Nothing sucks like success

Blockbuster used to live up to its name – they became the Walmart of home video entertainment, eating up not only the local stores but smaller chains as well. Then Netflix came up with a new business model that blew them away. Blockbuster tried to evolve with ideas like Total Access, which allowed people to exchange mailed movies for free in-store rentals. But it was over.

The problem was, Blockbuster was locked in a legacy business model. It was the Microsoft problem all over again.

Microsoft was a great success with its model of selling software for individual use that was still compatible with systems created a quarter century ago. That success is still preventing them from evolving to a model that works the way we want to work – on the cloud, with web-based apps.

When you’re big and established, a new business model will threaten your cash cow. Too many people in the organization have a stake in keeping the old model, and they put on the brakes. The result is stagnation. In other words, your success becomes a mire that sucks you in, preventing you from evolving and adapting to changing conditions.

So how and when do you innovate in order to prevent being sucked under? I’ll talk about that in the next post.

What Killed The Zune?

File this under “no surprises”: Microsoft is ditching the Zune.

Why? Because the product was born out of a need to compete, instead of being created to meet customer needs and desires.

It wasn’t bad as a device – it had a great screen, and a few new ideas. But no one seemed to feel the Zune promised them anything they needed.

What did the Zune promise? Unlimited access to a large music library for a monthly fee of $14.99 – for as long as you kept up your subscription.

In theory, a nice feature. How do you test a theory? By asking your customers if your theory sucks or not. How many times to you need to hear people say that they want to own tunes, not rent them, before you believe them?

What did the Zune promise? The ability to download tunes you hear on FM radio, and from wi-fi hotspots.

The reality: the FM idea sounded good until you realized that most iPod users considered FM radio that thing their parents listen to in the car.

The wi-fi downloads made sense – who wants to wait till they get home to download music? But Microsoft took a couple of years to get that going. During those years (2006-2008) car companies were already coming out with iPod docks.

What did the Zune promise? The ability to share tunes. This is a cool feature, their big innovation, and it might have taken off if they had done it right. As it happened, they forgot to ask customers, “How valuable would you find the ability to give your friends tunes that lasted for 3 lousy plays?” Plus, sharing presupposed a group of Zune users, and Zune users never got thick enough on the ground to congregate in groups.

There were other problems – the high price, the brown color, and having one model versus the wide range of iPods available – but the main reason for the Zune’s demise is Microsoft’s failure to listen.

What the Wave Taught Us

When Google announced its Wave project in 2008, some of us in the company were excited – our company relies on online collaboration, and Wave seemed to be a way to keep a continuously-running virtual meeting room open for us to throw in ideas and work on projects. But we never took on Wave, and neither, it seems, did others.

It wasn’t a lack of publicity. Most people knew at least that Wave existed, even if they didn’t know what it did. What did Wave in? A few thoughts:

Barriers to adoption – Google Wave required buy-in from IT departments, which tend to stay with what they have unless they’re given an absolutely delightful reason to switch.

Message not received – Just what was Google Wave? People still aren’t sure. It was very hard to describe, and they never really got their spiel down to a business card-sized statement. What is it? “Equal parts conversation and document” – well, okay, but what is it?

Too much thinking required. A tough learning curve won’t deter PhotoShop users, but we tend to be less forgiving of free applications. Strange, but if you haven’t invested money, you’re less likely to invest time either. You don’t need a 20-minute video to learn how to tweet.

No chance for gradual adoption. Google search built its market share one person at a time. Facebook too. But to use Wave, you needed to enroll a bunch of people right off the bat, and ensure that they all learn how to use the program. Too much like work.

It’s a failure, but not a tragedy. As Googling Google points out, this was a lab project – an experiment. Google learned a lot from the experience, and already harvested the patient’s organs for use in Gmail and Google Apps. To fail well and constructively – that’s a skill worth honing.

The Kin Is Dead – What Happened?

Microsoft products tend to die noisily, and there has been lots of chatter about the early demise of Microsoft’s Kin phone. Microsoft conducted 50,000 interviews to find out just what people needed in a phone, leading some to conclude once again that you don’t innovate by listening to your market.

Hold on.

What killed the Kin? Not the hardware, or the software. It was the lack of apps – the lack of an ecosystem.

The Kin was a specialized tool for a niche market – young social networkers. Microsoft set out to design the perfect tool for young customers looking to text, tweet, and do Facebook.

Their target market, however, doesn’t want a perfect tool – they want to design their own tool inside an ecosystem that delivers lots of possibilities. These people are very savvy about app ecosystems.

A single-purpose device – even if that single purpose includes multiple networking platforms – is not for them. That’s more suited to Grandma, who wants a phone that just makes calls, or maybe just calls 911. (Sorry about the stereotype – please don’t email me if you’re a grandma who spends all day tweeting about the photos of her Facebook friends she’s just posted on Flickr).

Microsoft built a solution, but they got the problem wrong. They needed – and other companies have delivered – a product that’s a gateway to an ecosystem. Had they listened better, they’d have figured that out.

So listening – the right kind of listening – is still key. Without that, you’re dead in the water.

Failure = Success?

I’m moonlighting today – you’ll find my thoughts on failure, and why it’s an essential element of success, on Blogging Innovation. See you there!

A wonderful quote from the article on Google in The Atlantic about

…the Google concept of “permanent beta” and continuous experimentation—learning what does work by seeing all the things that don’t. “We believe that teams must be nimble and able to fail quickly,”

I love that “able to fail quickly”. It reminds me of the Churchill quote: “Success consists of going from failure to failure without loss of enthusiasm.” Innovators don’t fear failure – they see it so often, they’re old friends.