In the late ’90s, Harvard professor/author Clayton Christensen wrote “The Innovator’s Dilemma” in which he described “sustaining” and “disruptive” innovation. The first typically comes from “incumbent,” established companies that offer incremental improvements to products and services already known to most consumers. The second more often from new market “invaders,” which recognize potential not seen by existing competition.
So which are you? You need to be one and could possibly be both, but if you are not innovating anything, why do you exist?
If that sounds harsh, I mean it to be. Business is harsh, even more so today than at any point in CE history and there is simply no room for companies who do not do all they can to evolve their business. The consumers they attempt to appeal to will demand nothing less and staying “as is” is not an option.
Saying this in a publication addressing the consumer electronics industry, the bastion of new technology, may seem unnecessary. After all who comes to market and sells more new technology than CE manufacturers and retailers? However, while true to a point, it also misses the point that much of what is offered does not sell, or more often, under sells relative to potential, resulting in household penetration rates well below 50%. Case in point, home theater.
According to the CEA 11th Annual Household CE Ownership and Market Potential Study, effectively all (90 percent+) of US households own some type of TV and/or DVD player. Not bad, but when you look further you find that ownership of what most would consider to be home-theater components — including things like A/V receivers; front, center and rear speakers; subwoofers; HTiB; and DVRs, Blu-ray and DVD — is much lower. In many cases, fewer than 40 percent of US households own those products.
So with all this product innovation, we can’t get half of the country to buy? We don’t because innovation is much bigger than just product.
I know there is a natural purchase barrier beyond which it is difficult to go; a point where X numbers of consumers say, “I know what you want to sell me and I don’t want it.” But based on Coyote Insight’s work, I can tell you without hesitation that we are nowhere near that point for the vast number of products now stuck at household penetration rates of 50% or less. Many non or under buying CE consumers are so because the industry’s approach to them is not right.
Christensen tells us that many who have not bought, don’t because the product message “overshoots” what they feel they need/want in product capability, features, after sale service, etc. In other words, they don’t want to pay for what they believe they don’t need.
Many others have been “undershot” by manufacturers and retailers who did not offer information and service the consumer thought important. In either case, the opportunity is there for disruptive innovation and there is no reason that many of you cannot be the companies and individuals to satisfy that demand.
Mr. Christensen makes it clear that the two conditions that must be met for a company to be innovative, are the motivation and ability to do so. Clearly “ability” implies a number of very important things not the least of which is money, but since I’ve never met a management team who felt they had all they needed, for the moment let’s call that a wash and set it aside. That leaves motivation and while you should be quick to say you are motivated to innovate, take your time to really think about what that means. It may be more complex than you know.
Dean Karmen, inventor of Segway scooters and holder of well than 400 patents, had this to say about innovation.
“Technology is easy to develop. Developing a new attitude, moving the culture from one mental model to another, that’s the difficult part.”
We have more than enough technology and it is well past time to begin concentrating on the consumer’s “mental model”.