Even if a new technology solution is disruptive by some technical assessment, it is often unclear to the users that such is the case regarding their own wants and needs.
The good news? Creating technologies does not have to be hit or miss. When do users have a crisis? When all their friends have a flat-screen TV and they feel like dopes admitting that they don't. Who doesn't have a crisis? The guy already satisfied with his cable modem service who's being bombarded with advertisements to switch over to DSL service.
The Total Perceived Pain of Adoption
Why do we open our wallets and decide to buy something, anything? What takes us from being potential customers to actual customers? Most people say this is an easy question: When the price is right. Isn't that all there is to it? Not at all. Much of the time, price accounts for less than 10 percent of the total perceived pain of adoption, or TPPA.
If the level of crisis is higher than the total perceived pain of adopting a new solution, then a change will occur. If the crisis is lower, then things will stay as they are.
Why Technology Fails
The Picturephone was a device developed by Bell Labs in 1956 as a prototype and launched by AT&T at the 1964 World's Fair in New York. It consisted of a telephone handset and a small TV. In other words, people talking on the phone would be visible to those with whom they were having a phone conversation.
Shortly thereafter, Picturephone service began between New York City, Chicago and Washington, DC, at a cost of $21 for a three-minute call — and that was on top of the hardware cost of around $500,000 for the Picturephone itself. AT&T executives were convinced that three million units would be operating in homes and offices by the mid-1980s, bringing in revenues of $5 billion a year. However, AT&T banked on network effects to drive adoption of its Picturephone. What it didn't understand was that customers had little innate desire to see live facial expressions at the other end of the line. In other words, there was very little user crisis.
Technology will only be accidentally successful if the focus is on what can be created. Systematic success — whether it's in creating new products, building great companies or changing the world — comes to those who manage to see the world through the eyes of others … to understand their crises and to help them find less painful ways of changing their world for the better. Copyright © 2006 Soundview Executive Book Summaries
- Penguin Publishing Group
- Publication date:
- Sold by:
- Penguin Group
- NOOK Book
- File size:
- 594 KB
- Age Range:
- 18 Years
Meet the Author
Pip Coburn is the founder of Coburn Ventures, an advisory services firm. Before starting his own company, he was a managing director and global technology strategist in the technology group of UBS Investment Research, where he oversaw 120 technology and telecom analysts worldwide.
Most Helpful Customer Reviews
See all customer reviews