Friday, February 15, 2008

Reductive Innovation

In their great book Blue Ocean Strategy, Kim and Mauborgne provide a nice array of tools to think about the potential of new markets and new market segments for innovation. One of my favorite tools is the concept of underserved and overserved markets. An underserved market is a segment or group of people whose needs are met, but not completely met. An opportunity exists to serve them in a more complete and total way. An overserved market is a segment that has more than it needs, and could be enticed with a solution that provides the capabilities that are necessary and no more.

Watch carefully, then, the advance of some new products coming out of India. In the last few weeks Indian companies have announced the Nano car, which will cost less than $3000, and new cell phones that will cost less than $30. In the article about the phone, the author notes that the phone "has jettisoned all non-essential features - such as a screen". Well, when you don't have landline service and the thought of having any telecommunications service at all is a pipe dream, receiving a cell phone that works but lacks a screen is probably the least of your worries. While many of us in the States and Western Europe pine away for the latest touch screen technology integrated with MP3 capabilities for our phones, billions of people don't have any reliable telecommunications at all. This Indian firm is opening up telecommunications to a version of the "long tail" - except this is a vast but underserved mass market that won't miss the screen.

This thinking is virtually never reflected in the West. When we think of innovating, we are constantly asking - What can we add? not, What's best for the customer. So, inevitably, we end up with bloated products that have lots of features and gizmos that are supposed to be interesting and helpful but are just difficult to understand and use. If you use Vista, do you think this bloated piece of software is really innovative? Why do I need to relearn to use the software applications I've used for years. But I digress.

Frequently we should be asking ourselves as we innovate what we can REMOVE from a product - what features are unnecessary, or, what features or services if removed could open up an entirely new market or customer segment. Probably the only people who do this well are industrial designers, who are seeking the cleanest, sleekest look and customer experience. For the rest of us, innovation too often means larding up the product with features people say they want, but don't necessarily demand.

Sure, one way to look at the advance of the inexpensive Indian car or cell phone is to say that they've just found ways to cut costs and bring products to market that the Indian economy can afford. Think about this - that same customer profile exists in India, China, much of Southeast Asia, Latin America and Africa. The potential customer base is huge. Will we see Nokia and Motorola quickly copy suit to bring forward new, inexpensive phones to attack a dramatically underserved market? If the Indian firms learn innovative skills though reduction, what new products or services could they create or existing markets could they disrupt?
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posted by Jeffrey Phillips at 5:02 AM

8 Comments:

Anonymous James Todhunter said...

Great post, Jeffery!

People often ignore this concept because it seems very incremental, and we usually tend to focus on the big jump forward. But sometimes, you need to step back to move forward. Innovation is fundamentally about creating value. A product that is out of reach for a market segment delivers no value. By simplifying or otherwise bringing a product within the grasp of a new market segment, you are creating significant value.

7:40 AM  
Anonymous Todd W. said...

you should mention Nokia. They are already waaaaay out in front in this regard, as it pertains to emerging markets. (Certainly they are also going in the other direction with feature-laden and often confusing phones at the high end, too.) That may be an unnoticed factor in Motorola's death spiral.

I hate to bring up Apple, but it's interesting to note that there are many "standard" features of an advanced smartphone that they left out of the iPhone - video recording and MMS messaging, to name two.

11:56 AM  
Anonymous Graham Horton said...

Leaving out features can be a good idea and is therefore an element of several well-known product improvement creativity techniques.

Osborn's checklist (known as SCAMPER by some) contains the suggestion "Eliminate" for example. Elimination is also one of the principles in the SIT method.

In the mobile phone example, we are looking at a disruptive innovation (although not a classic one), since by removing a sufficiently large number of features, a market segment can be reached which has been previously been not served at all.

The Palm Pilot is another good example (when compared to the try-to-accomplish-everything products that preceded it.)

It would be interesting to apply the principle of "reduction to the fundamentals" to other products, or better still, socioeconomic systems - perhaps tax law ;). Until now, such systems seem to suffer from the same "feature creep" as personal electronics
such as my amplifier remote control, which has 64 buttons, each of which can be used in three different modes :-/


Cheers

Graham
Impulse für Innovation Blog (in German)

11:09 AM  
Blogger Dan Keldsen said...

Jeffrey - Given that most technology companies are run by (surprise!) technologists, it's almost a given that new gadgets will be laden with features (featuritis) that are for the endlessly tinkering type.

There is much to say about simplifying and removing clutter. To paraphrase Sigmund Freud, sometimes a phone should just be a phone!

Slight tangent on the business model front: I was taking to a fellow many years back who sold solutions into credit card companies, to cut down the costs of processing so that, among other things, they could afford to do microtransactions (a few cents to a dollar) and not lose money on the deal. When he asked them who their competition, they didn't mention other credit card companies - their competition was CASH. Opportunities and competition are all in how you frame it, and yes, Blue Ocean Strategy has a quite a toolset to view that through... reminds me I should re-read it!

Cheers,
Dan

9:18 AM  
Blogger Oopala said...

Jeffrey:

I'm liking your post these days more and more. Less is more! Maybe it's time to quit trying to be all things to all people, and just concentrate on making a simple, satisfying product that does one thing, and does it well? Thanks for your thoughts and I'm looking forward to your coming thoughts.

10:51 AM  
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