On Product Misjudgment: The Imperfect Science of Understanding the Peripheral Environment

peripheral environment gadget

“People don’t know what you want until you show it to them.”

— Steve Jobs

“Carefully watch how people live, get an intuitive sense as to what they might want and then go with it. Don’t do market research.”

— Akio Morita, Sony co-founder

“If I had asked people what they wanted, they would have said faster horses.”

— Henry Ford

Is it fair to say visionary product management has been idealized to a ridiculous degree? While the quotes above were said by really smart people, I think it’s also true they’re a bit on the arrogant and ridiculous side.

Each of these men put themselves at the center of their own creative universes and, yes, succeeded wildly in creating amazing products. But they were not alone in their discerning power. They had plenty of help inside and outside their companies.

Jony Ive and hundreds of coders and designers helped Jobs bring about the iPhone while sampling other tech created elsewhere. And Ford and Morita’s companies had hundreds of collaborators. But the core belief that individual entrepreneurs can change the world through grit and innovation endures. I think this type of thinking, while sometimes helpful, is too often insular and hurtful to a young company.

If company culture propagates the notion that success only happens inside the four walls of an organization, or worse, inside that of the founder’s brain, I think they’re more likely to fail.

Think about the general reasons why businesses fail or decline. It’s rarely for lack of competence. Few say a company didn’t try hard enough to serve their customers or didn’t want to create great things. In fact, the core premise of disruption theory says incumbents don’t fail by doing all the right things. They fail because they misjudge the relevance of their product.

Most tech firms misjudge their product’s peripheral environment because of the following.

We Think Too Narrowly About Applications
The Apple iPhone X

In technology, paradigm shift transformations are constant. In the last twenty years, we’ve gone from the Internet, to cellular, multi-touch, to the VR/AR/IoT/Blockchain era. In media digital imitability, scaled algorithms, and new provider platforms were all affected by tech.

What matters is that when industry structures change, value shifts to new places. It’s insane to think there was a time when we thought the best thing to come from the mobile web was the weather and email, when in fact a perpetually-connected computer in almost every pocket has paved the way for better use cases like location-based services.

And even the best companies are not immune from thinking narrowly about applications, which lead to bad products and potentially ruinous decisions.

For example, think about what happened at Microsoft. Company leaders assumed PCs would always be at the center of users’ computing lives and so their approach to the smartphone was insular. They believed smartphones would always be a portable, slightly less-capable version of everything you’d want on a PC. But they misjudged peripheral apps — things a mobile OS could do better natively than a PC. Think of how Apple, the iPhone, and its billions of developers took advantage of location-based services, mobility, and connectivity of mobile.

If we force ourselves to think about capabilities of technology beyond the perimeters of current or past apps, we give ourselves a better chance to understand what the future looks like.

We Think About the Right Things At the Wrong Time

Timing is one of the most challenging aspects of IT market entry.

Product champions have to determine whether changes in habits are necessary for adoption, and whether their customers are primed for it. Or perhaps, the customers are ready for it but the supporting ecosystem isn’t, leaving room for competitors to catch up.

When the goal is to be proactive about positioning organizations for the future, the challenge isn’t necessarily figuring out what that future is, but when and how to get there. And that means identifying use cases in existing lifestyles that can act as a bridge to new products.

Think about how Google has been alternatively too early, too late, or right on time on trends.

The company’s Glass augmented reality system had a sound, forward-looking premise. It would enhance people’s peripheral perspective with information at a faster rate than ever. But its ability to fit into our lives was off. Perhaps Google had to wait for more AR-capable apps to be developed first, like the ARCore SDK that came later on. Maybe it needed a good AI assistant and better natural language processing. The latter would have been useful to users who didn’t want to shout “Hey, Google” within earshot of everyone at a bar.

One example where Google was too late was in social media. They released Google Plus years after Facebook and MySpace took that crown and what was the result? Ah, the less said about that, the better.

What about the product that came out right on time? Well, that is Google’s iconic search and related ad programs. They have a giant company to prove they did everything right there.

We’re Overly Defensive of the Status Quo and Underestimate Market Fluidity
Photo by LinkedIn Sales Navigator on Unsplash

People often attribute failures of incumbents to troubles of bureaucracy: that large firms struggle to mobilize quickly to nimble disruptors. This is partially true. Incumbents fail as they’re desperate to expand existing profit centers in the face of declining strategic relevance.

The underestimation of market forces of indirect peripheral competitors, which undermine the need for the incumbents in the first place, is a type of folly that can be stopped.

Take the development of the video conferencing tech industry. As conference calls improve, and AR and VR continue development, connected businesses like airlines lose lucrative business travelers the more meetings are conducted remotely. If so, what existing competencies or resources can be repurposed to generate value? Or does an airline — as an organization used to bringing the world closer together — consider diversifying into other areas to help them continue to deliver on that?

This is where we have to appreciate the fluidity of markets. The invisible barriers between industries are never as great as we instinctively believe. Swiss watchmakers didn’t entertain the possibility of tech companies infiltrating their turf. Did film studios think digital distributors  Netflix, Google, or Apple   were a credible threat to backwards integrate and produce their own content? Did Microsoft think an e-commerce company could compete as a cloud services provider (AWS)?

Ultimately, firms make mistakes by either thinking about the wrong things, or thinking about things in the wrong way. Firms rarely fail for a lack of effort, but rather an inability to adequately consider the complex dependencies of all the things happening around them.

For those thinking about a career in tech, I believe it’s this type of insight that can help you move ahead in a company. 

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Written by Jeremy Liu

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