Sunday, July 17, 2005

How Customer Focused Design Can Stifle Innovation

There's something happening right now that truly amazes me: podcast support in iTunes.

It's not an amazing feature, or a mindblowing leap in technology. And that's why I find what's happening amazing.

What the heck am I talking about?

It all started a couple of weeks ago, when Apple announced podcast support in iTunes 4.9. Since the week it was released, I've noticed that in many of the podcasts I listen to, the podcasters are beginning to constantly beg their listeners to switch to iTunes for downloading and listening to their podcasts.

Why do they want their users to switch to iTunes?

iTunes maintains a "Top 100" list of podcasts. Every podcaster wants his/her podcast to top the iTunes chart, which in turn means more eyeballs on the chart, which in turn means more incentive for the podcasters to want to top the chart, which in turn means more eyeballs on the chart, which in turn means ... you get the point.

So here, with this simple feature that in no way pushes the limits of technology, Apple has positioned itself as the number one source of podcasting content (and fueled use of the iTunes software and music store, and of course, fueled iPod sales, and maybe even fueled Apple's general "cool factor" thereby fueling other hardware sales).

Now, I'm going to take a step back, and talk a bit about the big picture. Last week, I spent two hours every morning in Customer Focused Design (CFD) meetings for a new software product. The CFD process was centered around the tried and true Kano Methodology (here's a more brief overview). In short, the Kano methodology is a way of understanding which product attributes are important to customers by discovering how the extent of their presence might impact customer satisfaction and customer dissatisfaction.

Attributes are then classified into four groups: "must haves", "one-dimensionals", "attractives", and "indifferents". In the end, attributes, and specific requirements to attain the attributes, are prioritized according to their classifications. So for example, "must haves" (i.e. "the car must have a stereo") and one-dimensionals (i.e. "the car must get good gas mileage") are generally prioritized above attractives (i.e. "the car stereo must have an iPod connector").

Here's where the process begins to break down. We sometimes become so focused on listening to what the customer wants, that we lose sight of the fact that the customer often doesn't know what the customer wants (or alternatively, what the customer wants is not good for our company or our product).

This is exactly what Clayton Christensen talks about in The Innovator's Dilemma. Business Week has a copy of what I'd argue is the most significant chapter online here.

Why were the leading drive makers unable to launch 8-inch drives until it was too late? Clearly, they were technologically capable of producing these drives. Their failure resulted from delay in making the strategic commitment to enter the emerging market in which the 8-inch drives initially could be sold. Interviews with marketing and engineering executives close to these companies suggest that the established 14-inch drive manufacturers were held captive by customers. Mainframe computer manufacturers did not need an 8-inch drive. In fact, they explicitly did not want it: they wanted drives with increased capacity at a lower cost per megabyte. The 14-inch drive manufacturers were listening and responding to their established customers. And their customers--in a way that was not apparent to either the disk drive manufacturers or their computer-making customers--were pulling them along a trajectory of 22 percent capacity growth in a 14-inch platform that would ultimately prove fatal. (Bolding added for emphasis)

So, here's a question for you. If a company spends all its efforts responding to the needs of its customers, to what extent can it truly innovate?

It can provide some technologically innovative solutions to meet needs expressed in customer feedback. But what about the needs that aren't expressed because they aren't known? Can a company create new markets this way?

Anyhow, I'll take this full circle back to the iTunes podcasting support. Let's see.. the first version of iTunes with podcasting support was released a few weeks ago. How long does it take a software feature to go from planning/design to implementation to release? 3 months? 6 months? 12 months? I think it's safe to assume that Apple made the decision to be the first to support podcasting quite some time ago - before there was a market - when customers might've rated podcast support as "attractive", or very possibly even "indifferent", but certainly not "must have" or "one-dimensional" (what % of iTunes users listened to podcasts 6-12 months ago, considering most of my friends still don't know what a podcast is?)

Apple saw past the needs of their customers and their market (potential customers). They set the bar, so that "podcast support" will now become a "must have" for their competitors.

They used a simple concept, a Top 100 list, to secure their position and get both podcasters and podcast listeners to almost instantly switch to their brand new service.

And that, I think, is amazing.

1 comment:

James said...

I agree totally.
Being relatively new to the company i work for and seeing the product with fresh eyes i've spec'd several "indifferent" yet inovative features which we've had to put on the back burner due to customer/sales preasure.
However, feature requests are getting fewer. soon, we'll probably satisfy enough of our customers current needs to be able to take a step back and be creative.