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June 11, 2006

The Change Function – Book Review

The Change Function – Book Review

The Change Function = f(user crisis vs. total perceived pain of adoption). 

You always knew that, right?  Maybe so but I’ll bet you didn’t say it – even to yourself – as clearly as Pip Coburn does in The Change Function: Why Some Technologies Take Off and Others Crash and Burn.

Pip’s explanatory example: “…if the total perceived pain of adopting a smart phone is for whatever reason higher than the perceived crisis the user experiences without a smart phone, the user will not buy a smart phone. But if the crisis of not having a smart phone is greater than the total perceived pain of adopting the smart phone, then the user will buy a phone.”

Note the word “perceived” modifying both “crisis” and “pain of adoption.”  That’s where marketing comes in.  By making something hot you can make it more painful not to have it than it is to learn to use the damned thing.  On the other hand, if the thing really is easy to learn to use, then the perceived crisis doesn’t have to be as great to get lots of people to adopt it.

If I’d read The Change Function a couple of years ago, maybe I wouldn’t have bought Mary a Segway for her birthday.  She canceled it when she got the email explaining that she’d have to go into the City and take driving lessons before she could get it.  High pain of adoption.  She also couldn’t figure out where she’d be able to get to with it that she couldn’t get to without it.  No perceived crisis.  Segway is one of the examples Pip gives of products which failed because of the inexorable operation of the change function.

It’s important, says Pip, not to confuse a perceived crisis on the part of the would-be vendor with a crisis on the part of the prospect.  The oft-failed Picturephone (not be confused with cell phones that take pictures) was an answer to a crisis felt by telcos, not their customers.  They needed new high-margin products.  TPPA (Total Perceived Pain of Adoption) for this product/service has always been high both because we aren’t used to being seen when we talk remotely AND because the first users (and someone has to be the first user) can’t find anyone else to talk to.

Hmm…  You could say I bought the Segway because I had a perceived crisis: I needed to get Mary something cool for her birthday.  And I had no TPPA – it was Mary that would have to learn to ride it.  So I bought it and she canceled it.

Blackberry is one of Pip’s examples of a product where the perceived crisis is high – lack of access to email while traveling – and the TPPA is low. Shoulda known it. 

With flat screen TV, the pain of being uncool by not having one is growing by the day.  Remember, that the perceived crisis can be precipitated by “everybody” else having one.  So a marketer needs to get a seed community of influencers going first – their crisis may simply be that they need something new and cool.  If the TPPA for them is low, they can help create the crisis which gets everyone else to buy the low TPPA product.

An excellent point Pip makes is that price is usually NOT the most important pain of adoption.  At least in technology, complexity usually is.  So you can’t rely on Moore’s law directly to make dog of a product into a success by lowering the selling price.  However, if the lower cost of components results in an easier to use product at the same price point, voila!  That’s really the story of the personal computer.  Computing got cheap enough to make a graphical user interface practical.  The price of computers didn’t go down with the introduction of the Mac; the usability went up.

To those of us who read Pip’s blog on AlwaysOn, it’s no surprise that he writes well and is a master of the one line zinger.  Like his blog, the book is fun to read. 

Those who got investment advice from him when he was UBS or get it from him now at Coburn Ventures expect Pit’s pithiness to be useful in making investment decisions.  As usual, he makes specific predictions.  Tablet PCs and Fiber to the Premise – overrated according to the results of the change function.  Business intelligence software and satellite radio – winners.  Read the book to find out why and get the rest of his picks and pans.

The best chapter is the one where Pip gives ten sets of questions to ask a management team before making an investment.  Easy to see here why he’s a successful investor.

I don’t agree with all of Pip’s advice on how to manage a technology company.  I wouldn’t hire anthropologists to tell me whether a product is usable or meets a real need, for example. However, his first rule is essential for a modern technogy company: “Fast Fail: learn->fail->relearn->iterate replaces fail->fire.” 

This mantra implies rapid protyping, quick market entry, and brutally honest assessment of what went wrong and why as well as an assumption that many efforts will fail.

Jack Covert reviewed Change Function at 800ceoread and made it his selection on June 1.

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