The three laws of technology strategy

The other day when I was writing about the fate of mobile apps (link), I mentioned one of the laws of technology strategy. It made me realize that although we in the industry talk about those laws all the time, I've never seen them all written down in one place. There are probably more than three laws, but these are my favorites. Please post a comment if you want to add some more.

Here we go, twenty years of industry experience boiled down to three lines:


1. An elegant business model paired with mediocre technology beats an elegant technology paired with a mediocre business model.

To put it another way, if you create a marvelous tech product that has no way of making money, you get a long and passionate entry on Wikipedia. If you create a lousy tech product that prints money, you get to be Bill Gates.

Windows is the best case study here, but this one has been proven over and over again in the history of the tech industry. But companies keep tripping over it because they're often run by engineers who have been trained to value technical elegance as an end in itself.

Don't get me wrong, elegance is great. The most wonderful tech companies are those that combine elegant products and great business models. But you must pay the bills or you don't get to keep playing. And wads of money can buy a lot of patches and kludges.


2. Design for a need, not a desire.

A serial entrepreneur once expressed this to me nicely: "I focus on aspirin issues." In other words, if someone has a serious enough problem that they feel pain, they'll be much more likely to pay money for an answer. (I wish I could remember who told me that -- I'd like to credit him by name.)

Very often tech companies will fall in love with a concept that is compelling to people in the company, but not to non-technologists. They'll convince themselves that people will want it because, well, they ought to want it.

A related problem: A company will come up with a product that's nice, but doesn't really address an aspirin problem. You know you have this problem when someone in the company says that need a marketing campaign to explain to people why they should want the product. The really good products need marketing for visibility, not persuasion.

I think this is the underlying problem behind most failed web applications. They do something interesting, as opposed to something compelling.

What makes this whole problem especially tough is that you can't just ask customers what they need. They aren't engineers, they don't understand what you could build. All they'll ask you for is improvements on the products they already have today. What you have to do is get inside the customers' heads, understand how they live, and figure out what you could do to improve their lives. That's what the best product managers do.


3. Software designed for one platform usually fails on another.

We teach this one to ourselves every time the industry goes through a platform transition, and then we promptly forget it again:

A computing platform isn't just a technology, it's a mindset, with a huge set of unstated assumptions about customers and business practices attached to it. When you port software from one platform to another, you take those assumptions along with you, and usually they don't fit.

This is why the software leaders in one generation of computing usually fail in the next generation. Check it out -- which software products led in the DOS world? Lotus, WordPerfect, Ashton-Tate. Did any of them thrive in the Windows/Mac world? Nope.

Then did the software leaders in Windows/Mac -- Adobe, Microsoft, Symantec, Intuit -- dominate in the Internet? Nope, the new startups without the mental baggage dominated.

Which leads to an interesting question: Do you think the leaders of mobile Internet will be the same companies that led the PC Internet? Or is the next Adobe/Lotus/Google a little startup out there, rethinking what it means to be connected in a mobile setting?

Think about it.

8 comments:

Anonymous said...

Great post Mike!

Here's a question for you regarding Law #2:

How would you qualify the problem that a web application like YouTube solves?

I don't think anyone would claim that people *need* to share and view videos with their friends. This is not something people were having headaches about before YouTube existed. And yet it's insanely popular.

I guess the question is: do you think there should be a different way of justifying the business case for entertainment software than what we do for productivity software?

yaromir said...

Very insightful! Totally agree with your formulation of the three laws of technology. Our class instructor loved to repeat to us the golden rule of business - "no pain - no change." However, would argue with the assumption that mobile web is a different platform. I believe there is just one web. The only things that differ are access method and device type. That's why today we see an expansion of Web 2.0 services into the mobile domain. To my observation, there is a little number of successful companies that originated in the mobile domain only.

Garrett said...

Point #3: Internet Domination...

1) Adobe - Flash (acquired through Macromedia, true, but they own and maintain Flash nowadays)

2) Microsoft - yes, their browser is slipping in usage, but it's still (sadly) in majority use.

3) Symantec - with all the security issues in Internet Explorer and Outlook (and in the Windows operating system itself), Symantec makes a pretty penny selling anti-virus and adware

4) Intuit - this one may not fully dominate, but it's one of the big ones still when it comes to finances and doing taxes over the Internet.

I think all four of your examples in this category are actually quite successful when it comes to a Windows to Web transition. The first two of them unquestionably dominate the Internet; the latter two are still strong in their niches in our Webby world.

Somewhere around 80% - 90% of all Internet connected computers use Adobe Flash AND Internet Explorer together to experience the vast majority of the Internet. (If that's not domination, what is?)

Frederick said...

Hi! Bonjour
I agree with this post
We are based in Asia and we have little experience in Mobile development, we develop Web applications (not native Appli. to come back to you last post) and a good example to illustrate this post and the precedent is what we can see actually in the “2D barcode business”, the concept is great but all the “barcodes” companies in US & Europe try to develop native appli. which create a large barrier for the awareness and use of the service because the users don’t want, don’t know or can’t download a mobile application and in the other side the Telco’s and handset manufacturer are “slow” ;-) to accept third party appli.
And our experience show us that it’s better to create a web appli (what we have done) which connect the user experience (SMS and search) maybe less sexy than a native but more in relation with the user needs.
And we are in good position to say also that it’s not because something working well in a particular ecosystem such as Japan with QR codes that it can work in another ecosystem with no adaptation regarding the user experience and expectation.

Michael Mace said...

Anonymous wrote:

>>How would you qualify the problem that a web application like YouTube solves? I don't think anyone would claim that people *need* to share and view videos with their friends. This is not something people were having headaches about before YouTube existed. And yet it's insanely popular.

Outstanding question. I think the headache problem that YouTube solves is boredom. YouTube's ability to jump quickly from video to video, share them, discover new ones -- it's like eating video bon-bons.


>>I guess the question is: do you think there should be a different way of justifying the business case for entertainment software than what we do for productivity software?

Yeah, it's tricky when you're dealing with entertainment, because the entertainment value of something is so subjective. How do you tell in advance if something's going to be entertaining? Often you can't know -- look how many failed books and movies are produced every year. You have to either have incredible taste, or try a lot of things and see what sticks.

I think it's much easier to analyze in advance whether a productivity tool will solve a real business or personal problem. But even there it's sometimes easy to fool yourself.


Garrett wrote:

>>I think all four of your examples in this category are actually quite successful when it comes to a Windows to Web transition.

To pass the test, a company needs to be as strong in the new platform as it was in the old one. It's not enough merely to survive. So Microsoft, for example, is tremendously diminished in the Internet compared to the PC world. What's more, a lot of Microsoft's Internet properties are subsidized by the Windows franchise. If the Internet parts of Microsoft had to stand totally alone, I think some of them wouldn't exist at this point.

But you make a really good point about Macromedia. They were the leading animation tool in PC-land, and they bridged that to the Internet very well.

Did I mention the Fourth Law? It says there are exceptions to the first three... ;-)

Chan said...

Interesting!

This tech shift is something we saw more recently than when Aldus/ Lotus saga ends and Adobe, MS catch on. It was anyway good old packaged software business they were in.

The paradigm shift happened when Google and the gang came in with the net bubble.

But still since Adobe, MS had good money in the banks they could afford many mistakes and still thrive in this Google's era,

As someone says there isn't much from here to the mobile web other than the dumb pipes and the devices change themselves.

The products are more likely will be the same, say gMail, Zoho, Google earth or iTtunes will still be those when this transition ends soon.

So winners for the next decade most likely will come from the same gang who dominates today. MS, Google and Adobe likes from software ends.

This may change when it comes to products but Apple will still be there cos there's iTunes biz model is near perfect that other product vendors like Dell or SONY can't get hold of it.

There is a more chance to be a new winner here I guess, in the products category, than in the software business.

After all may be Apple will be a sheer winner in this both categories in the end. Cos it has got it's products right and then it's software bundle is too unrival.

May be it's Apple who pushed the envelope eliminating Flash from iPhone for the mass adoption of the mobile web.

As I work for a software company we were too shady about what cult to follow. Flash was good enough, Google (Ajax) seems promising and MS .NET was the king of desktop applications business.

But with iPhone Apple saved us from lot of trouble. It just proved us that Ajax is not only promising but it is actually very practical for the next decade. The best part? We no longer needed to be tied down by either camps, the desktop nor the net.

So I call it, FREEDOM! Finally.

Russell Buckley said...

I'd also add: a mediocre technology, a mediocre plan and a mediocre team, BUT great timing always wins :-)

Russell
www.MobHappy.com

Paul Golding said...

Item 2 is a contradiction, the way you've worded it. A desire can most definitely be a need and vice versa. Also, there are countless examples of entrepreneurs and inventors who developed something almost solely because they desired to have it. Of course, they hoped that others would too. It is a common mistake to assume that "designing for desire" is wrong on the basis of having done it and got it wrong. All that one can conclude is that there was no realisable demand for the product and so the particular desire didn't lead to a marketable product. In a different time and context, it might. One cannot conclude that the desire itself was wrong. We need other data for that. (Of course, one has to define desire a little better here in order to exclude obviously niche desires.) What I think is a more tangible problem here is that all too often technologists will ignore market or user information, if available, in preference of their own whims, which is a different problem.

The solving-a-problem criteria also needs qualifying. When it comes to technology, it often creates new modes of doing things. Early adoption of these modes is actually what creates the problem later in the market. With much technological innovation, the precise nature or even existence of the problem isn't known until the solution presents itself and people become used to it such that the problem is now not to have it. That is often the nature of technological progress. To mention your commentator's issue, I suspect that very few of us were saying to ourselves that I have a "I need a YouTube" problem. When I was involved with designing GSM phones at the start of digital cellular, no one I spoke to "needed" a mobile phone, nor wanted one - believe it or not. To them, it didn't solve any problem they thought they had. Very often, the introduction of a new product can eventually cause a problem. When everyone's got a mobile or an email address, then you might need to go get one etc.

By the way, at the very beginning of the Web, I set up a design agency to design web pages. I went on the road with a PC to demonstrate the Web to various companies. I would say that easily 95% of them didn't see the need, nor could they understand it. I was often forced to talk about "interactive DIY teletext" as a kind of analogy. So, marketing a new concept clearly is often required, although often risky. Russell's comment is spot on - it's often just a (accidental) timing thing.