Monday, April 21, 2014

Diminishing marginal return and missed opportunities

My good friend and colleague Paul Hobcraft sent me a note over the weekend.  The story he attached discussed the new razor from Gillette, which is the "latest" in shaving technology.  The ProGlide Flex Ball razor has multiple blades, a pivoting head on a flexible ball track and the option of battery power.  Any product that needs four or five adjectives to describe is worrisome.  The ProGlide Flexball razor may be what we all knew we'd finally see, the pinnacle of innovation reached as the marginal returns approach zero.

Diminishing Returns
While admittedly not a perfect example of diminishing returns, what the razor presents is a race to the top, to "win" the shaving technology race through ever increasing sophistication and complication of what is a relatively simple process, that many people accomplish every day with a cheap disposable razor that has one blade and no pivot points.  Does all this new technology actually result in a "better" shave?  I suppose that depends on what your definition of "better" is.  Does a razor that costs $12 for the handle, before the blades are factored in, provide enough of a better shave than a package of disposable razors that cost $6 for 10 razors?  This is rapidly becoming a vanity project.  Who can cram the most technology into a razor to "wow" young men who are fascinated by technology but perhaps don't weigh costs and benefits. Who will finally create a razor that links to an app on your iPhone while simultaneously mapping your GPS coordinates and providing the "best" possible shaving route across your face?  Where does the pursuit end?

While I've begun this article discussion a seemingly absurd pursuit of innovation which results in negligible marginal benefits over other razors, we should also look at the other side of the coin.  Every investment means another investment was not made.  What are the opportunity costs, or in this case the "missed opportunities" of spending millions on a razor that has little actual benefit?

Missed opportunities
First, we should ask, what are the critical needs or jobs to be done that aren't getting done well, or at all, when a man shaves his face?  A "close" shave is already getting done, perhaps not perfectly, but reasonably well.  Are there other needs or jobs to be done that aren't being addressed or solved that Gillette could have addressed?  Certainly.  There are needs to reduce the amount of time it takes to shave, or perhaps the frequency of shaving.  There are needs to reduce nicks and cuts that occur when men shave, or to reduce skin irritation.  There are needs to closely shave within the nooks and crannies, skin folds and delicate locations near the mouth and nose.  A device as large as the ProGlide FlexBall doesn't simplify many of these needs.  While I haven't conducted the qualitative research, I will assert that by listening to customers there are probably many other needs that are going unfilled, especially needs external to the razor technology that would benefit consumers.

Here's where the opportunity costs really begin to sink in, when we consider the innovation opportunities not taken in areas like channels, business models, services, customer experiences and many other factors, other than the core shaving technology.  Gillette is being attacked in many of these areas by Shave Club, which is a classic disrupter in the Christensen sense.  Shave Club is also attacking the business model and customer experience of shaving.  Gillette has clearly decided to double down on the technology of shaving, but without truly significant benefits over what exists. Every technology reaches a point of zero marginal returns, and it's often at that point that a radically new technology or solution emerges that completely disrupts the older technology.

What's "wrong" with innovation
What this all means is not that innovation is "wrong" but that far too often firms are willing to bet on more features and more technology rather than considering the entirety of the innovation landscape.  Far too much innovation is focused on technologies that can't be distinguished by customers or easily consumed, while lots of innovation potential is missed because the innovations are needed in other realms, from business models to customer experience and beyond.  There's nothing wrong with innovation, but sometimes we need to do a better job at aiming the weapons before choosing the targets.  The Gillette ProGlide FlexBall is a case where the methods of innovation are probably OK, but the targets and outcomes could have been defined much differently.  You'll know innovation is completely exhausted when Gillette brings out the inevitable ProGlide FlexBall 2, offering even more flexibility or blades.  Watch for it at your local supermarket, then buy the products that actually meet your needs.

My personal favorite whipping boy in this case has historically been Microsoft, who were happy to continue to layer on feature after feature in Word and Excel, making it ever more difficult for dedicated users to find the handful of core features that they used regularly.  This is called "bloatware" by some in the software space.  Adding more features when few or none are needed isn't innovation, in fact it becomes the opposite of innovation.  Now, I see the new CEO of Microsoft is making the Office suite available for the iPad.  Maybe someone in Redmond gets channel and service and business model innovation after all.
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posted by Jeffrey Phillips at 6:15 AM

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