WiReD
The Faster a New Technology Takes Off, the Harder It Falls
* By Larry Downes and Paul Nunes
* 01.03.14
First, a eulogy: The bell curve is dead.
That familiar model for technology adoption (first popularized by the
noted sociologist Everett Rogers) — with clearly defined market segments
adopting new technologies in predictable groupings — no longer applies.
Following
this work, Geoffrey Moore wrote in 1991’s Crossing the Chasm that
successful new product introductions followed Rogers’s five discrete stages,
moving
from early adopters to mainstream users only after crossing a sales “chasm”
in which the marketing message changes from the new and exciting to the
familiar and incremental.
But today, new products and services enter the market better and cheaper
right from the start. So producers can’t rely on a class of early adopters
and high margins to build up a war chest to spend on marketing to larger and
later markets. For better and for worse, thanks to near-perfect market
information, consumers are too savvy for that. Everyone knows right away when
some new offering gets it right — or, conversely, gets it wrong.
The bell curve, once useful as a model of product adoption, has lost its
value as a planning tool. This kind of disruption has its own unique life
cycle, and with it its own best practices for marketing and sales, product
enhancement, and eventual product replacement.
(http://www.wired.com/opinion/wp-content/uploads/2014/01/bbd1.jpg)
Markets take off suddenly, or they don’t take off at all. Since adoption
is increasingly all-at-once or never, saturation is reached much sooner in
the life of a successful new product. So even those who launch these “Big
Bang Disruptors” — new products and services that enter the market better and
cheaper than established products seemingly overnight — need to prepare to
scale down just as quickly as they scaled up, ready with their next
disruptor (or to exit the market and take their assets to another industry).
While every Big Bang Disruptor has its own unique trajectory, the examples
in our study suggest a new model for the adoption of better and cheaper
innovations, one that is radically different from the traditional view of and
Rogers and Geoffrey Moore. The life cycle of Big Bang Disruption looks l
ess like a gently sloping bell curve and more like a cliff: as dangerous to
competitors on its way up as it is to innovators on the way down.
(http://www.wired.com/opinion/wp-content/uploads/2014/01/sharkfin-downesnunes.jpg)
We call it, for obvious reasons, “the shark fin.”
The process of Big Bang Disruption begins as a series of low-level, often
unrelated experiments with different combinations of component
technologies. This relative calm may give incumbents the false sense that
nothing is
happening, or in any event that whatever might be happening is not doing so
quickly enough to warrant a competitive response.
Yet when the right combination of technologies is assembled and paired
with the right business model, takeoff is immediate. Customers from a wide
range of segments, including mass market consumers, adopt the disruptor as
quickly as its producers can supply it. Market penetration is often nearly
instantaneous.
Next, as the disruptor quickly approaches saturation, adoption drops at
nearly the same pace with which it took off, leading to a period of rapid if
uneven decline. During this period, early warning systems, careful
planning, and the agility to quickly scale up and then down are essential both
to
capitalize on the opportunity of a Big Bang Disruptor as well as to survive
the chaos it can bring to existing markets.
The Rise and Fall of Microsoft’s Kinect
One example of this process was the introduction of an add-on device for
Microsoft’s Xbox 360: the Kinect. It initially sold for $150, but it
revolutionized home gaming — capturing the imagination of diehard players and
casual gamers alike. And while it appeared to come out of nowhere, antecedents
could be seen in and out of the gaming industry. Integrating motion and
other sensors with facial recognition, for example, had long been in
development in many industries, especially in security systems.
Speech recognition, likewise, had already been used in products and
services supporting hands-free computing tasks such as automated phone support
and in applications including GM’s in-vehicle OnStar system and the popular
Siri, which Apple acquired in 2010. Facial recognition had been used for
high-end military applications for years and was the subject of extensive
experiments by the advertising industry.
Even other game consoles, notably Sony’s PlayStation 3, had experimented
with handheld controllers fitted with motion sensors. Sony’s add-on device,
the Move, sold fifteen million units in its first two years.
No one, however, had ever put all these components together or integrated
them with a catalog of new games designed specifically to take advantage of
the powerful hardware and software Microsoft used for Kinect. The new
device looked less like its predecessors than it did a technology from the
future.
Kinect was an enormous hit, selling eight million units in just the first
sixty days. According to Guinness World Records, that made Kinect the
fastest-selling consumer electronic device in history. A little over a year
after launch, twenty-four million Kinects had been sold, pushing sales of Xbox
360 consoles and games along with it. In 2010, Microsoft took the top spot
in the fiercely competitive console market for the first time since Xbox 360’
s launch in 2001.
For Big Bang Disruptors, however, catastrophic success invariably leads to
rapid market saturation — and with it decline and sunset. Within six
months, the pace of Kinect sales dropped precipitously. Though stragglers
continued to buy the product in peaks and valleys over the next year, the
product
had largely fulfilled its mission in its first ten months. For Microsoft —
and other game developers — it was time for another innovation.
(http://www.wired.com/opinion/wp-content/uploads/2014/01/kinectsales-downesnunes.jpg)
Big Bang Disruptors like the Kinect, however, can have second lives as new
innovators deconstruct them and recombine their parts into something new.
Kinect continues to find unexpected uses outside of gaming, thanks in part
to Microsoft’s willingness to make its developer tools and interfaces
widely available. Telemedicine researchers in the UK, for example, have
adapted
Kinect for remote tracking of hand and finger movements to guide patients
recovering from strokes. Kinect’s technology is also being used in the
construction of miniature satellites, where Kinect will handle in-orbit
docking.
(http://www.wired.com/opinion/wp-content/uploads/2014/01/bigbangdisruption.jpg)
Farther afield, the economies of scale that comes from production of
millions of Kinect units has made it cost-effective to use some of its
components for a fast-evolving market of health, fitness, and monitoring
devices.
Companies including Fitbit, Jawbone, and Nike, as well as other startups, are
selling low-cost wearable computers that use accelerometers and other
sensor technology to track and record an increasingly wide range of vital
signs
and measurements, including steps taken, calories burned, heart rate,
temperature, and sleep patterns.
With the shark fin, companies that have long operated as the flippers of
their industry, controlling its speed, direction, and destination, suddenly
find themselves the pinball, bouncing around at the whim of forces outside
their control. To ensure their future as the former and not the latter,
they need to understand where Big Bang Disruptors come from, how they enter and
exit the market, and what they leave in their wake.
This is the first book selected for the inaugural Book Club at _CES_
(http://www.wired.com/gadgetlab/ces-2014/) , as their book of the year. It will
be released January 7.
Excerpted from _Big Bang Disruption: Strategy in the Age of Devastating
Innovation_
(http://www.accenture.com/microsites/bigbangdisruption/Pages/index.aspx) by
Larry Downes and Paul Nunes, in agreement with Portfolio, an
imprint of Penguin Random House. Copyright 2014 by Lawrence Downes and Paul
Nunes.
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