Check Where You’ve Been BEFORE You Look Where You’re GRowing
—Avoiding Mistakes Even the Big Guys Make
Posted on 01 February 2010
This applies to companies of all sizes but these few big examples will tell the story.
It’s as straight forward as a few rules:
1) Understand why your customers like your product(s) or services and use that information to educate your target market;
2) Give customers more of what they tell you they like by continuing to improve or expand services or features, but be sure not to take away the things they like in the process, and;
3) If you decide to chase the competition and replicate their features/services, don’t ignore your current customers or assume they’ll stick with you.
With this as a thesis, there is probably enough background material here for a complete business book and corresponding college class. It’s not my intent to explore all of the endless business case studies that support this thesis, but I’m happy to list a few here.
New Coke tasted just like Pepsi… What could go wrong?
What an incredible mistake Coke made when they introduced “New Coke!” Everybody knows the story and how Coke later released “Classic Coke” and, eventually, pulled off a huge recovery. But Coke’s big mistake was going after Pepsi drinkers with the “taste” of New Coke and thumbing their nose at current customers. I’m sure some very well paid researchers did scientifically based studies on how and why some non-Coke drinkers refused to switch to Coke and they determined it was taste. Fortunately for Coca-Cola, their mistake was huge and their disappointed customers yelled with a loud and clear voice. Things got fixed.
You see, rather than undertaking the relatively hard task of finding more ways to reach more non-Coke drinkers with messages about why they should be Coke drinkers, based on all the reasons current Coke drinkers were customers, they decided to ask non-Coke drinkers what they wanted and try to give it to them. They might think they did enough research, but look at the real world results. Coca-Cola absolutely did not understand their current customers and didn’t care to, and why should they? They were already customers.
Lesson: Don’t ignore your current customers by changing so much that it alienates them, when you try to attract new customers.
Palm, Inc’s 2 Biggest failures came from ignoring their current customers
The company that was the leader in PDAs and then smartphones, now holds around a 3% marketshare. Remember when they used to be a market leader? That’s when they made Mistake 1 - The initial success of Palm had nothing to do with advertising. They were successful because a bunch of early adopters understood what the inventor, Jeff Hawkins, invented. A great electronic device with a simple set of organizational tools and a text entry system based on printed handwriting. They called the handwriting input “Graffiti.”
I was in the unique position of owning the only company in the world dedicated to teaching people how to use Palm handhelds. I learned pretty quickly that most of the early adopters (nerds like me) who didn’t really need my classes were already using Graffiti. People who paid to learn the Palm from me, were entering data by bringing up the optional “virtual keyboard” and tap-typing to enter data instead of taking a few minutes to learn Graffiti. Once I taught people how to use and get fast at Graffiti entry (it usually took me 12 minutes to teach) then it totally changed how people viewed their Palms. They went from tolerating them to loving them! If you know Graffiti, the device becomes phenomenally more user-friendly. And Graffiti allowed people to have a conversation or sit in a meeting taking good notes, all while keeping eye contact with the speaker, because you didn’t have to look at the Palm to do data entry! (Something that can’t be done with ANY smartphone even today!) Graffiti was so natural and automatic, and it was absolutely the single most brilliant thing about Palm handhelds and it was the single biggest key to why these handhelds succeeded when others did not.
Unfortunately, one of the other competitors in the handheld device space was RIM with the Blackberry, and it had a little thumb keyboard. When Palm did research to learn why people didn’t want a Palm, it came down to Graffiti vs. a keyboard. Rather than try to come up with clever ways to educate people about why Graffiti was superior to thumb typing, they decided to phase out Graffiti instead. Unlike the faithful Coke audience, Palm users couldn’t yell loud enough for Palm to hear. And by phasing out Graffiti, Palm faded into the sea of PDAs and smartphones as just another company.
Mistake 2 - After years of bad decisions, weak device improvements, watching a number of companies take more and more of the marketshare once owned by Palm, and essentially squandering their leadership role, Palm hired engineers from the new smartphone leader (Apple) and tried their hand at reinventing themselves with the iPhone wannabe, the Palm Pre. It’s a very average device with a bit of artificial credibility borne out of some positive reviews from some too-easily-impressed, feature-counting tech writers. Honestly, it takes far less skill to follow than it does to lead, and even though the Palm Pre is defined by many technoratti as “groundbreaking,” they have a long way to go before breaking out of single-digit market share numbers. The buying public, not the geek press, makes the final decision. Even if it keeps Palm’s doors open a little longer, the Pre is not a ’success.’
The actual mistake #2 was trying so hard to be “like” an iPhone or better than an iPhone (they failed at both in my humble opinion, but don’t ask me, ask the buying public) that they totally ignored the legions of Palm fans they had developed over the years. Forget Graffiti. That’s dead and buried now. But there was (and still is) absolutely no way to migrate the years of legacy appointments, notes, and task lists which were created using every single previous Palm device. Ironically, iPhones (not to mention the iPod Touch) as well as Blackberries, handle legacy Palm data better than the Palm Pre.
Apple Stands As A Shining Example of how NOT to ignore your base
In the late 1980s Apple computers were running on a microprocessor family referred to as the 68000 series produced by Motorola. They knew that there were performance limitations to the chip set and the hope for future performance improvements was looking weaker and weaker. They knew they needed to switch to a new chip set based on RISC technology (later referred to as the PowerPC processor) but that meant rewriting the operating system from the ground up. Another huge problem is that all applications would need to be rewritten to run on the new OS. Rather than making a “clean break” and starting an entirely new platform from scratch (the easier path), Apple didn’t release the new hardware and OS until they had working hardware emulation of the 68000 series processor running on the new PowerPC. That meant that customers could continue using their legacy software and developers had a cushion allowing them to develop new software without leaving their customers stranded without new versions.
If you want to read a little more about that history, there’s a nice article here.
Lesson: Even if you must change as you evolve, don’t ignore your current customers.
Your company may be nothing like Coke, Palm, or Apple, but I hope these examples give you something to think about as you consider what your plans are to grow your current business and attract new customers.
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