Technological Innovation and Leadership – The Guide to Successful Innovations (The 5th of a Many Part Series)

Posted by Rahul Sethi on 10:04 PM

In the previous 2 parts we briefly touched upon branding innovation and how that is essential to the longevity and revenue capitalization capability of an innovation. We also touched upon the dangers of over branding innovation. Let’s now get back to the product development aspect and try and dwell further into the World of Generic Benefits.

In today’s post I am going to try and outline these ‘generic benefits’ that consumers would probably want with respect to technology. Obviously my list will not be the last word and I would appreciate it if you can add to the depth and quality of the article.

At the most fundamental level, I think the three benefits that are generic in nature especially with respect to New Technology Are:

Freedom of Choice

Cost Minimization

Help

Freedom of choice fundamentally refers to choice with respect to the number of options in a marketplace. Technology, especially service led technology has the option of providing multiple choice enabling the risk perceived for a potential consumer to fall since the possibility of finding the best ‘fit’ is more.

Cost Minimization refers to the reduction of three kinds of costs. Switching Costs, Risk Costs (those were dealt with in ‘freedom of choice’), and attention costs.

Switching Costs are costs associated with changing technologies. From existing technologies to new technologies. So essentially from the point of view of a technology company there must be forward integration.

If one takes the example of the Mac OS, which is built on a Linux platform, there was a significant effort taken to ensure that there was compatibility of programs and applications.

The efforts included a tie up with Microsoft for key Windows related programs such as Office, Messenger, Outlook etc. The result was the creation of an extremely strong brand called Mactopia (love the word play!) developed by Windows.

There has also been an advance in terms of the Mac’s ability to run Windows on its hardware. Thus if someone wants a Mac for its design but is slightly apprehensive about its OS, he can use the Mac OS as well as the Windows OS simultaneously.

The Apple Stores across the World take great pains to educate potential users about their OS – the way it works, its benefits, features etc. At most stores, they have video tutorials and also ‘Genius Bars’ where consumers can talk to Mac Experts. All these efforts are brand building efforts but more importantly they are efforts to reduce the ‘switching costs’ associated with buying a Mac.

Switching costs exist primarily in the mind and that’s where they must be dealt with.

Under cost minimization, there is also the existence of attention costs, which need to be minimized. From a purely usage perspective, a user may need to pay a lot of attention to detail in dealing with information supplied by the firm.

The trick is in managing information provided to the consumer and also intuitively addressing the problems that a user might anticipate before hand.

In such a scenario – simplicity is the key. Especially if a technological innovation has an interface.

Orkut is a great example with respect to reduction of attention costs. Because of its simple interface and “everything is accessible” approach, a person who is barely literate can sign up and use the site with relative ease. Compare that to Facebook, where there is still a lot of confusion with respect to how to go about things (at least for the average Indian Consumer).

One needs to remember that ‘attention costs’ are extremely culture specific and they depend on the socio economic demographic of the target audience.

Attention costs then also overlap into the concept of Help. Help is inclusive of the actual process of adoption and induction of the innovation into everyday life. In a sense it encompasses switching costs, choice, and attention costs. Help I think is something that happens post purchase.

So in the case of Mac, help effectively comes through existing customers who are passionate loyalists. For companies that are not as fortunate, the investment may need to be huge. Processes need to be put in place. The best ‘help’ however, I think comes from loyalists and actual users themselves. So it may not be a bad idea for innovative technology companies to invest heavily in their users to make them loyal – they quite obviously have benefits for processes as well.

Help - and attention costs, i think will be the biggest costs to be paid by Indian Innovators especially because customers will be toe stepping into New Technology and probably need to be encouraged all the way - just like a swimming coach encourages his/ her student to get into the water for the first time.

Freedom of Cost and Cost Minimization then translates into:

1) Customization/ Personalization

2) Convenience

3) Participation

4) Anticipation (intuition)

5) Compatibility

6) Easy trials

7) Easy use

8) Benefits that can be learnt while being seen

I will deal with these off shoots in the next part.

They key to note from this part is that the greater the freedom of choice for an innovation, the lower its costs (everything included), and the more comprehensive and intuitive the help, the greater ‘seem’ the generic benefits to a consumer. And as a result – the more likely it is that an innovation will succeed.

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