Saturday, March 21, 2015

Product Renewal through Technological Resurgence: When Past is the Future and Legacy is the Discovery!

It is generally believed that new technology not only makes older technologies inefficient and inappropriate but also makes whole product lines obsolete. There have been many case studies of products that have become obsolete by the sheer march of technology. Mechanical watches by quartz watches, ink jet printers by laser jet printers, fountain pens by ball point pens, hand telephones, calculators, cameras and navigation systems, all by cellular phones, physical publishing by digital publishing, corner bookstore by online bookstore, telex by fax, mail and fax by Internet, and so on. Almost all of these have been driven by revolutions in electronics, telecommunications and software technologies. If such changes have not been more universal (for example, X Ray not getting edged out still by CT Scan), the costs alone could be the deterrent.   

The upcoming Apple Watch is another perfect example of a disruptive technology in wearable computers that could change the way smartphones and health devices are positioned in future. Interestingly, this technological trend may not leave even very traditional and mature products such as automobiles untouched.   The fascinating point in all this technological revolution and product obsolescence is that the basic needs that were fulfilled by the earlier generation products continued to be required. Things like timekeeping, printing, writing, voice communication, photography, navigation, book reading, mail communication, other non-voice communication, and medical diagnosis are still required. Technology’s ability to converge more applications into one device or one medium has contributed to this transformation.

Technological resurgence

Established technologies, and hence established products, may be overtaken by newer ones; however, nothing prevents them from staging a comeback. The case of Seiko Epson, the famous Japanese printer group is a case in point. The company, under the stewardship of Minoru Usui san, took a bold step in 2006 to refocus on ink jet printers despite the likely advent of a paperless digital office. Not only did he focus on ink jet printers, in preference to laser printers that are considered to be technically superior, but also shifted focus from consumer markets to business markets. This has been made possible by a technological stride in print head technology patented by Seiko Epson that enabled high accuracy in firing the ink droplets and thus securing higher print quality. This was also accompanied by a different bundling strategy for the marketplace that enabled his high cost printers featuring big tanks accept cheaper inks from any brand.

Similar technological resurgence has been behind the Swiss watch industry, which recovered from the shock of piezoelectric quartz watch technology by a refocus on its precision design and manufacturing capability on one hand and by integrating multiple drive options from mechanical to quartz to light powered and radio powered movements in watch design and manufacture. This was also accompanied by redesign of watches to appeal to customers belonging to different demographics and professions, including youngsters, students, sportsmen, professionals and seniors. There has also been a very successful effort to position watch as a luxury product, with an additional ornamental value for the ladies watches. The case of the fountain pen is also one of similar comeback, from a mass writing instrument to one which is rendered obsolete by ballpoint pen and which finally staged as a gallant comeback as a luxury writing instrument.

Basic needs

It is important to recognize that technologies may come and go but the basic objectives of all technological developments would be to fulfil certain basic needs in an ever better fashion.
As long as writing exists, the need for writing instrument exists. Many thought that personal computers have rendered typewriters irrelevant, and along with traditional typists. True, but typing itself has never gone out of need; in fact, typing has become a universally required skill and physical keys of a typewriter got replaced by a computer keyboard, followed by a BlackBerry keyboard, now followed by a virtual keyboard. The same type of product reinvention cycle can be seen across products. At the core of such renewal lies the relevance of technology in enhancing user experience even for basic established needs.

Successful technological resurgence would depend on multiple factors: the scope for the old generation technology to be upgraded, the opportunity to extract incremental value from the technology, the costs and benefits of breakthrough innovation vis-à-vis incremental innovation, the potential to integrate supportive technologies, the ability to re-segment the markets based on new technologies and products, the possibility to reposition and rebrand through ‘retro’ features, the adaptive nature relative to the Internet technologies, and so on. Not all later stage technology would result in more expensive products. For example, Swatch watch used inexpensive quartz technology to provide to youngsters inexpensive watches as fashion accessories. It is important, therefore, not to discard any product or banish legacy technology simply because a new technology has arrived. 

Market redefinition

The key to re-emergence of legacy technologies for renewing products lies in the ability to redefine markets. It also requires redefining competition. The relevant case is that of fountain pens. The industry possibly sold several hundred million units each year in the 1950s but by the 1970s the annual sales dwindled to a few million units due to the advent of the ballpoint pen. Today, possibly in unit volumes the same level is being maintained but in dollar value the turnover of the industry multiplied – the reason being that the fountain pens are now being marketed not as utilitarian writing instruments but as nostalgic luxury accessories. It is not that technology was passive in this process; from finely honed gold nibs to lacquer finish cases, new technology did give luxury touch to the renewed fountain pen drive.  As a result, fountain pens and ballpoint pens now operate in two distinct market segments. The same could happen to radios and record players.

The case of Seiko Epson also demonstrates how technological resurgence gives confidence to redefine markets. Given the lower print quality and lower price point relative to laser printers, ink jet printers were ideally positioned for the cost conscious consumer markets and the laser printers for the office market. However, on the back of energy efficiency and comparable print quality, Seiko Epson could do the contrary market positioning for its new series of ink jet printers focusing more on business users successfully. The likely future market definitions could be even more disruptive; from simple definition on the basis of a spectrum between mass consumption and luxury use, future products would have very novel redefinitions. For example, shoes in the past moved from being classified as business and casual shoes to application oriented shoes (running, jogging etc.). Tomorrow, if a smart chip can be embedded in the sole of a shoe, shoes may get stratified into health shoes and routine shoes!

Human factor

The temptation to discard legacy technologies could be easy to fall for executives and companies but the grit to re-develop and re-deploy legacy technologies requires strong human faculty. Fundamentally, it starts with the resolution of the apex business and function leaders to preserve the institutionalized value of technologies until the time comes to merge new technologies. This also requires preserving the technicians and workforce that grew with and lived in/with the legacy technology. There is an interesting anecdote on this. When Zenith, a Swiss watchmaker was buffeted by the quartz onslaught, it like many Swiss mechanical watchmakers decided to discard all its production tools, including critical molds and dies. However, a veteran employee who could not stand the idea of scrapping all the historical production tools hid them in a shed in the factory.  When, years later, the mechanical watch industry made a comeback and Zenith was at its wit’s end as to how to participate in the revival, the veteran employee returned to disclose the hidden treasures of historical tools and drawings, and led Zenith’s foray into mechanical watches.

There is a practical and compassionate element to the human factor too. It is easy to lay off people but difficult to retrain people. Companies which invest the time and effort to retrain people would combine the benefits of legacy knowledge and futuristic technology. Seiko Epson, for example, decided to retrain and redeploy its people on newer product lines. This, of course, requires not only a compassionately practical management but also a mature employee base which is not plagued by insecurity but is willing to learn new technologies as eager students with a faith in future. The third important factor is to focus on the customer as not merely as a user but more importantly as a human being who needs to be provided a better quality of life. The new slew of products, particularly the ones on the anvil, such as smart phone linked health watches are nothing but the stethoscopes, pedometers, electroencephalographs and diagnostic algorithms, all rolled into one.

When the customer is pampered and enthused as a human being, just with satisfaction of basic needs with resurgent technologies and renewed products, past tends to be future-perfect and legacy promises to be future-creative!  

Posted by Dr CB Rao on March 21, 2015  

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