The Power of Hindsight in Product Strategy
In this article, we will use hindsight as a tool to explore these motivations, one by one, through case studies and examples.
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The decision to make a fundamental change in strategic direction, whether in re-launching a product, or revamping a service, may depend on several factors. Many companies get a second wind by reinventing themselves to capitalize on a shift in consumer perception, new processes, current trends, new technologies, etc., while others inexplicably plummet to new lows after periods of great success.
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In this article, we will use hindsight as a tool to explore these motivations, one by one, through case studies and examples. In the end, we will see how five fundamental objectives form, or should form, the foundation for any strategic or tactical change a company might wish to incorporate concerning redirecting or rethinking, its offerings.
I. Flagging Usage — The Facebook vs. Orkut Case Study
Sometimes, well-loved products just fall out of grace with customers for a multitude of reasons. It could be that the customers, or consumers in general, grow to love another competing product better, or that more ‘invisible’ trends in the market could drive a shift in user preferences and sentiment. A classic example would be the decline of Google’s homegrown social network, Orkut, and the rise of Facebook. It is, perhaps, a case of how the re-launch of a product that had already captured a substantial user base went wrong, or never happened on time.
Facebook and Orkut, two social networking platforms, started at approximately the same time, in 2004. Facebook preceded Orkut by several months when it was conceived as FaceMash in mid-2003. While the former was a fledgling startup founded by two roommates in a Harvard University dorm room (as the story goes), the latter was a well-directed push by a well-established company (Google), making its way into the then-green social networking space.
Facebook began as a network for college students. Orkut was open to anyone and everyone in the world.
Orkut became a roaring success within a couple of years of its launch. User count grew steadily into the tens of millions, over the years, and the service was immensely popular in Brazil and India. Users loved Orkut for several features it offered that were novel at the time – they could get in touch with old friends and make new ones.
They loved the idea of having social diary entries (‘scraps,’ as Orkut called them) that the whole wide world could read and comment on. They could be ranked as ‘trustworthy’, ‘cool’ or ‘sexy’ by friends, and could earn a follower base of ‘fans’. Some of these features could be seen as quite revolutionary, even by the standards of some of today's popular social networks.
Facebook, on the other hand, began as a more exclusive space with simple and limited features. It did go on to open its doors to the general public from its modest base of college students a few years after its launch.
Despite its initial successes, Orkut began seeing an exodus in its user base, particularly after Facebook became publicly available to users from all over the world. There is a very real possibility Google saw the balance starting to tip the moment it began happening, but why they were truly not able to plug the leaks in the early stages of their declining popularity remains a subject of conjecture.
It is possible that, while Google was able to cater to a massive market in Brazil and India, the core sentiments and trends closer to home, namely, North America, went largely ignored. This was a time when Apple had ushered in, through its iPhone and apps, an era of simplistic and functionally minimalistic UI design that users could navigate with a very easy learning curve.
The shift from computers to smartphones for browsing websites and apps, and using the revolutionary touchscreen technology, required a simple and intuitive user experience that users could easily interact with, on a small screen, without significant compromise in features.
Facebook adapted rather rapidly to follow this design philosophy from a very early stage, offering its users with a short menu of features that they could discover seamlessly, learn to use easily and browse on viewscreens of all sizes. On the other hand, Orkut was piling on new features (albeit great ones) that users either did not know about, or found too congested, or complicated, to use, particularly on smaller viewports.
It is also possible that Orkut users once brought in by the appeal of the open-book transparency of the platform, became a little more apprehensive about privacy. Orkut originally allowed everyone to discover everyone else on its network, read and comment on posts, and see friends and followers. Visitors to users’ profiles were listed on their home screens and users could follow the names to see who visited them while they were offline.
While all of this was initially very exciting, Orkut users likely became overwhelmed by strangers sending unwelcome friend requests or chat invitations. Furthermore, Orkut, through its ‘communities,’ also became a breeding ground for plenty of unsavory content, sometimes bordering on hate and false news and narrative (a problem even today's social networks are trying to tackle on an active basis). Facebook began receiving disillusioned Orkut users in droves, and, by around 2009, Facebook had surpassed Orkut’s user base.
Alarmed by its continuously declining popularity and usage, Google's launched a new social network, Google+, in 2011, to begin the process of replacing Orkut instead of reviving it. This was, perhaps, another ill-fated move. The smarter move might have been to re-engineer Orkut’s privacy protocols and user experience to cater to its active user base, which was, at the time, still quite voluminous, particularly in a couple of valuable foreign markets, despite the decline.
Even as Google brought out Google+ with all its bells and whistles it was hoping would lure lost users back, more and more loyal and die-hard users of Orkut, who might have been retained if their needs were addressed, continued abandoning the legacy platform in favor of Facebook. Also, although Google did eventually go on to effect several updates on Orkut’s platform to improve user privacy and experience, and clamped down on the exploitation of its ‘communities’ feature by nefarious elements, it was too little too late.
Orkut was shuttered in 2014 and Facebook is, today, the largest social network in the world, with over 2 billion active users. As for Orkut’s heir, Google+, it was colloquially called ‘the awesome party that nobody showed up to.' Google+ was also shuttered in 2019.
Online applications and products, unlike shipped/physical products, have the distinct advantage of being updated or upgraded, even while they are actively used by millions of users. Any potential problems in usage or user perception can also be triaged, thoroughly analyzed, and followed through with usage analytics tools and techniques. It is easier than ever to release new features to an experimental group of beta users, gauge reception, and account for any unpreferable user behavior before they are released en masse.
It is necessary to stay on top of a product’s vital signs throughout its lifecycle and treat any indications of monthly active users (MAUs) dropping with profound seriousness, and corrective measures, if they are not explainable, seasonal hiccups. Given the nascence of the social networking market that Google had penetrated, so effectively, with Orkut, well before the other household names (such as Twitter, Facebook, and Instagram) of today, it is likely that Google was a little lax with acting on some key product vital signs that Orkut had worked so hard in building over the years of its existence. Google’s actions, or the lack of them, may have forever lost them vast tracts of the social networking space that they were themselves one of the first to enter.
II. New Tech — The Kodak Case Study
This one has probably been beaten into the ground as an example, but the case of Kodak’s lack of willingness to see the potential in a new, disruptive technology it had itself invented, one that eventually led to its downfall, is a tale to be preserved for the product management posterity. Chunka Mui offers plenty of insight on how the iconic American company — one that dominated the photography industry for decades — made a series of catastrophic decisions, in his 2012 Forbes article, How Kodak Failed.
Steve Sasson, the Kodak engineer who invented the first digital camera in 1975, was met with cynicism by Kodak's management when he unveiled his invention before them. According to Mui, the corporate response called the invention ‘cute,’ and asked Sasson not to ‘tell anyone about it,’ without doing much more to look into or foster the invention.
The company did, however, ask Vince Barabba, the then-head of market intelligence at Kodak, to study the market threats posed by digital photography given that Sony had only just introduced the first electronic camera. Barabba’s study revealed that digital photography had the potential to replace Kodak’s core business of film-based photography. The study also stated that it would take some time – and that Kodak had ten years to prepare for the ‘transition.’
Despite the subtly ominous signs shown by the study and the fact that it turned out to be remarkably prophetic in hindsight, Kodak did little to prepare, even given the time and resources it had. On the contrary, it dug its heels deeper into its core business by building more film-centric products, such as the Advantix, that ceded some function to digital photography, but yet, required a film to develop pictures into print.
In January 2012, Kodak filed for Chapter 11 bankruptcy. Digital photography is now the mainstay of all photography.
In this case, Kodak had the triplet advantages of an early warning, technical knowhow to develop the new technology (digital photography), and the time to foresee its potential and bring it out, in a big way, to consumers of its products. Digital photography had plenty of potentials to reduce costs, improve end-user experience, and catapult Kodak to a significant lead over its competitors. It is likely, however, that the company did not read too much into, both, the opportunities and threats presented by digital photography, since its revenue stream from the film business was, at that time, robust and largely unsinged by the competition.
There is an important commonality between the success trajectories taken by new technologies, whether they are tangible, such as in the case of mobile touchscreens, or methodologies, such as in the case of blockchain. If the new technology has the potential to fit into space and improve value for the user, even if by means not obvious by contemporary standards, it pays to invest time, effort and energy into exploring the possibilities of adopting, protecting, developing and making it mainstream before the competition does. As demonstrated by this Kodak case study, the very existence of a company can depend on timely R&D, and correlating new tech back into increased value for the user, in this world that is becoming increasingly competitive and innovative.
III. New Use Case — The Blockbuster vs. Netflix Case Study
The insights in this section are gathered from the 2014 Forbes article A Look Back At Why Blockbuster Really Failed And Why It Didn’t Have To, by Greg Satell. In early 2000, Reed Hastings, founder of Netflix, met Blockbuster CEO John Antioco to propose a partnership. Netflix was prepared to run Blockbuster’s brand online and it was proposed that Blockbuster would, in return, promote Netflix in its stores. The deal was a non-starter for Antioco, who was running a successful business already and felt no need to partner with a startup.
The simple result of that dismissal is that Blockbuster is now bankrupt, and Netflix is a company worth tens of billions of dollars, one that produces as well as showcases content.
While Blockbuster turned down the deal with Netflix, it is essential to recognize or speculate, that Blockbuster saw Netflix as an upstart – one that had more to gain from the partnership than it could give. The well-established company was probably (somewhat justifiably) confident of its customer reach given its thousands of stores spread across the United States and the rest of the world.
Anyone who wanted to rent a movie could quickly pop into their local Blockbuster store, grab a DVD, and check out. However, Blockbuster could not have recognized that Netflix, with its online model of renting DVDs (back then), eliminated a couple of major pain points for the user, namely, deadlines for returning movies and late fees associated with late returns. Netflix users could keep movies for as long as they wanted; they simply had to return them before becoming eligible, again, to borrow new ones.
As we all now know, Netflix went on, further, to eliminate DVDs to offer a completely online experience for watching movies and shows, by investing heavily on a web platform. Blockbuster would have had to radically alter its business model to try to take on a lean, young Netflix that was innovating and evolving rapidly to capture the largely untouched space of subscription-based web entertainment.
Blockbuster went bankrupt in 2010, a mere ten years after the pivotal meeting between Hastings and Antioco. While Blockbuster’s time to react was rather limited when compared to Kodak, and the whole decade the photography giant had to adapt, the in-store retailer made a critical mistake in its perception of customer experience. The original reluctance Blockbuster had in rethinking its model to match that of Netflix came out of concerns that eliminating late fees would jeopardize a sizable portion of its revenue.
Blockbuster completely ignored its customers’ angst against late fees and the fact that they likely allowed themselves to be tied to the company and its services until a better alternative could be found. Netflix capitalized beautifully on, both, the elimination of movie-return deadlines and late fees that Blockbuster’s customers resented, and charging into the web entertainment space that saved users the last-mile effort of needing to borrow from and return at stores.
These stories have several key takeaways for those of us who are product managers, developers, UX designers, and executives in charge of corporate strategy. There is an overwhelming need to:
- Keep in touch with usage metrics and back them with verifiable hypotheses on user sentiment.
- Regardless of how deeply a company is established and/or how well a product is doing, new findings, or adverse shifts, in user sentiment, should be rapidly recognized and addressed.
- Product owners and strategists must adopt both long-term strategy and short term tactics that will put both company and product on an adaptive course to maintaining an edge over the competition.
- Study competing products closely and get subjective input on what they are doing better than the homegrown products are not.
- It is easier than ever to integrate usability studies and surveys into product strategy.
- There are many methodologies, software tools, professionals, companies, and consultancies, that can translate qualitative user input into quantifiable data that could help justify (or disprove) hypotheses and proposals.
- It is necessary to take advantage of these resources to continue to stay on top of ever-evolving consumer needs and competitive landscapes.
- Ensure that the needs and expectations of an existing, loyal user base are not compromised at the expense of going after deserters and new user segments.
- In the Orkut and Blockbuster examples above, both companies had opportunities that might have helped them fortify and preserve their loyal user bases before the exoduses went out of hand.
- Google might have addressed immediate concerns from its Orkut users that stuck longer than others (instead of investing in a completely new social network) while Blockbuster might have assuaged the issue of movie-return deadlines and late fees, while still maintaining profitability in its business model. This is done by simply mimicking Netflix’s method of lending.
- Instead, both Facebook and Netflix capitalized, not only on their agility to roll with the tide of evolving consumer preferences but also on the resentment against some features and rules of engagement offered by their principal competitors.
- Stay in touch with new tech and trends.
- They are evolving at a rate faster than ever before. Studying, justifying, and adopting them promptly could mean the difference between monopoly and bankruptcy. It should be gauged whether any new technology solves major user needs in a manner that existing tech does not.
- Once such potential has been identified, and favorable ROI potential for the business has been established, companies need to move quickly to mature those new technologies, release them to the mainstream, and market the value brought in by those technologies as crucial USPs for users and customers. This could be a powerful method of capturing market share from even existing competitors.
- Always look to different markets, user segments, and use cases, to insert current products, either as is, or modified for them, if the fit can be justified.
- There are numerous examples of products that were invented and intended for a particular purpose but found huge success in others.
- While this article does not necessarily discuss examples of such repurposed products, product leaders should, nevertheless, consider the possibilities of outside applications while planning the next course of action for ailing products.
In conclusion, user experience and customer satisfaction are the kings of the product management playing field. The commonality between all of the above takeaways is that they are all centered around creating and maintaining value for customers and consumers/users. While the examples discussed here are related to specific companies and products, I do not doubt that learnings from them could be applied to any product/solution of today.
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