consultaglobal

"”People are only willing to change and accept new technologies when the pain of their current situation outweighs the perceived pain of trying something new. Most potential users are afraid of new technologies, and they need a great reason to change. If you don’t give them the reason, then forget it.”

The Change Function, Why Some Technologies Take Off and Others Crash and Burn by Pip Coburn.

“When superior technologies emerge, old ones usually don’t simply fade away. To the contrary, their performance often leaps suddenly, thereby extending their lives and slowing the adoption of the new technologies.”

Beware of Old Technologies’ Last Gasps by Daniel C. Snow.

Back in the late 90s, a number of analysts in the telecommunications industry thought that the so-called 3G, third generation cellular networks, would achieve rapid market adoption in light of the higher data rates enabling end users to experience the “mobile internet.”

While 3G is now becoming widespread in many countries, it has somehow taken a decade for the market to reach this point. As a matter of fact, quite a few mobile network operators had opted to first deploy 2.5G In hindsight, some experts also claim that Wi-Fi had partly managed to steal the 3G show.

This is an interesting case study because 3G was engineered to offer compelling improvements over 2G and the kind of ubiquitous access and seamless roaming elusive to Wi-Fi, which happens to rely on unlicensed spectrum.

So, there were good reasons for network operators to leapfrog inferior mobile data technologies. However,  a basket of other critical factors impacted 3G’s introduction and rollout:

• uncertain macro-economic prospects and high tech bubbles
• regulatory environment: country specific licensing terms and costs
• unrealized gains from recent infrastructure investments and growing network operator and supplier debt
• economies of scale hard to achieve by new infrastructure in a capital intensive industry looking to shift capex to opex
• significant ecosystem gaps in some cases (such as the slow introduction of affordable 3G devices) and extensive fragmentation due to the number of mobile platforms and lack of portability, thus rising application and content development costs
• not enough attention to usability, QoE, the quality of the end user experience and, therefore, overlooking human factors engineering to deliver user centric services instead of technology driven products
• unresolved nethead vs. bellhead discrepancies impacting access, application and content delivery as well as business models leading to the monetization of emerging online services
• the overall industry’s marketing hype leading to over-committing what 3G could actually do on day one: note that today’s 3.5G is technically closer to those expectations.

The question that I’m trying to address is, what does it really take to successfully introduce a next generation technology, generally speaking? At first, I would think that the newer technology would have to deliver some clearly differentiated and demonstrable:

• performance improvements showcased by metrics obtained from comparison testing under both good and bad day scenarios;
• unique capabilities that legacy and existing systems cannot possible deliver, such as specific applications or efficiencies which wouldn’t otherwise exist.

From a change management perspective:

• do the benefits of introducing a new technology outweigh the challenges within the planning period?
• what does it take to swap out legacy systems and is the cost of switching worth it?
• any old technology last gasps worth considering?
• are there any competing alternatives or substitutes in a colliding course?

I would also look at the value to the ecosystem of users, service providers, suppliers, investors and policy makers. In other words:

• is there an ecosystem to work with?
• what’s in it for everyone? is it worth the change?
• are goals and roadmaps aligned?

Let’s say that you have good answers for all of the above questions. There would still be a need for addressing how your company gets that business in today’s competitive marketplace:

• vision and thought leadership?
• clearly differentiated value proposition?
• time to market and first mover advantages?
• innovative operations and business models?
• partnerships and alliances? open systems?
• M&A? vertical integration? industry consolidation?
• best of breed? end to end systems integration?
• quality and total cost of ownership?
• other?

Last but not least, what’s the degree to which the introduction of a next generation product relies on a push vs. pull market strategy? What would the extent of the new market creation effort be?

• who are the early adopters, power users and influencers?
• who are the lead users willing to tamper with the technology and innovate in the process?
• what’s the necessary critical market mass and how long does it take to get to a point of no return?

“the causes of last gasps have major strategic implications for firms in industries where technology transitions are occurring. A danger for new-technology firms is underestimating how long the last gasp will delay them from becoming profitable. In a study of the semiconductor industry, I found that this miscalculation caused numerous tech start-ups to founder (…) the new appears, the old improves.

Beware of Old Technologies’ Last Gasps by Daniel C. Snow.

Back in July I joined Harvard’s course on Leading Product Innovation, where Professor Snow addressed the subject of product transitions, which prompted me to write this post. As usual, I will welcome your comments and emails on the subject.

J. de Francisco blogging from Chicago on Sep 20

consultaglobal.org :::  disclaimer & disclosure