4 February 2010
William Goldman’s aphorism about Hollywood producers failing to guess which movies will be hits is equally applicable to new products and technologies like the iPad. Our first impressions – especially when we haven’t even seen or touched one – are almost invariably wrong. The immediate reaction of most commentators when the iPod and the iPhone first appeared was to dismiss them as yet more examples of Steve Jobs’ eccentricity. We have not heard too many humble retractions – pundits don’t like admitting errors any more than CEOs.
In most cases the initial scepticism of crowds is justified – nearly all new products and technologies fail to find a market – but some succeed big time. Apple’s unparalleled track record in devising insanely great, fabulously successful, counter-intuitive products means we should at the very least keep an open mind in this case. The crime is not being wrong the first time, but refusing to acknowledge the mistake.
I have not tried an iPad yet so am in no position to make a reasoned assessment, but the arguments of Stephen Fry, The Economist and Nick Carr all make sense to me. The flourishing of multimedia on the Internet, the explosion of mobile applications and the emergence of cloud computing all suggest that the personal computer as we know it will soon cease to be the most important communications tool. Some kind of tablet computer could well be the wave of the future, though a multiplicity of devices seems more likely. The fact that I, as an inveterate keyboard tapper, might not want a tablet just yet is beside the point – I was not in the target market for many of the products I myself marketed.
Many executives believe that market research can provide definitive answers. Intelligent questions may help to clarify some issues but research can also exacerbate the problem by promising a kind of certainty that is almost certainly spurious. The vast majority of respondents, when asked if they would ever use a completely unfamiliar product or service will say no – they can’t see what it might offer them. In focus groups this starts to look conclusive, as so often groupthink rules. It was focus groups that led GE to conclude in 1980s that there would be no significant market for personal computers. Its executives were comforted by the fact that the only enthusiastic respondent thought they would be particularly useful for communicating with beings on other planets.
Unproven technologies are frequently dismissed as ‘solutions looking for problems’. Several commentators have trotted out this cliché in the last week. In fact nearly all the great technologies of the last few decades started out that way. The term was first applied to the laser when it appeared in 1960, and then to the two most successful new products of the last thirty years – the personal computer and the mobile phone.
Before the arrival of Visicalc, the first spreadsheet program, there was scarcely any generally useful application for the personal computer, other than for technical enthusiasts who were basically buying them as toys. Hundreds of thousands of computers, bought by consumers in the early 1980s in a flush of enthusiasm, ended up in the backs of cupboards, never having proved of any real use. Yet the PC went on to become one of the most versatile, ubiquitous and disruptive of all technologies, as it became ever more powerful and affordable, as more and more software applications were developed for it and as more and more people learned how to use them.
The mobile phone evolved equally dramatically, from the expensive, barely portable, brick-like objects that business executives lugged around in the 1980s, to the tiny emblems of personal identity virtually all of us carry today, and that in some cases are already substitutes for a PC. It took even longer before the Internet mutated into a medium that people other than academics and geeks might want to use, let alone what it has become.
Evolution works in new markets as a search algorithm that slowly discovers ‘the needles of good design in the haystack of possibilities’. Discovery is also a good metaphor for how technologies like the PC and the iPhone attract new applications. The first version of any radical idea is rarely an instant hit, the iPod being a notable exception. The iPad is a more complex, ambitious concept and is likely to mutate much more than its sibling. (Though let’s not forget that the iPhone started life as a spin-off from the iPod.)
We will never be able to do more than make intelligent guesses about the future. If that were more widely recognised, expectations would be more realistic, less time would be wasted producing and pouring over ludicrously detailed forecasts, and the subsequent recriminations would be much less acrimonious. Why do we crave certainty and so dislike having to change our minds?
Some psychologists believe that evolution has programmed us to react quickly to sudden events, to reach clear-cut conclusions and stick to them. This ability to think fast enabled our hunter-gatherer ancestors to recognise danger, or to spot their next meal, in the blink of an eye. Careful reflection was probably not a useful attribute – wondering whether their first impression was correct could have had fatal consequences. Intuitive thinking and decisiveness are particularly valuable for managers, who have to size up a new situation quickly and take prompt action, but such snapshot views almost always oversimplify and, if never reconsidered, are dangerous
Most of us do less logical, deductive thinking than we would like to believe. We have inherited from our distant ancestors a craving for instant explanations that seem to make sense of new experiences and we quickly construct these ‘narratives’ or eagerly swallow those of experts spinning plausible stories. When fresh evidence appears that does not fit with the explanation we filter it out, but welcome information that confirms our preconceptions.
Executives of all kinds are particularly susceptible, because they have to take decisions quickly, and because previous success reinforces their self-confidence and dislike of criticism. The more successful they have been in the past, the greater the danger. They get out of the habit, if they ever had it, of acknowledging their errors. If those around them never disagree with them or ask a challenging question, they become insulated from reality. All the experience of John Akers and other senior IBM executives confirmed the story they all told themselves in the late 1980s: the mainframe is the heart of the computer industry, the PC is a sideshow, IBM is unassailable. It took years of terrible blows to make them realise that perhaps none of these things was true any more.
Eventually IBM did realise. Great companies learn from their mistakes.