Tablets: an exercise in disruptive innovation

The recent dumping of the HP TouchPad and WebOS platform is a classic example of the effect of disruptive innovation as coined by Clayton Christensen.  As discussed in this HBR post, the failure of HP in the mobile device market was sealed back in 2001 when, failing to recognise the mobile market as disruptive innovation, they tried to use classic growth strategies to target this emerging market. 

HP acquired Compaq, then tried to create new mobile devices using its existing technology, including adaptations of it existing OS platform.  So, true to form in a disruptive environment, one of the giants of the IT world failed dismally in this emerging market, and ten years later have exited the market all together.

Christensen's model of disruptive innovation categorically explains how large companies like HP can fail so dismally in disruptive environments, so I won't go into that too far here.  What I am interested in however, is whether HP should have seen this coming, or as Horace Dediu says, was it unforeseeable?

The issue of predictability in disruptive innovations is central to our evaluations of leadership because if these kinds of innovations are predictable, then we should be holding leaders accountable for their failures to navigate them effectively.  Conversely of course, we should be lauding those who navigate these difficult waters well and repeatedly, rather than calling it luck.

So, could HP have seen it coming? Firstly, The Innovator's Dilemma was first published in 1997, then in paperback in 2000.  So it is reasonable to assume that leaders in an innovative company like HP would have read it by 2001, so let's proceed on the assumption that they had.  So assuming knowledge of the disruptive innovation process, could leaders at HP have been expected to identify that mobile devices could be a disruptive innovation?

The key components of disruptive technologies are:
1. They usually utilise technology that is actually worse than market leading technology at the time (eg. slower computers) based on the existing market value chain.
2. They introduce a fundamentally new value proposition that is not valued by existing customers (eg. portability).
3. The emerging market for the innovation is small - too small to be of interest to large firms.

Clearly, with hindsight it is easy to say that mobile devices could have been identified as a disruptive technology, and certainly when assessed against this criteria, the iPod was identifiably disruptive.  However, is it fair to say that leaders should have been able to see the future potential and identify it as a disruptive technology, and respond appropriately?  In 2001, I suggest not.  For Apple, the iPod could easily be seen as a revolutionary innovation in competition with portable CD players, rather than a disruptive innovation.  iPods offered music listeners a smaller, more portable device with greater storage capacity and meant that the listener did not need to carry CDs with them.  These value propositions were clearly of value to customers in the existing music player market.

Apple was also able to leverage its understanding of the personal computer user and apply it to music players.  Apple's core business has long been about having a strong understanding of the personal user market, in fact it was Apple's focus on personal users that allowed it to ride the disruptive innovation train to greatness in the 1980s.  Apple has always focussed on personal user experience as its core value proposition.

HP on the other hand, comes from a background of servicing business and science markets, beginning with the production of specialised electronic test equipment for industry and agriculture, through to scientific calculators and then bringing small computers into office environments.  This experience did not include the same focus on the user experience as a core value proposition.  Rather, HP's focus was on assisting workers to more efficiently get their work done.  In this market, the focus was on value for money and processing power.

Although mobile devices clearly had value for business environments (as evidenced by the rise of Blackberry), it would be difficult to foresee the evolution of the iPod from this business minded  perspective.  The orientation of a business towards its customers fundametally drives the types of innovations that are considered in the first place, let alone the ones that reach production stage.  Apple fundamentally understood its customers to be people.  People who had needs, wants and desires that spanned from the personal to the professional.  HP viewed its customers as businesses and workers - organisations and people with a job to do.  Apple was nicely placed to adapt to the converging nature of technology because it could see the benefits for people both personally and professionally.  HP on the other hand were focussed on the professional without regard for the personal.

Apple's focus on customer experience was not only helpful in identifying the disruptive innovation opportunities, but absolutely fundamental to creating those opportunities.  Despite the fact that other companies had mobile devices long before Apple, and even arguably had greater expertise in the development of mobile harware and software, no-one was in a better position to create the mobile device revolution.  Apple's focus on customer experience allows it to bring ideas together easily - if it is good for people, then it is good for Apple.  This may seem simple, but it is fundamentally different to the approach that other companies take. 

Because Apple starts and ends with customer experience, it has kept hold of expertise across all areas of the design process, from software and operating systems, to hardware, even including retailing and support.  And more importantly, Apple always aims for these separate areas to work together seamlessly for the user.  By keeping control of all aspects of the design process and having a dogmatic focus on customer experience, Apple was perfectly placed to identify the mobile device potential and then to execute it flawlessly, despite having zero previous experience in telephony devices.

When looked at from this perspective, it is not surprising that Apple users can border on zealotry.  After all, Apple's whole philosophy is about making products that people love to use.  So, back to disruptive innovation and HP.  HP were in no position to do well in the mobile device environment in 2001.  Not because they lacked the technical expertise, but because they lacked the understanding of this fundamentally different customer.  And this is the essence of disruptive innovation - its about new types of customers.  A company that is fundamentally aligned to serving business needs was never going to be well placed to develop products that served individual needs.

So is Apple likely to be displaced in the next round of disruptive innovation?  Unlikely.  Apple's focus on the individual should serve it well long into the future.  People are unlikely to tire of a company that serves them up products they love.  And keeping the focus on customer experience provides a brilliant platform for innovating around the changing needs of individuals.  Individuals are mutifaceted and Apple has proven capable of serving the multiple needs of individuals who have a personal and a professional life, and want tools that can serve them in both worlds.  As long as Apple maintains its focus on customer experience, and defines its customer in holistic terms it will remain hard to beat.

Using customer journey maps to enhance service integration at a policy level

I read a lot of articles online about Business.  In the main these are articles from the Harvard Business Review online (www.hbr.org).  As I’m reading these articles I am constantly thinking about how these lessons might apply to the government enterprise.  In particular, I am interested in how government can learn from the best of the business tools and ideas and adapt them to its own purposes.  I do believe that government operations are inherently different from business operations, and face different limitations and advantages.  Having said that, I also believe that there are many similarities and that government could stand to learn a thing or twelve from business operations.

So, I decided to start a little blog about the things that I am thinking, and wherever possible about the things I may be trying to implement, the challenges I may be facing and hopefully any successes I may have.  So here it is; your feedback is very welcome.

Using customer journey maps to enhance service integration at a policy level

The opportunities to provide more integrated and holistic service to Victorian families following the joining of the Department of Education with the Early Childhood and Youth Services functions previously delivered out of the Department of Health have been much talked about.  However, many of the opportunities are yet to be realised as the services and service models we look to integrating are extremely complex and in some cases fragmented.  This post considers how a tool used by business to understand their customers’ experiences might be used by policy makers to fundamentally rethink the way that we deliver and fund services.

A customer journey map is essentially a diagram that shows how customers decide on a purchase of a product.  In general the maps allow us to think about and capture what activities, motivations, questions and barriers a person may face in deciding whether or not to purchase a product, which particular product they may choose, and whether they are happy with their purchase (and hence are likely to purchase again from that company).  In sales, these maps cross reference these four elements of purchasing behaviour with the steps in the purchasing process: awareness, research, purchase, and out of box experience[1].  At each point in this 4 x 4  matrix the customer can have a negative or a positive experience which makes them more or less likely to make a purchase and then to be happy with it.

So what does this have to do with service integration in the policy arena?  Well, essentially a customer journey map allows us to understand what it is like for a customer, and to critically analyse where the system may break down and push the customer down a path away from the service, rather than bringing them into the service or connecting them with other services.  In this context the government’s motivations are essentially the same as the business – we want people to find our services, engage with them, use them and then be happy with the service they received.  Whether or not they pay for them, and whether it’s a product or a service is not really an issue.

Understanding customers’ experiences is hardly revolutionary, we already know that customers often experience confusing, fragmented service options that make it difficult to access services and limits their satisfaction when they do access services.  In fact, that is precisely WHY we keep talking about integration of services.  The point of this post is really to highlight a tool that might make it easier for us to understand the detail of a customer experience and to highlight not only where the gaps and barriers may be, but also understand what the barriers and gaps look like so that we can try to come up with solutions.

An example of what a map might look like in the policy arena is provided below.  Please note that this map is entirely fictional and is not based on any kind of research with customers of any government services.  It is provide merely to illustrate the general points above.  I would suggest that if you are thinking about doing this for a particular service that you do the best you can in terms of getting actual customers’ experiences, rather than doing it second hand or with guess work.

Customer journey map: choosing a Primary School (click to link to enlarged version)

It is important to remember when looking at the example above that the columns in the matrix (awareness, research, decision, experience) are loosely consecutive in the sense that mostly people will move from left to right; from awareness to experience in roughly the order listed.  I say loosely because there is often a fair bit of to and fro between awareness, research and decision as more information throws up more questions and changes the parameters of the decision making process.  The more complex the decision and the more engaged the decision maker, the more likely it is that there will be a lot of to and fro before a final decision is reached.  Also, the matrix above should not be seen as completed once an experience has been had, in fact often the experience will begin the process anew as the experience creates a heightened level of awareness.  But I digress.  The important point is that it is a dynamic but somewhat consecutive process, from left to right.

On the other hand, the rows of the matrix do not have a linear or consecutive relationship, and frequently occur simultaneously.  This means that a person in the throws of making a ‘purchase’ or choice is likely to be undertaking activities, to have questions that need an answer, to have motivations regarding the purchase and to be experiencing some barriers.  They may also be in various stages of the purchasing process for each of the behaviours they are exhibiting.  For example, they may be researching the answers to some of their questions, while simultaneously narrowing their options down based on financial barriers and at the same time being motivated to get their child into the most academically prestigious school they can afford.

So, overall we can see that the process of making a choice (or purchase) is a relatively fluid process where customers loop around inside the matrix gently heading from left to right as they narrow down their decision and finally make a choice.  This is a very important point to recognise for policy makers because the matrix illustrates both the complexity of this process and yet allows for it to be broken down, simplified and more easily understood.  Most importantly, having mapped a particular decision making process it is far easier for the policy makers to understand the experience of the user in a deep and integrated way.

But the use of the matrix shouldn’t stop at a better understanding of a customer, for while useful, that is not really the point of the exercise.  The point is that having mapped the process and gained a deeper understanding, the astute policy maker can then consider the raft of policy already in place in light of the matrix and make a considered assessment of the strengths, weaknesses and gaps in existing policy as a starting point for considering new policy.  Too many policies fall over at the implementation stage because they were actually ill-conceived to start with.  Not because the policy makers were not smart, well intentioned people, but because they began the process without a deep understanding of the consumers who would be using their product and of the market that their policy was entering into.  In this respect, government has a lot to learn from smart businesses.

[1] Out of box experience refers to the experience that a customer has when they get their product home and literally take it out of the box to begin using it.  It is a critical part of sales because customers have usually seen a fully functioning version of their new product in the store, and that is what they want in their home.  So the more difficult it is, or the longer it takes to get from taking it out of the box to having a fully functioning version, the less happy the customer is.  Anyone who has been unable to piece together furniture from Ikea will know this pain.

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