Here's a short review of the just published book "The Change Function" by Pip Coburn. The author was the managing director of the technology group at UBS Investment Research and now owns his own research firm.
The book's basic message is that the technology industry is so fascinated by technological possibilities that it completely neglects (to its own disadvantage) what users actually want. The bust of the Internet and telecom bubbles and the still lasting crisis of the technology industry was caused by this ignorance, claims Coburn, and he uses a number of case studies to illustrate his ideas. The heroes of the techno-elite are Intel founders Gordon Moore and Andy Grove with their respective laws about the exponential development of technology. "Build it, and they will come" is the motto of most technology firm. But very often they don't come, because customers are less and less impressed by pure technology alone.
The really important question is, according to Coburn, what "crisis" (in the form of a problem or desire) customers have and how big the perceived pain of adoption is. The resulting change function, "f(user crisis vs. total perceived pain of adoption)", is not really a precise formula, but rather a way of expressing that customers compare these two factors when they decide whether to buy a new product or not.
The most successful products are of course those that solve a big customer problem, but are easy to adopt. And when measuring the cost of adoption, the product's actual price tag is not really that important. The pain of learning how to use the product and the necessary changes in behavior are much more relevant.
Coburn lists a lot of technological flops that ignored this simple rule: the picture phone, interactive TV, the Tablet PC, B2B markets. He even makes some predictions about the odds for success of some currently "hot" technologies: HDTV, mobile e-mail for everybody and satellite radio will turn out to be a success, while RFID will fail or at least take a very long time to get broad acceptance.
The book is not as scientific as you might think from reading its mathematically sounding title. On the contrary: its style is quite casual and at some points maybe overly rich in anecdotes, but fortunately, the author doesn't use the usual business book lingo. Most of the case study subjects are actually well known, but there are also some real gems, for instance the very detailed analysis of software-as-service vendor Salesforce.com.
The book's basic idea is really not new: Find out what your customers want, analyze what possible reasons they might have not to buy your product, and then create a product that addresses these concerns. A truly simple message, but Coburn is certainly right about the fact that the technology industry frequently ignores this rule. Most customers are not fascinated by technology, they simply want to solve a problem, preferrably without technology.
That's also something that many Web 2.0 startup companies should consider. Too many of them still believe that it's a great success to sign up the usual crowd of 50'000 geeks that participate in every beta program anyway. But the real end user doesn't really care about the elegance of social microformat tagging with an AJAX interface. They simply want to get the job done.
"The Change Function" is a very accessible, fact-rich book about the possible failures when companies try to innovate. There are also a few brief thoughts about the importance of organization and corporate culture, and finally the author gives extensive advice about how to select a successful management team for a technology company. The book is certainly by no means as extensive and rich as for instance Clayton Christensen's work about technological innovation, but it is a good primer about the subject.
By the way: Pip Coburn's short text on ChangeThis is a good summary of his ideas.