by Andy
October 2, 2012
An article in yesterday’s WSJ.com shows yet another statistic that states the obvious — the economy is taking longer to recover than everyone hoped. It discusses vacancy rates for office space and that only 36.7 million square feet have been added since 2011, far below the 141 million shed from 2008 to 2010 http://on.wsj.com/PKZEae.
What caught my attention was the lone bright spot industry that is leasing more – one that’s constantly reinventing itself, trying new things, taking the lead, and growing. Technology. Arguably this sector got cranking with Microsoft, which brought hardware partners like HP, IBM and Dell along for the ride. Then Al Gore invented the Internet and AOL got everyone online. Phones took off and with it, Motorola, RIM and many others. Google got data to our fingertips and personal entertainment devices like iPod, iPad, iTouch, iPhones birthed a myriad of apps and technologies. The tech support sector grew and created all sorts of VARs and service providers. Don’t forget Amazon, Yahoo!, Cisco, Sun, Honeywell, SAP, Oracle, and a whole host of other technology firms that develop, drive, and support this seemingly ever-green space.
I apologize for this very abridged and gross over-simplification of technology over the last 30 years, but you get the idea. Sustained success!
Maybe it’s not just about new products, but a new mindset. Tech thrives on creating products they fully intend to make obsolete the following year – if not sooner. Non-tech companies launch far fewer products, and then milk them as long as they can. In between, these non-tech firms spend an alarming amount of time and resources on consumer research to isolate the next opportunity that will take years to finally launch.
You don’t hear much about consumer research in the tech space. Rather, tech firms take a ‘let’s try it’ approach and use in-market experiences as their research. And then adjust as needed before version 2.0 comes out in a few months.
Granted, a core reason for technology’s success is the excitement of ‘new.’ In more stable sectors, folks just don’t care that much about a new breakfast cereal. However, that doesn’t mean General Mills could not take a far stronger leadership position in the category and own the topic of morning nutrition. If they did, we’d hear far more from General Mills than the launch of yet another flavor of Cheerios.
Maybe it’s fear of failure that inhibits other sectors from thriving? Nike’s tagline Just Do It seems to have far more applicability beyond achieving personal athletic goals. A good dose of Nike’s mantra could do our whole economy some good.
Great points Andy … like Steve Jobs once said, “Customers don’t know what they want until we show it them!”
The mundane of business can cripple even the most aggressive of companies.
Great points Andy … like Steve Jobs once said, “Customers don’t know what they want until we show it them!”
The mundane of business can cripple even the most aggressive of companies.
Or as Henry Ford put it, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'”
Or as Henry Ford put it, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'”
Well, there is another side to this pancake. The recent histories of innovative tech enterprises like IBM, HP, Microsoft, Dell, etc. also illustrates the reality that it’s harder to stay on top than it is to get to the top. Often the energy that propels a start up towards success does not seemlessly translate to the energy necessary for sustaining success. Plus, when the innovators who drove the growth get rich and fat, they sometimes lose the incentive to keep innovating.
Agreed. That said, this sector takes failure well, moves forward, and seems to remain quite healthy. Granted, a few have plunged off the cliff but many remain and the industry thrives.
Well, there is another side to this pancake. The recent histories of innovative tech enterprises like IBM, HP, Microsoft, Dell, etc. also illustrates the reality that it’s harder to stay on top than it is to get to the top. Often the energy that propels a start up towards success does not seemlessly translate to the energy necessary for sustaining success. Plus, when the innovators who drove the growth get rich and fat, they sometimes lose the incentive to keep innovating.
Agreed. That said, this sector takes failure well, moves forward, and seems to remain quite healthy. Granted, a few have plunged off the cliff but many remain and the industry thrives.
Getting back to the state of the economy, it has been widely reported that industries are sitting on billions while current concerns like the tax code and healthcare shake out. Hopefully there in a boom around the corner.
Getting back to the state of the economy, it has been widely reported that industries are sitting on billions while current concerns like the tax code and healthcare shake out. Hopefully there in a boom around the corner.
The point that tech companies develop products that are obsolete in months or a years is I think the real issue. Imagine if auto manufacturers applied this strategy to their products, maybe not every year but an expectation of every 3 years whole new product consider what might be the state of the auto industry. Keep in mind the 1908 Model T gas mileage was 25 mpg and that model was produced from 1908 to 1927. And current fleet mileage is below the 25 mpg marker. So why as consumers do we not demand the same level of innovation in other products that we demand of tech and computer manufacturers??
The point that tech companies develop products that are obsolete in months or a years is I think the real issue. Imagine if auto manufacturers applied this strategy to their products, maybe not every year but an expectation of every 3 years whole new product consider what might be the state of the auto industry. Keep in mind the 1908 Model T gas mileage was 25 mpg and that model was produced from 1908 to 1927. And current fleet mileage is below the 25 mpg marker. So why as consumers do we not demand the same level of innovation in other products that we demand of tech and computer manufacturers??
How do you really make money? By tapping into customer’s disposable income. Smart-phones, and the like seem indispensable to tech savvy folks accustomed to real-time updates of stock quotes or even scores in the european soccer leagues, but the reality is you can’t eat them to survive. What do people with meager means save up for? it isn’t to buy the slightly more expensive organic bread from Publix but instead to buy luxury items (cosmetic surgery, iPads, etc). The benefit of running a business like Valve (makers of the computer game Portal 2) is that evoking emotional desire will help generate profit (much like fashion – I read somewhere that Hermes , Michael Kors are doing well in this economy). Eventually, the luster of new electronics dulls (seen any expensive digital watches recently?) and the items become pedestrian. It happened long ago with cars (many people just want something from A to B). And now desktop computers are suffering the same fate (Gateway and Compaq, how are they doing these days?). To me for a technology company to stay relevant they shouldn’t focus on optimizing price, improving mileage, or improved resolution of their screen but continue to shift paradigms regarding what one can think about doing with their personal electronic device or the near instant access to good information.
How do you really make money? By tapping into customer’s disposable income. Smart-phones, and the like seem indispensable to tech savvy folks accustomed to real-time updates of stock quotes or even scores in the european soccer leagues, but the reality is you can’t eat them to survive. What do people with meager means save up for? it isn’t to buy the slightly more expensive organic bread from Publix but instead to buy luxury items (cosmetic surgery, iPads, etc). The benefit of running a business like Valve (makers of the computer game Portal 2) is that evoking emotional desire will help generate profit (much like fashion – I read somewhere that Hermes , Michael Kors are doing well in this economy). Eventually, the luster of new electronics dulls (seen any expensive digital watches recently?) and the items become pedestrian. It happened long ago with cars (many people just want something from A to B). And now desktop computers are suffering the same fate (Gateway and Compaq, how are they doing these days?). To me for a technology company to stay relevant they shouldn’t focus on optimizing price, improving mileage, or improved resolution of their screen but continue to shift paradigms regarding what one can think about doing with their personal electronic device or the near instant access to good information.