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Innovation

How technology management became akin to politics

Tech companies have to practice a form of politics rather than old-fashioned marketing, because we can change our sites, or change our computing environments, as easily as we change our minds.
Written by Dana Blankenhorn, Inactive on

News that Android phones are now outselling those from Apple, and that Facebook's market position is suddenly precarious, forces technology executives to rewrite their playbooks.

The new analogy is politics. (Picture from Publicdomainclipart blog.)

It all starts with a business concept called switching costs. Investorwords defines this as "The costs incurred when a customer changes from one supplier or marketplace to another."

Back in the 20th century switching costs were high. You might pay $3,000 for a PC, another $3,000 for the software that ran on it, and then there was all that time you wasted learning how to use the thing.

The Internet and more intuitive interfaces have dropped that cost to the floor. Smartplanet has competitors. You can switch over to one at the speed of thought.

This gives you all the power of a modern voter. Unless you're in office, or working closely within a political movement, you are free in a democracy to change you views on a dime. Were you a liberal last year? Be conservative. Or vice versa. It's easier than switching from coffee to tea.

Politicians deal with this reality in one of two ways.

Some pursue a "base" strategy, which in business we call a "niche" strategy. Instead of seeking the whole market, seek the adoration of a piece of it.

For most of its history Apple pursued a niche strategy. It was less a product than a lifestyle, a movement, a choice and not an echo.

From the moment Anya Major threw that hammer at David Graham in Apple's famous 1984 ad, it was clear that Apple stood for something. If you liked it, you loved Apple. If you didn't Apple didn't need to focus on you.

But what happens when that take-it-or-leave-it attitude enters the mass market? A base strategy like this succeeds only so long as the base is clearly the best option. Android is a good option and the base is suddenly threatened.

The alternative to a base strategy in politics is triangulation. or a mass market strategy. You position yourself in the center between two extremes. You are good enough, not outstanding. Moderation in the pursuit of justice. You're a PC.

Facebook pursued a PC strategy, and over the last few years came to dominate the social networking space. But what happens in politics if you push too hard or (worse) seem to defy your own beliefs in the pursuit of profit?

Well then the fall can be sudden, Arlen Specter-like. When you try to hold the whole market, you can lose the mandate of heaven quite suddenly. Just as when you treat your base as the whole market, and build an ideology around yourself, the fall can also be sudden.

We know Internet switching costs are near zero. What most surprises analysts today may be how other product switching costs are approaching zero in the mass market. A PC costs $500 today, not $3,000, and when it's in the form of a phone or a tablet that's the all-in price. It's no longer a considered purchase like a car, it's more a fashion statement like a new outfit.

What this means is that the customer is truly in charge. Tech companies have to stay on top, not of the market, but of customer opinion. They have to practice a form of politics rather than old-fashioned marketing, because we can change our sites, or change our computing environments, as easily as we change our minds.

This post was originally published on Smartplanet.com

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