THE STORY
I used to work with a retailer who sold low-end watches. Suddenly the sales of these watches plummeted. Was it because someone had suddenly become better at selling low-end watches than this retailer? No.
What had happened was that one of the primary customers of
this retailer was early adopters of cell phones. They were using their cell
phones to tell time, so they stopped wearing watches…which meant they stopped
buying watches.
This retailer wasn’t the only one seeing portions of the
watch market vaporize due to people using their phones to tell time. Look at
watch ads today. Watches are no longer sold as functional timepieces. They are
either sold as a piece of jewelry or as an heirloom to be passed on to future
generations.
Think about it…timepieces being sold as the epitome of
timelessness. It can’t get much more bizarre than that.
Watches were originally designed as a portable way to tell time. They were the superior solution to solving that problem. But then along came the cell phone. For a large sector of the population, the cell phone became a superior solution to the problem of portable time-telling.
When watches became an inferior solution to the problem, the
demand for them dropped. It wasn’t that the phones became less effective at
what they did. They were as good as before. It’s that a totally new solution
appeared that was superior. Suddenly, a watch’s biggest threat came from
phones.
This problem does not just impact watches. All businesses
succeed by providing a superior solution to a problem. As a result, businesses
tend to work diligently on perfecting their solution. They want to keep getting
better, faster, cheaper with their solution offering.
But then…BAM! Something from out of the blue blows your
solution out of the water. It no longer matters how good of a watch you make.
The best, most accurate watch suddenly became an inferior portable timepiece to
the phone. Making a better, faster, cheaper phone won’t get them back. The
rules have changed.
This can happen to any business. A solution from an entirely
different industry can make your industry irrelevant. The best, fastest,
cheapest obsolete item is still obsolete.
Watch out for the unrelated industry (like phones) which can
make your entire strategy (like watches) suddenly obsolete.
The principle here is that while problems can be eternal,
particular solutions to these problems can have a short time span of viability.
This poses a risk to any business with a product mindset. While your product
may be a great solution today to a given problem, that does not ensure that it
will be the best solution tomorrow—no matter how well you execute on delivering
that product.
Examples:
- Laser Surgery has made
eyeglasses an inferior solution to vision correction.
- Digital communication of
news has made paper-based communication of news (newspapers and magazines)
an inferior option.
- Every few months, somebody comes up with a new solution for losing weight. The solutions come from a wide variety of industries, from new food solutions to new exercise solutions to new surgical procedures to hypnosis to pills to whatever. Each solution’s time of relevance is so short that we call them “fads.”
Now you may be saying that this risk does not affect your
business, because you are not product focused. You are “solution-focused.” You
are always working to be a better solution for your customers.
Well, that may be true. But how broadly do you approach that
solution? Do you only look for solution improvements within your industry? Are
you only looking for better portable time solutions within the watch industry
or are you considering solutions from different industries like phones?
Consider the situation facing GM which we talked about in an
earlier blog. Teens and young adults used to look to cars as the superior
solution to their desire for freedom. Suddenly, the youth of today fulfill
their desire for freedom via their cell phone. Cars are no longer something to
lust after to satisfy this freedom urge for this demographic. To many of them,
cars are just a means of transportation. And given that the young adults of
today often prefer to live in city centers, cars aren’t even seen as a
particularly good solution to them for that solution. Mass transit, taxis and
new car-sharing options like Zipcar appear cheaper and more convenient in an
urban environment.
As a result, car ownership (and driver’s license ownership)
is down in this demographic.
So GM is not just competing against other cars. On one
front, it is competing against anything else that can do a better job of
satisfying the urge to be free. On another front, they are competing against an
urban lifestyle (where cars can be seen as a burden). And they are competing
against new options to transportation ownership made possible through cell phones
(like Zipcar). And they are competing against trends which reduce the need for
transportation in the first place (working at home, shopping on-line, visiting
via Skype, etc.).
Will traditional car ownership eventually fall victim to
some form of the same fate as watches? I would certainly have some concern if I
was in that industry.
Even teen/young adult clothing sales are down, due in part
to a shift of spending from clothing to gadgets (like iphones and ipads). It
used to be that clothing for teens was a superior solution for trying to be
“cool” with their peers. Now, spending that money on gadgets creates a superior
coolnesss. So gadgets get the money that used to go towards clothing.
So what does this imply for strategists?
1) Look Broadly
for Solutions
First of all, if you want to own a solution over time, you’d
better be prepared to look way outside your conventional industry, because the
next leap in superiority may come from somewhere totally different.
Think about Bausch & Lomb. They used to be in the lens
business because that was the superior way to improve eyesight. But they could
see that non-lens solutions could do a better job at some eyesight solutions,
so they diversified into areas far afield from lenses, like laser surgery and
eye vitamins.
Proctor & Gamble used to look to chemistry for their
cleaning solutions. Then they thought more broadly and looked to physics for
cleaning solutions. The result is a number of new cleaning innovations like the
Mr. Clean Magic Eraser.
How far afield from your core are you looking to find superior
solutions to your core? Do you only read publications in your own industry and
only go to trade shows in your own industry? You won’t find it there until it
is too late.
2) Be Prepared to
Redefine Solutions
Sometimes, if your product is no longer the best solution
for a problem, you can reposition the product to be the right solution for a
different problem. As mentioned above, watches are repositioning themselves as
jewelry and heirloom solutions rather than timepiece solutions.
In the 1800s, circuses were the superior way for small
communities to learn about the latest and newest things. When that no longer
worked, they repositioned themselves to be a great solution for nostalgia. I
talked about that here.
When Hamburger Helper was introduced, it was a superior
solution for dinner convenience because it could be made much faster than a
conventional dinner at that time. Later, when other alternatives (microwave,
take-out, etc.) could provide dinners more conveniently (faster & with less
effort), Hamburger Helper was no longer the winner on convenience. General
Mills has tried to come up with other solutions for Hamburger Helper such as:
- The convenience meal your
kids will actually eat; or
- The convenience meal you can feel better about serving because you actually took part in preparing it with your own fresh beef.
I’m not sure any of these tactics are working, but at least
they are trying. You may need to do the same in order to stay relevant.
SUMMARY
Problems may be eternal, but the best way to solve the
problem changes over time. Often the superior replacement solves the problem in
an entirely new way from an entirely different industry with entirely different
skills, technologies and business models. It is not an incrementally better
status quo, but rather something which makes anything remotely similar to the
status quo obsolete. The long term solution is to either: a) Keep an eye
outside the industry to discover solutions which can keep you from becoming
obsolete; or b) Find a way to redefine your product so that it can be the
superior solution to something else (where it can still be relevant).The best timepiece on the wrist” is not a solution. It is a description. The solution is at a higher level—portable time-telling. If you don’t define the problem at the higher level, you will miss some of the creative ways to solve the problem.
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