The Change Function: Why Some Technologies Take Off and Others Crash and Burn [NOOK Book]


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 ...
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The Change Function: Why Some Technologies Take Off and Others Crash and Burn

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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.

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Editorial Reviews

Library Journal
Whether you are a consumer of technology, an investor in technology companies, or a developer of new technology products and services, Coburn's book will challenge your beliefs about success and failure in today's technology landscape. Drawing on his experience as a Wall Street technology analyst, the author shares his system for predicting whether or not a new technology will be a commercial success. The book explores the "build it and they will come" technology business model through numerous case studies: picture phones, interactive TVs, satellite mobile phones, tablet PCs, Webvan, the Alpha computer chip, fast but high-temperature laptop PCs, and smart mobile phones. As the commercial failure rate of great new technologies is very high, understanding why and what can be done to address the problem is the book' s true value to readers. As is true for most business books today, this text feelse like a conference talk put to paper. It generally works, though certain sections lack enough detail for readers to appreciate the ideas being discussed. Given the current plethora of books on innovation and creativity, this title is a timely counterbalance to the rhetoric about the changing nature of our economy. Strongly recommended for all library collections.-James A. Buczynski, Seneca Coll. of Applied Arts & Tech., Toronto Copyright 2006 Reed Business Information.
Soundview Executive Book Summaries
The commercial failure rate of nominally great new technologies is troublingly high. The failure rate is consistent with the hatred and distrust most normal human being have of high technology. The goal of this summary is to look at what has failed in the past, to understand how the industry came to be in the position it is in today, and to spotlight examples of what might and might not work in the future.

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.

Crisis Explained
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
—Soundview Summary

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Product Details

  • ISBN-13: 9781101218358
  • Publisher: Penguin Group (USA)
  • Publication date: 6/22/2006
  • Sold by: Penguin Group
  • Format: eBook
  • Pages: 240
  • File size: 580 KB

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.
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Table of Contents

1 Silicon Valley, we've got a problem 1
2 The change function 18
3 Is the technology industry ready for change? 29
4 Why technology fails 43
5 Four more failures 90
6 A future winner : flat panel display TV 101
7 Three more future winners 115
8 One future loser : RFID 127
9 Three more future losers 143
10 The change function in action 154
11 Ten sets of questions 169
12 What to do? 194
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  • Anonymous

    Posted March 13, 2007

    Essential requirements for high-tech product success

    Intel icons Gordon Moore and Andy Grove are each credited with a high-tech development axiom. 'Moore¿s Law' says the cost of putting the maximum number of transistors on an integrated circuit (like a computer chip) doubles every 24 months. This leads to the 'price elasticity argument' that infers the ideal price at which consumers will find new high-tech products attractive. 'Grove¿s Law' posits that people adopt new technology when it is 'disruptive,' that is, when it becomes 10 times better than anything else available. But author Pip Coburn, who writes with a lively pen, believes that high-tech leaders must put these revered principles aside, and focus instead on the people who use their technological marvels. Those who appeal to consumers will thrive. Those who do not will lose money as their products go down in flames. Is Coburn correct? As the founder of a firm that advises investors on high-tech stocks, he makes a compelling argument. We suggest that technology executives, portfolio managers, and anyone else concerned with the success of high-tech companies and their products will want to read this thoughtful book before placing their own bets.

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