hU.T LIBRARIES
-
DEWEY
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Dewey
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M414
Anirudh Dhebar
Sloan School of Management
cjffcs'fi"
Massachusetts Institute of Technology
38 Memorial Drive, E56-329
Cambridge, Massachusetts 02142-1347
Telephone: (617) 253-5056
e-mail address: adhebar@nrut.edu
Information Technology and Product Policy (A):
''Smart" Products
Anirudh Dhebar
WP # 3855
August 1995
ICRMOT WP
# 133-95
MASSACHUSETTS INSTITUTE
OFTKHMOLOGy
OCT
2 4 1995
LiBRARiES
Copyright
©
1995 Massachusetts Institute of Technology
—
Information Technology and Product Policy (A):
"Smart" Products
Abstract
Increasingly, information technology
to
(IT) is
incorporated in products to
make them
"smart"
provide the user improved information about and control over performance, greater automation,
and enhanced
features, functions,
and
capabilities.
consumer sees them as improvements
These product improvements
—are made possible by
the
—and one hopes the
programming
capabilities of
microprocessors and other electronic devices, which expand the set of benefit-enhancing attributes
that can be designed into a product
set of attributes.
found design
facility, flexibility,
message
it
and cheaper
easier
to
change, add, or drop a growing
This article outlines three major product-policy concerns stemming from the new-
managing the speed and nature
central
and make
that
emerges
is
and economy: getting the product and product
of product change,
the need for a
product supplier from piling on the features, too
and establishing product-use standards.
new system
fast
use standards. The message should be of interest
line "right,"
of checks
and balances
to restrain the
and with dysfunctional disruptions
to a
broad
in product-
set of organizational functions:
design and development, product and marketing management, and
IT
management.
A
product
Mention "information technology," and many managers
centers for an organization's information, control, decision-support,
enablers of task automation; as foci of
new
computers
will think of
—as nerve
and communications systems; as
product-design and manufacturing technologies; as
coordinators of material flows and logistical support; and so on. While these information-technology
(IT)
—and do—
applications can
affect a firm's products, the
This series of articles focuses on
product
that
lines.
have
IT
I
IT
impact usually
is indirect.^
applications that have a direct impact
consider two settings. In this
article,
I
on products and
—physical products
look at "smart" products
incorporated in them. In an accompanying article (Dhebar, 1995d),
I
take
up
the case of
information products, the "production" (information collection, storage, editing, and publishing) and
distribution of
which are increasingly dependent on
IT in Products:
IT.
How and to What Effect
Craig Fields, chairman of Microelectronics and Computer Technology
Corporation, once predicted that by the turn of the century. General Motors would
be
selling
more computer power than
IBM.
It
remains a reasonable
forecast.
a typical car in 1970 contained about $75 worth of electronics, most of
the average today
is
about $2,000.
And on
such cars as Ford's
it
Whereas
in a radio,
New
Lincoln
Continental, laden with gadgets such as automatic seat-tilters, radio-tuners and
suspension-adjusters,
all
triggered
by a transmitter
in the driver's
key
ring, the figure
tops $3,000. {The Economist, 1995: 76)
It is
not only cars that are getting smart. The
last
two decades have witnessed an explosion
in
the use of electronics, in particular, microprocessors, in toys, entertainment systems, household
^The impact, though
indirect,
may
still
be
significant.
Better
and more timely information, improved decision
support, design automation, flexible manufacturing, electronic data interchange, and so on, can have a
significant impact
on the product
line.
I
focus on direct IT effects in this article not on the basis of their
significance or otherwise but because of the specific product policy issues that are raised.
appliances, office and factory equipment, instrumentation devices, telecommunications equipment,
transportation systems, and so on.
products; there
implications of
This
article,
concern
is
is
all
talk, too, of
more
smart homes,
this smartness,
however,
prosaic:
is
I
The move
to greater intelligence is not limited to individual
offices,
highways, and communities.
The
social
while difficult to predict, are likely to be significant and pervasive.
my
not about the social implications of increasing product smartness;
want
consequences for product policy.
to explore the
Generally speaking, the use of microprocessors and other electronic devices in a product can
result in three types of benefits for the user:
•
improved information about and control over product performance;
•
greater automation of product functions; and
•
enhanced product
Take the radio
receiver.
features, functions,
volume. The same three tasks continue
gone, as
tells
is
—and the same
differently.
mode
be
all
band, setting the desired station, and adjusting the
at the heart of radio use,
A glance at
but today's radio receivers can
the controls reveals that the analog readout
is
(TUNER, tape, CD, and so on), the station frequency, the acoustic properties of
and so on. To tune
to a station, the listener
she pushes a series of buttons. Better
memory and
listener
to
a
the radio" required four actions,
the pointer traversing the spectrum of frequencies. Instead, a digital alphanumeric display
the time, the
the sound,
capabilities.
Time was when "playing
manual: switching the radio on, selecting
do much more
and
had
recalled at the
to get
up and
push of
still,
does not rotate the tuning
frequently listened-to stations can be
a button. Before, to
change stations or
physically interact with the radio receiver;
dial; instead
he or
programmed
to adjust the
into
volume, the
now, most controls are
accessible through a portable remote-control device. Finally, today's receiver not only receives radio
signals,
it
also doubles as the
listener to sleep
waking the
command
center for a complete entertainment system, lulling the
with classical music on one frequency, taping a talk show on another frequency, and
listener
wath news on yet another frequency
—
all
with digital precision.
3-
—improved information about and control over product performance,
greater automation, and enhanced functionality — are made possible by the programming capabilities
The three
"benefits"^
of microprocessors and other electronic devices.
product design cannot be overstated and has
The
liberating influence of these capabilities
at least three
important
facets:
•
the set of attributes that can be designed into a product often
•
certain attributes are
•
the cost of changing, adding, or dropping attributes
The last point
by
pile
on the features?
The Economist
article
...
to
do
is
often significantly lower.
2, 3, 4,
on
its
on smart cars makes
to
perform a single basic function
or 50 operations at negligible cost
—so why not
a similar point:
[anti-lock braking systems]
control into a smart traction system involves
little
and computerized engine
physical change to a car
almost entirely a matter of software, giving the car's computer a
hundred
"benefits."
*rhe
shift
adds only another $25 or so
to the
$200
it
costs a car
still
dollars exh-a for
struggling with
The point
it
is
set of
company
to
is
(The Economist, 1995: 76-78)3
it.
"How do
well taken and
1
I
set the clock in
touch on
it
my
vcR?" may question the use of the word
later in the article.
from physical to software-based change as the enabling mechanism
may be needed for
may not be good
jjeople proficient in the latter
for
product improvement raises
and development function: quite possibly, very
realizing software-based product changes than hardware-based ones, and
interesting questions about the staffing of the product design
different skills
new
—
ABS, but even so, companies which offer traction control charge several
install
^The reader
It
No
{Business Week, 1991: 58)
Adapting ABS
instructions.
head.
number of capabilities a designer can
put into a machine. The chip that was designed
made
much larger,
and changed over time, and
in
the economics of design
the cost of adding features limit the
can frequently be
is
the following quote:
Modem electronics has turned
...
more does
is illustrated
more easily designed
on
at the former.
The design
facility, flexibility,
and economy resulting from the use of microprocessors and
other electronic devices have potentially major implications for the product line a firm
at
any point
in time, the
and the amount
pace and nature of product change the firm
of product experimentation the firm
Take the wristwatch.
In the past,
is
able to offer
is
able to implement over time,
is
able to carry out in the market.
product variety
in
through differences in appearance than through differences
wristwatches was implemented more
in functions.
True, there were manual-
v/inding and self-winding watches and watches with and without date-and-day displays and alarm-
and-chronograph functions, but, otherwise, different models were distinguished by
face,
and so on. Contrast
that with the relatively inexpensive, black, plastic, digital wristwatches of
the late 1970s-early 1980s.
features and
functions
cheap
add and drop
to
Most of these watches looked
—variety
The greater
features
and there was rapid churning of the product
line.
lie
some
different
and economy
critical
—getting the product and the product
product
have two goals
piolicy
line "right,"
— are
managing
the sp>eed and nature of product
not unique to IT-based products but,
for the article: (1) to present a coherent articulation of the
critical
management
to the
is
(2) to
development managers,
IT
more important
draw
the attention
managers, product
same. With the wider audience in mind,
issues rather than to provide an in-depth treatment of
The choice
and
product design do not come
questions that arise because of the use of IT in products; and
designers, and senior
relatively easy
and are the subject of the following discussion.
of product managers, marketing managers, product
survey the
that IT brings to
of the
product-policy challenges. The central concerns that
change, and establishing product-use standards
nevertheless, merit sp)ecial attention
models on
great variety in
programming
was
emerge
1
the
in
was
offer, it
facility, flexibility,
without a price, and therein
similar, but there
achieved through variations
Not only were there many
microprocessor.
their size, strap,
I
have chosen
to
any one or more of them.
only partly deliberate. The traditional literature on product policy does not
distinguish between products with or without IT and the existing IT literature tends to focus on
situations
where
it's
impact
is
indirect (see
opening paragraph)
—and, references
cited in this article
a
-5-
notwithstanding, in-depth answers are not available to some of the questions that are raised.
Hopefully, this article will sensitize managers and researchers to the important questions and impart
momentum to the effort to get to the answers.
Getting the Product and the Product Line Right
As suppliers incorporate
about the use of the technology:
IT in
IT
products, perhaps the greatest challenge
must be employed
and control over product performance,
lies in
being judicious
most appropriate information about
to offer the
to deliver the optimal level of automation,
and
to enable the
best set of features, functions,
and
product performance, too
automation, and restricted functionality, and the supplier
the opportunity to
little
add value
to the
encourage existing customers
version.
On
to
the other hand, too
Inadequate information about and control over
capabilities.
consumer, capture market share, stimulate
much
...
If
IT
brings added
of falling into the "too
and economy
to
—
bom
of the electronic age.
facility, flexibility,
IT to
The obvious
—answer
is
it is
world
is,
given the giddying
a thorough
by gaining
used and by making sure that whatever
not only the product designers
new
benefits.
Every designer
restrained
and reminded.
enhance (and not diminish) the consumption
even greater use must constantly be reminded of
sure,
in the
—but,
and economy, not easy
understanding of the context in which the product
attributes that IT enables will
"Who
{Business Week, 1991: 62)
...
should designers restrain themselves?
temptation of design
To be
facility, flexibility,
much," "excessive," and "overwhelming" camp:
programs three weeks of TV ahead of time?"
eager to put
many consumers may be
economics doesn't restrain designers, designers must restrain themselves
wholly new design discipline
How
new demand, and
information about and control over product performance,
befuddled by the product. Precisely because
is significant
lose
repurchase the product or to purchase a "new-and-improved"
excessive automation, and an overwhelming set of features, and too
design, the risk
may
this.
who must be
Ultimately, products are the responsibility of product managers, marketing managers,
,
and senior
6-
managemenf.
It
who must do
they
is
then, of product designers
and the reminding
—
first,
of themselves and,
and developers.
The message about
examples abound of
the restraining
restraining design
and designers cannot be emphasized enough,
—for want of a better phrase—
IT
applications run amuck:
Every day, across America, millions of managers, bankers, doctors, teachers,
chief executives,
and otherwise highly competent men and
helpless frustration by the products around them.
women
In their offices, once-familiar
telephones and copiers have suddenly turned silent saboteurs, while
that
mail
were supposed
—often do
En
to
make work more
efficient
are driven to
—computers,
new systems
faxes, electronic
just the reverse.
route from the office, their car dashboards have a dizzying array of digital
Once
displays and their radios sport a dozen tiny buttons too small to operate.
home,
it
gets worse. Stress levels soar with vcRs, CDs, message machines, electronic
thermostats, keypad burglar alarms, digital clocks, microwaves,
phones, and
home
anymore. Their
Human
computers.
lives
People can't seem
more programmable
to get things to
work
right
have become a nigh;rnarish world of blinks and beeps.
engineering
—or the lack of —has always been a problem
it
products, of course. But there's a reason
ever before: the microchip.
...
Trouble
w v
'
is,
bedevils us
it
too,
in
much more now
many companies wind up
some
than
selling
complex, overloaded gadgets that consumers can't figure out. Impenetrable manuals
don't help much, either.
Ricoh Co., one of Japan's leading manufacturers of office equipment, recently
found
it
&
in a
survey of
its
fax customers that nearly
deliberately built into the machines to
Mather survey
of
95% never used
make them more
VCR owners recently found
that only
three key features
appealing.
3%
...
An Ogilvy
of their total TV viewing
for
-7-
time went to shows that were recorded in advance using the vcR's programming
features.
Hardly anyone used
his or her
vcR except
to play rented
movies.
The marketing implications of overwhelming consumers with
complex and rarely used features may be more profound than companies
all
these
realize.
...
(Business Week, 1991: 58-59)
The
task of "getting the product right"
is,
to
be sure, a
difficult one.
For one thing, the
—improved information about and control over product
performance, greater automation, and enhanced functionality—often affect how the user interacts
changes that
IT
makes
with the product, and
possible in products
is
it
not always possible to predict whether and
the product-use experience.
it is
human-product
the
terms and, therefore,
will facilitate
it
The difficulty
interface that
is difficult to
—
just
often the
know, ex
most
ante,
difficult to characterize in formal, objective
which IT-based product-user
interface construct
it.
a thermostat control, a radio receiver, a camera,
about any product you are accustomed
to
an
electric
and comfortable with.
comprehensively characterize the product-user'interface and lucidly detail
construct works for
impact
a fundamental one: in the overall context of product use,
product use and which will detract from
Take a coffee machine,
range, a car
is
is
how these changes will
why a
you and another construct does not? You may prefer a
cooking
Can you
particular interface
specific information-
about-and-control-over-product-performance configuration, a certain type and level of automation,
and a particular mix of
language
to the
features
product designer.
And
It is n<^t
Now consider the use of IT to
over product performance,
features
and
articulating
functions.
If
(2)
funf^tions,
but try articulating your reasons in a complete
easy.
(1) alter the
way you
are informed about and exercise control
allow you greater automation, and/or
you had
which aspects of the
(3) offer
you an expanded
set of
difficulty characterizing the pre-IT product-user interface
interface
worked
for
you and why,
it
will
be even more
and
difficult to
predict whether the proposed IT-based changes will enhance or diminish your product-use
experience.
-8-
If
the individual
consumer cannot reasonably predict whether
enhance or diminish
will
his or her product-use experience,
mismatch between product-design
of a possible
intent
how
the proposed iT-based changes
can the product supplier? TTic risk
and the
user's product-use exj^erience
is
mitigated by the fact that most products are designed not for individual consumers but for large
populations of consumers. Having said
in IT-bascd
sure, well-crafted
may
of consumers
many
chance
work with
The danger
the iT-enhanced product
far
enough or
if it
way
to find out
and
goes too
how
a population
product development team) will rely
work. All
consumers have had
a
Of course, by
then,
it
let
may be too
late.
alone success, of iT-based
that the product developer
(where applicable, the
—perhaps even more than before—on his or her own sense of
this in a context
consumer population and the
is
after
decide for themselves whether the proposed
to
far.
may be
of the poor predictability of market acceptance,
changes affecting the product-user interface
will
possible and the cost of implementing
marketing research can provide useful insight into
product-user interfaces, the only sure
to
is still
react to proposals for a "smarter" product,^ but, given the highly subjective nature
smartness does not go
what
mismatch
changes that many consumers disapprove of can be quite high.^
To be
of
that,
where developer's preferences may not be transferable
traditional checks
and balances on the temptation
to "pile
to the
on the
features" have been mutated.
When
incorporating
IT in
developer must worry about.
^Norman
a product,
Many
it is
not only the product-user interface that the product
products are used along with other complementary products.
whole issue of the product-user interface in the context of increasing product
smartness. Decrying the trend toward product-user interfaces that force people to adapt to the precise,
repetitive, and accurate dictates of rr-laden products, he argues for a human-centered approach to the design of
(1993) reflects on the
product-user interfaces
—an approach that adapts products to the cognitive attributes that make people smart.
' The literature on marketing research is extensive and the applicability of the various research methodologies
depends on, for example, the extent to which the smart product is new and the extent to which it is a variant of
an existing not -so-smart product, whether the product
it
a
new
feature or function, or
is it
a
change
is
consumable or durable, the nature of the smartness (is
and so
in the level of a feature), the stage in the product's life-cycle,
and Urban and Hauser (1993) may be good
mix of approaches and contexts.
on. For the interested reader, Churchill (1995), Dolan (1993),
points. All three arc texts and,
between them,
offer a useful
starting
which
may or may
not be produced by the
same supplier and which may or may not accommodate
the proposed iT-based changes in the product under discussion. In this context, the
good news
unlike the product-user interface, the product-complementary product interface lends
that,
objective characterization,
and
this
itself to
should simplify the product development task. The bad news
now, there are more compatibility considerations
that,
to
worry about
is
is
—and, therefore, the greater the
chances of getting the smart product "wrong."
The
single-lens-reflex
camera provides a good setting
to illustrate the discussion so far.
Typically, the camera itself consists of only the body; to take a picture, the "system"
a lens, a roll of film, and a photographer. Interactions across
camera body-lens-film system are
Before IT
among camera
came
to
be incorporated
functions,
new
the interfaces in the photographer-
good photography.
in
cameras and
suppliers and photographers about
understanding: there were
more
critical to
all
must also include
how
lenses, there
a shared understanding
the entire system worked. IT disrupted this
opportunities to collect and display
and add previously unimaginable
was
features.
Which
more
of these
information, automate
enhancements would be
valued by the photographer, and which would be seen as an intrusion into a satisfying photographic
experience?
The question
is a
vexing one.
Say the camera supplier can ascertain the individual
photographer's preferences for information-about-and-control-over-product-performance, task
automation, functionality. There remains the problem of aggregating the preferences of a population
of photographers. Thus,
and
some photographers may want aperture setting,
shutter speed, focal setting,
several other pieces of information displayed in the eye piece (digitally, or in the
analog read-out?); while others
images.
limiting.
may
not care for the resulting clutter of numbers, pointers, and
Some photographers may want automatic
Some photographers may
consider that a gimmick.
metering, while others n\ay find the feature too
like the time-and-date of
And some photographers may
everything for them, while others
form of an
may
photograph
feature, while others
may
value an idiot-proof camera that will do
consider that demeaning.
Interestingly, a
whole
set of
—
-10-
previously irrelevant consumer heterogeneities begin
play a
to
product design:
critical role in
differences in the photographers' preferences for task autonialion, for example, had
no bearing on
camera-and-lens design as long as automation was not possible; they become a major design input
once microelectronics and microprocessors make
it
possible to automate a broad (and growing) array
of tasks.
We
lens,
are not
even the
film,
done
yet.
can play a
enhancements and which
It is
not only photographers the camera supplier must fret over. The
critical role in
will not.
Thus, the camera body
film speed automatically, but the change will
identifier code.
Similarly, the
determining which
come
to
may
naught
if
may
changes
be designed
prove
will
to load film
and
to
be
to sense
the film does not have a special ("DX")
camera body may have autofocus
only allow manual focusing; indeed, an older manual lens
IT -based
capability, but a
not even
mount on
manual lens
will
a new, autofocus-
compatible camera body.
One way around
enhancements
is to
the problem of getting the product right
offer a product line, with
when
comes
it
to iT-based
models varying by type and amount of information
about and control over product performance, degree of automation, and extent of functionality.
Indeed, the
offer
facility, flexibility,
and economy
an even more extensive product
can be more extensive,
facility, flexibility,
it
that IT brings to product design can help the supplier
line than in the pre-lT world.
does not mean
that the line will
and economy, the
be
But
just
right. Precisely
risk is that the product
because the product line
because of greater design
manager may respond
to all the
uncertainty by proliferating the line with a plethora of product versions and models, thus further
confusing consumers, complicating the task of product management, and
undermining
possibly
profitability.
The how-extensive-a-product-line question
flexibility,
—quite
and economy
that IT brings to
is
an interesting one: on the one hand, the
product design
may
result in a proliferating
product
facility,
line;
the other hand, given the uncertainty of market acceptance of proposed IT-bascd changes, the
facility, flexibility,
and economy may support market experimentation
—a
on
same
process that, to be
-11
successful, warrants a dynamic, extensive product line (see Dhebar, 1995b).
"dynamics" leads
to the subject of
The emphasis on
—getting the product and product
product change
line right not
only at any one point in time, but over an extended period of time. Here, too, the incorporation of
in products
has direct
IT
—and significant—impact on product policy.
Managing Product and Product Line Change
The challenge of getting
case, takes
on
the product and the product line right, difficult
special significance in the
must make deliberate choices about
dynamic
the speed
setting,
(how
where,
fast
among
the
new
in the static
other things, the supplier
must new-and-improved versions
products follow existing versions; see Dhebar, 1995c) and the nature (how
must
enough
versions be; Dhebar, 1995a) of product change.
of
new and how improved
In this context, not only
must the
product developer restrain himself or herself from "pil[ing] on the features," the product manager
must
also exercise restraint in the pace at
which
different IT-based
changes are implemented in
products and the resulting smart products are introduced in the market.
To
see
issue for the
product
is
why, consider the consumer's long-term product-consumption
consumer
used.
is
decision.
A
critical
the durability of his or her investment in the overall system in which the
The investment
durability
—and, therefore,
unrestrained producer
The most obvious source
products have a relatively long
less
may find
the
consumer
far less facile
and
flexible
than the
than enthusiastic about a new-and-improved version.
of consumer-investment durability
life
and
typically are
is
product durability. Durable
more expensive; consumers expect
to
use them
with satisfaction over an extended period of time. Having purchased a particular version of the
product and
at the
made
a not-so-easily reversible investment in
it,
the
consumer may not be very pleased
prospect of a (cheaper!) new-and-improved version (much
the market so soon after the existing version
satisfactorily serve the
—
new and much improved)
hitting
this in spite of the fact that the existing version
may
consumer's needs. Personal computers are an excellent example: no sooner
12-
havc you purchased
a cheaper,
a unit, took
it
how of the
packing box,
ncw-and-improved version available
Product durability
Two
the only reason.
it
up, and started to use
—and you kick yourself
an important reason
is
set
for
for not
it
that there is
having waited.
consumer-investment durability, but
other considerations, both touched on earlier, play a
it
is
not
critical role: (1) the
consumer's familiarity with the existing version of the product, including the time, the emotional
energy, and the other resources expended on learning
accustomed
version
is
to
it;
and
(2)
how
to
use the version and becoming
the consumer's investment in the overall system in which the existing
used, including resources expended in acquiring and interfacing the different
complementary products
that are
used along with the product
in question.
Depending on
the
product, these considerations can be even greater sources of consumer-investment durability than the
product
itself.
Earlier,
I
argued that
the product-user interface.
is
it
The
often difficult to predict the impact of IT-based product changes on
difficulty takes
on
special significance in the
products require a period of breaking in and getting accustomed
product and the more sophisticated the product-user interface
to,
dynamic
context.
and the more complex the
(this often
follows from product
complexity), the greater the consumer's investment in becoming familiar with the product,
mastering
if
its
Most
let
alone
use. Especially for IT-rich products, the consumer's learning curve is resource-intensive,
not in terms of money, certainly in terms of time, trials-and-errors, understanding-and-memorizing
command
protocol, frustration, "getting used to,"
new
existing version
It
is this
resource intensity that
way
to
consumer-investment durability: surely, the consumer can be excused
version
if
a
contributes in a major
for resisting a
and so on.
major investment must be made on becoming unaccustomed
and getting accustomed
to a
new
to the
version.
—improved information about and control over
product performance, greater automation, and an expanded
of features and functions—do offer
To be
sure,
many U-based
product changes
set
added
benefits.
before
we can
But the incremental benefits are often uncertain and distant
figure out
how
best to benefit
(it
may
take
from some IT-based product innovation
some time
—and we may
13-
be disappointed), the costs of switching from the existing
to the
immediate, and, in any case, the expected incremental benefits
There's the rub: absent deliberate restraints, the
new
may
facility, flexibility,
version usually are certain and
fall
short of the switching costs.
and economy
that IT imparts to
product design can result in a quick-fire sequence of new-and-improved product versions, some or
many
The
of which
may
not pass the consumer's switching-benefits-greater-than-switching-costs
risk is a particularly acute one: IT-rich products are the very products seeing
accelerated replacement of existing versions
The user
is
by new-and-improved
only one element, albeit a
"smart" products are used.
critical
most
element, of the overall system in which most
well, often with electronic information transfer across the several
batteries;
support of other elements as
system
interfaces.
Thus, autofocus
video-game systems, game cartridges;
—we called
These other elements
them
entail tangible (even substantial)
investment on the
and personal computers, software, disks and displays.
—
complementary products in the previous section
of the
versions.
Many smart products require infrastructural
cameras need autofocus lenses; electronic calculators,
some
test.
consumer's part and contribute to the durability of his or her commitment to the existing version of
the product: each time the
of IT
is
main product
this
does not help
Given the
of the
complementary products may need
a tiresome, expensive,
that, increasingly, it is
facility, flexibility,
and economy
consumer ending up in such a game is a
None
all
to
be
can eat up the consumer's resources. Updating the entire system every time the
main product changes can soon become
it
system changes, more often than not because the use
being pushed one notch further, some or
upgraded, and
and
in the
and confusing game
unclear which system element
that IT imparts to design of
is
for the
consumer,
the "main" product.
such products, the
risk of the
definite one.
of this is to suggest that smart products should not be
made
smarter, or that the
introduction of smarter versions should be unduly delayed. In general, there are four reasons for
making products increasingly smart: supplier
vision, the
need
to
meet evolving demand, the
requirement to modify the product because complementary products have become smarter, and the
—often the imperative—
urge
to
outsmart the competition. In the context of our discussion,
it is
in the
-14-
first
and the fourth cases where the
necessary restraint:
Walkman may
economy,
will
flexibility,
is
it
must exercise producl leadership and vision
true that the supplier
not have happened otherwise), but with
products get too smart too
and economy and
fall
being unable to exercise
risk is the greatest of the supplier
fast?
all
over each other with new-and-improved (that
How
all
is,
smarter) versions
will less-facile, less-flexible,
version, the supplier can provide itself
degrees of freedom. Similarly, breaking
it
and
These
those involved with product development and marketing reason to pause.
Unfortunately, there are no easy answers. By offering a product
implementing
and
of the design facility,
vested-in-the-existing-product-version consumers deal with such rapid product change?
questions should give
Sony
the design facility, flexibility,
As competitors avail themselves
of existing products, will the products get too smart too fast?
(the
and
and not
just a single
consumers greater maneuverability and additional
its
down
line,
increased smartness into smaller, modular steps and
on upgradable product architecture can be
of great help. Both strategies increase the
consumer's options and help mitigate the negative consequences of consumer-investment durability.
On
the other hand, the
second strategy
even more
may
tie
first
strategy complicates the product-line-management effort, while the
the product
costly. Either
down
to antiquating architecture
way, the product supplier
will benefit
(1)
always think about the overall system
(2)
fully
understand the reasons
durability
and
for,
their time-dep>endent
in
and possibly make
a later shift
from being intensely user-centered:
which the product
and the elements
is
of,
used;
consumer-investment
impact on the consumer's switching
cost;
(3)
adaptively measure the consumer benefits resulting from increased smartness; and
(4)
systematically analyze the multidimensional character of
demand
evolution with
respect to product smartness.
The Need
for
Many New Standards
The increasing use
for
new
of IT in products raises a third product-policy concern,
and
that
is
the need
standards with respect to the product-user and product-complementary product interfaces.
•15-
We consider the product-complementary product interface first.
impact of
IT
on
this interface is in relation to the transfer of information:
each other, and the conversation
and
is
in a
all that
on the camera body; the only information
traveling through the lens
functional (electronic
and on
smart products like
to the film in the
mattered was that you could physically mount
transfer across the interface
camera body.
and mechanical) coupling between
the
was
Later, as metering
body and
autofocus
—and,
optical
—light
was automated,
the lens also
important. Finally, with the introduction of microprocessors in cameras and lenses
to
to talk to
whole new language. Take the example of the camera body
the lens. In older, mechanical cameras,
the lens
Perhaps the most significant
became more
came
the ability
with autofocus, complex information transfer across the camera body-lens
interface.
message sender and receiver should
either
through a translator, understand each other's language.
This
For the information transfer
"speak" the same language
or,
to
be
effective, the
requirement raises concerns about syntax, grammar, speed of communication, bandwidth, protocol,
cross-talk, signal quality,
and so on
—not unlike the issues that any two strangers from different parts
of the world have to sort out before they can effectively communicate.
The good news
is that,
unlike people, microprocessors can be
consistency: once the developers of the product
programmed
for precision
and
and the relevant complementary products have
agreed to the communications protocol and designed the interfaces appropriately, effective
information transfer can be sustained over time. The bad news
protocol
may
take time and effort and a
lot
is
of coordination within
that establishing the necessary
and across
industries, with each
player jockeying for a position of strategic advantage. In telecommunications, computers, consumer
electronics, transportation systems,
and household appliances, the establishment
an important element of the larger competitive game, and the process
business units (for a long time, computer users teased IBM about
computers
to talk
talk directly to
of such standards is
pits business units against
how
it
was
easier for
non-IBM
with IBM personal computers and mainframes than for IBM personal computers to
IBM mainframes), companies against companies (Nintendo
vs.
Sega for
home
video-
16-
game
systems; video-game cartridges are not compatible across the two platforms), coalitions against
coalitions (Sony-Philips
vidcodisks^),
and Toshiba-Matsushita-Time Wamer-RCA over
and countries against countries (Japan
vs.
a format for digital
the United States vs.
Europe over high-
definition television).
The standards
moved from
front
folklore
is
replete with such
examples and,
in recent years, the
the inner sanctums of engineering associations, standards bodies,
pages of the popular press. While the exact process varies from case
now well
debate has
and academia
to the
to case, the issues are
by
understood:
(1)
Standards for information transfer across the product-complementary product
interface are essential
facilitates the
if
a smart product
In a standards war, victory
makes
the
to
gain
fast,
widespread acceptance. This
development of compatible complementary products, thus offering
consumers greater opportunity
(2)
is
to
"mix and match" and "plug and play."
goes not necessarily
most convincing case
to the swift,
but to the player
who
—and can get enough consumers, complementary-
product developers, and distributors to join the bandwagon so the whole process
becomes
(3)
self-fulfilling
Timing plays
a
— that
it
can the
first
to get to a "critical
major role in the process: a standard too soon
mass" of adopters.
may
saddle consumers
with a less-than-smart product; on the other hand, a long-drawn-out process
may
deprive consumers of product smartness altogether.
(4)
The outcome
is
not dictated by technological concerns alone; indeed, in a
pxjlitically
charged process, the better technological solution can come a cropper.
(5)
Although some standards
just
happen,
it
pays
with the level of strategic management attention
° After
to
manage
it
deserves.
the process actively and
months of jockeying and negotiations, and under intense pressure from computer manufacturers and
Hollywood movie studios, the two camps agreed on a common standard in mid-September 1995. All players
were mindful of the fight over Beta and VHS formats in the late 1970s and its detrimental impact on the diffusion
of a
new product concept among wary consumers.
•17-
The other area where smart products often require new standards
interface.
This subject does not lend
traditional research
interface standards,
on standards
can be a
it
is
itself to
sophisticated economic analysis
subjected
much more
but,
to,
the product-user
is
and modeling
that
depending on the product, product-user-
nut to crack. There are at least five reasons for
difficult
this:
As already
(1)
argued, the product-user interface
is
a highly subjective construct that
is
from consumer
to
not easily or comprehensively characterized.
More
(2)
often than not, the construct
consumer and product-use context
is
idiosyncratic, with variations
to product-use context.
—unlike smart products talking
People
(3)
each other
to
—are imprecise, inconsistent,
programmable. They also cannot be designed or ordered
and not
easily
conform
to standards. This is not
be a disadvantage
in
some
tasks,
an indictment of people: these
but they play a major role in
to
always
characteristics
may
human smartness.
For product-complementary products interfaces, there are industry forums and
(4)
processes to establish and enforce agreed-upon standards.
standards, in contrast, get established
—
if
Human-interface
they do get established
—over time as
people learn to interact with different products and decide which interface they
prefer over
some
The whole process
other.
deliberative; instead,
it
is
In
any
case,
it
in not
not analytical, rational, political, or
experiential, behavioral,
complex trial-and-error-based individual and
(5)
is
and adaptive, and
it
is
based on
social learning.
always clear what one means by a "standard" when one
talks of
the product-user interface.
To
illustrate the last point, take the wristwatch.
used gears and moving
three)
hands
parts, the display
circling a dial,
to read the watch's
and
the watch
hands; growing up,
The mechanical, manual-wind watch of old
was an analog one with two (including
was wound by
we
learned
how
rotating a crown.
to
the second hand,
As children, we learned
wind the watch and
set the time,
and we
—
18-
gof used to
quartz watch,
it
reads different,
it
sounds
different,
it
needs a battery, and
the user to negotiate complicated sequences of tiny buttons.
interface,
how many
transition
from the analog mechanical watch
First,
how
old "standards" must be
the wearer
tells
the time
to the digital
is
of information content, display, retrieval,
is
(the
approximation
must pick from, read, and
it.
The two
and processing.
how
sufficient for
order to
in
tell
functions require
At the level of the product-user
completely different.
most needs);
for
an effective
In the
analog case, the wearer
activities involve
In the case of the
tells
very different models
analog watch, a mere
the wearer approximately what
in contrast, the
wearer of a
digital
sequence of numbers and codes displayed
intellectually process a
more information windows
Second,
is
many
the digital
quartz watch?
glance at the relative positions of the hour and the minute hands
it
its
abandoned and new ones established
sees the time; in the digital case, the wearer reads
time
Now consider
touch-and-fcxM on our wrist and the tick-tick next to our cars.
its
the time
down
in
watch
one or
to the fraction of a second.
the wearer controls the watch's functions
is
different.
Thus,
in the case of the
analog mechanical watch, a rotation of the crown winds the watch, a pull of the crown followed by a
rotation turns the hands.
In contrast, the digital quartz
however, and replacing the battery can be a nontrivial
specific
model
sequence of several
to
watch model and,
little
if
watch needs no winding
task),
buttons (the sequence
the wearer has not
and one
may
memorized
may need
needs a battery,
by manipulating a
sets the time
vary from brand
it,
(it
to
brand and watch
to refer to a
—nnisplaced?
user's manual).
Then, there
(and, perhaps, date
is
the fact that the analog mechanical watch
and day) and
to estimate
is
designed and used
to tell the
time
time intervals. The digital quartz watch, on the other
hand, can combine as a calculator, a stop-watch, a thermometer, a pulse monitor, and so on. All these
functions
may
share the
same control buttons and
require a mastery over several
command
The wristwatch example
physical display as "time"
and accessing them may
sequences.
illustrates the
range of new-standard needs
product-user interface: changes in the form, content, density, update
at the level of the
rate, display,
and processing of
-19-
information offered by the product to the user; and changes in
product to benefit from
its
how
the user interacts with the
increased automation and expanded functionality.
establishing the full set of needed standards
the smart-product supplier.
It
is
no mean
task
and can
and
and ingenuity of
a crucial aspect of product policy that product managers,
is
developers, and marketers have traditionally not needed to attend to
the skills necessary to attend to
test the skills
Identifying
—but must attend
—and,
therefore,
may not have
to.
Concluding Comments
IT
helps
and minuses.
make products
On
smart;
it
also liberates product design.
the "pluses" side, the supplier can offer
The
liberation has its pluses
improved information about and control
over product performance, greater automation, and enhanced functionality with greater design
facility, flexibility,
and economy; as
for the
minuses, what
is to
stop product designers and
developers from piling on features and product managers from rapidly introducing and upgrading
products that are smart but are
difficult for the
consumer
to use
without great confusion,
cost, or
adaptation? Without a deliberative product policy that recognizes the implications for product and
product-line design, product and product-line dynamics, and product-use standards, the supplier
may end up
with a product where the consumer's cost of switching to the smart product outweighs
the benefits of smartness.
I
it
my discussion as
conclude
to the reader to decide
It
used
on
to
I
began
—with a quote on the increasing use of
IT in cars.
the cost-benefit tradeoffs of the resulting product smartness.
be that anyone
who wanted a car with air bags, antilock brakes and
a few doodads like power seats had to shop for a big Cadillac or a Mercedes. But
today
all
those features and
more
tested the ingenuity of luxury-car
are available on a Toyota Corolla
makers
in
most drivers probably don't know they need.
—which has
dreaming up one-of-a-kind features
I
leave
.20-
Hcnce side-mounted mirrors
shifted into reverse, such as those
on
that automatically
No
it
also
makes
matter. This year, the Lincoln Continental
who
drivers like the feature
its
aren't
whizzes
at
it
more
and which
is
going the Q45 one better by
meaning the car remembers
don't. Trouble
is.
Continental drivers
operating the car's complex computer could end
(requiring the driver to choose one or the other)
the driver
wheel
Says
—that
...
it
up
MIRRORS ON OFF'
BMW740i] 16 different climate-control buttons and switches
is
so complex
comes with
...
[give]
air conditioning.
—there are 11 more buttons or switches on the steering
a
an automotive analyst
thing." (Lavin, 1995)
staring at
...
and the passenger independent control over heating and
In fact, this car
is
difficult to sec a car
a glaring LED screen as big as the speedometer that reads "REVERSE
[In the
the car
street.
offering automatic reverse-tilt mirrors with memory,
which of
down when
Admittedly, that allows a
Infinity Q45 sedans.
driver to sec a tricycle on the driveway; but
thaf s passing by on the
tilt
34-page pocket-sized Features Operations Guide
...,
"You
really should get a
two-day seminar with
...
this
21-
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this
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Churchill, G. A. (1995), Marketing Research: Methodological Foundations, Orlando, Florida:
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in
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The
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Date Due
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