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“Successful
innovations tend to minimize the behavior change they demand of
consumers.”
Prof. John Gourville, Harvard Business
School
Professor Gourville’s research focuses on the ways consumers use new
products. He highlights products such as the Toyota Prius, which is
technologically advanced but does not require the driver to learn new
skills in order to operate it. In contrast, products and services like
the Segway scooter or online grocery shopping, which require significant
behavior changes, face higher barriers to success.
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Small |
Large |
Amount of change in consumer behavior
required
Many individuals appear
incapable of change, even when their lives depend on it. In a Fast
Company cover story in May 05 titled “Change or Die,” Alan
Deutchmann reported that the odds of individuals making lifestyle
changes when they were required to do so by health problems was 9 to 1
against. Only one out of every 10 people with serious cardiac disease,
for example, would make the diet and exercise changes required to
improve their health.
Innovation and
business behavior change
While many consumers are reluctant to
change behaviors to adopt new innovations, it appears that most
businesses are equally or more averse to change.
One of the reasons for
this reluctance is that the effects of change are risky and difficult to
predict in a business system. In the worst cases, the wrong choice can
bankrupt a company; at minimum, advocating and implementing the wrong
innovations can hurt business careers.
Change happens most
quickly when a business has no choice – because of some kind of
disruption, the company can’t keep operating in the same way as it has
in the past.
Interestingly, this forced
change often results in improved business performance for the companies
that are subjected to it.
A classic example of the
benefits of forced change comes from the US Steelworkers strike of
1959. In terms of economic disruption, this strike remains the biggest
labor dispute in US history. The strike shut down US steel producers
for 116 days, from June to November, causing steel supply shortages in
industries like construction and automobiles.
Desperate for sources of
supply, US companies looked overseas to Japan to provide the steel that
they could not get from their usual producers. They found Japanese
steel to be of good quality and lower price, and continued to use
Japanese suppliers after the labor dispute ended. The labor dispute
forced US steel purchasers to change, and marked the beginning of the
decline of the American Steel industry.
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Union members in
the 1959 Steel Strike |
NHL Hockey Commissioner Bettman |
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Supply disruptions force change
An updated version of this
story is happening in 2005. The National Hockey League’s labor dispute
resulted in the cancellation of the 2004/5 major league hockey season in
North America. As a result, the cable network ESPN was forced to fill
its schedule with other programs – it substituted college basketball and
poker. The network found that its ratings for these programs were
higher than had been its ratings for hockey. As a result, ESPN will no
longer carry NHL hockey games.
ESPN is better off without
the NHL – its revenues are higher and costs are lower when it doesn’t
televise pro hockey games. But this revenue-improving decision didn’t
come from analysis of viewing behavior. Rather, the change was forced
on ESPN – it had to fill the hole in its schedule.
Professor Joe Lassiter at
Harvard identifies four kinds of disruptive forces that drive innovative
change:
1.
Government regulations, which force companies to adopt new
approaches;
2.
Supply disruptions, which force companies to try new
sources;
3.
New competitors, which force companies to respond to new
offerings;
4.
New technologies, which change relative costs and
capabilities.
Because the outside world
has changed, existing approaches become obsolete, and companies must
change to maintain their performance.
In this view of
innovation, a “better mousetrap” is neither necessary nor sufficient for
an innovation to be successful. Instead, successful innovations are
those that are “in the right place at the right time.” Innovators will
be successful if they develop new products and services focused on areas
where their potential customers are going to be forced to change.
More Information:
- Prof. John Gourville was
interviewed for Harvard’s Working Knowledge on 6 Sep 05.
- Here’s the Fast Company cover story,
Change or Die, from its May 05 issue.
- A short description of
the great steel strike of 1959.
- A description of
ESPN’s NHL cancellation. It turns out the NHL will now be seen
on the Outdoor Life Network (OLN) instead.
- Here’s a related prior update,
Customers Crossing the Chasm.
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