Good Companies, Bad Products, Part II

In my last column, I talked about some of the reasons good companies make bad products – and how sometimes, the products are fine, we're just biased. Or that the product was made by engineers for engineers. Or that the CEO personally pushed for it and no one was willing to contradict him.

Sadly, there are several other reasons why good companies make bad products.

Our Customers Love It, So We're Giving Them More of the Same

If you haven't read Clayton Christensen's The Innovator's Dilemma (Harper Collins, 2003), your business education is missing a core component. The book lays out a premise for what seems to be a good idea: successful companies listening to their customers and serving them more of what they want. Sounds great, right? But if the market is evolving away from that type of product, listening to your existing customers can be fatal.

For example, take Symbian. For years, Nokia sold tens of millions of Symbian phones, and as recently as nine months ago, the company pointed to research showing that its customers loved their phones. And they did. So while Nokia did see fit to adapt Symbian to the new touchscreen paradigm, it saw no reason to radically change its platform strategy and upset their huge Symbian customer base.

The problem was that when these same happy customers went to buy new phones, they discovered that iOS and Android phones were better in new metrics of apps, media and user experience; Symbian may have been familiar, but it didn't measure up. Sales and profits dropped, and Nokia had to radically change course.

The Distribution Channel Wanted It (Actual Customers? Not So Much)

[aquote]Just looking at the product and trying to describe it to a regular consumer should've been enough to kill it[/aquote]

Another instance of when listening a bit too closely to your customers can be a problem is when that customer is a middleman, not the actual consumer. There are plenty of examples, but one that jumps out at me is LG's Style-i pen-like Bluetooth message alert dialer thingie from back in 2006. There was almost no practical use for this gizmo, and as soon as this was announced I demanded one for my collection to use as a prop during presentations of what not to do.

When I asked LG why they built it, they said that Verizon Wireless was looking for a unique Bluetooth accessory and they developed it at the carrier's request. Just looking at the product and trying to describe it to a regular consumer should have been enough to kill the product, but, at the time, Verizon Wireless was LG's largest customer in the U.S. – and LG didn't want to say no. (Ironically, while this may have been a terrible product, making it and staying in the carrier's good graces for its main product line was probably the right business decision overall.)

A Product Of One

Sometimes the product itself is great, but it is competing in a category where the product itself is simply not enough – it really needs to fit into a larger ecosystem. If you cannot get content owners to sign on to your new optical disc format, you can have the world's best player and it won't sell. If your product requires integration, you'd better ensure there are integrators with both the capabilities and incentives to do that work, or the best product will be left hanging.

For a contemporary example, take Apple's iPad: Apple has an army of software developers supporting it, scores of accessories manufacturers developing complementary products for it, and a fully stocked store selling digital media content. Building a nice piece of hardware that does basically the same web browsing / email trick as the iPad without the rest of the ecosystem is not going to be competitive.

It May Eventually Be a Great Product (We Just Shipped it Before It Was Finished)

This is so common that in many cases, the company knows the product needs more work – and ships it anyway. Sometimes the company even announces that the rest of the features (or bug fixes) are coming down the road. So why would a company ship before the product is fully baked? It turns out that there are at least four distinct reasons why a company might ship a product when it clearly needs more work, and one of them is a direct result of Steve Jobs' success.

1. To please Wall Street. Public companies have to report earnings quarterly, and the pressure to hit those numbers – especially once guidance has been given – can be intense. Shipping a product early often creates problems down the road, but you can always deal with problems down the road... down the road. Or so it seems at the time.

[aquote]Ship buggy product, get promoted, blame failure of buggy product on unlucky sap who got your old job[/aquote]

2. To make internal numbers. Sometimes Wall Street isn't the driving factor, but internal projections and politics. Getting a product out the door and getting revenue in for your division can be the difference between being fired and being promoted. Perversely, in large companies where the success or failure of individual products does not impact the bottom line directly, this tactic can actually work. It goes something like this: ship buggy product, get promoted, blame failure of buggy product on unlucky sap who got your old job; if the buggy product is ever fixed, take credit for launching that product.

3. To hit a sales window. The most obvious of these is the end of year holiday sales season – if you don't have your product on the shelves by Black Friday, you will miss a rush of sales that will not materialize again for another year. Similarly, if you're selling a product to college students, missing the back to school sales season means missing out on sales you'll never get back. A sales window is not necessarily a fixed date on a calendar, it can also be driven by competitors' release schedules. If you want to make a big sales splash before a competitor launches their much anticipated device or service, but your product is not actually ready yet, there is pressure to release it now anyway.

4. Thinking You Are Steve Jobs Syndrome. There are times when an iterative product development process – getting something out the door and getting customer feedback before making further changes – is the best approach. This works especially well with software and online services. But even with consumer electronics, there are fears that if you spend too long working on a product, you get diminishing returns from those added features or polish. In other words, "the perfect is the enemy of the good." You also don't want to be in development forever, after all, Steve Jobs is known for saying, "real artists ship."

But that's where Steve Jobs really trips people up – by setting an unusually high bar for launching products with just the minimum features needed to create or reinvent a category. Jobs gets credit for being a perfectionist, for setting trends, and for taking technology and creating stylish, friendly, and profitable packages. But Jobs' true genius is his gift for understanding what can be left out of these products. Unfortunately, many products do not go through product development with Steve Jobs, and instead of being "good enough" they are actually "missing critical features."

Did I miss any? Let me know in the comments.