I want to continue with the this topic a bit. In the part 1, I made a few points:
- Product management must focus on optimizing for business success not simply technological leadership.
- This must be done by addressing market needs better than other competitors.
- A lot of what we deliver to customers may not be considered truly innovative, but is needed to address the way they need to use the product.
- Technology can change much faster than people’s ability to accept that change.
I want to spend a bit more time exploring this, as it does raise some points of discussion.
Last week when I was in California, I rented a Toyota Prius at the airport. It was my first time driving the Prius, and I will admit that, it took me a couple of minutes to figure out how to actually get the car in gear. First time I drove a car that had a power button in the dash.
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Once I figured that out, I drove the car for the duration of my trip and was amazed at how little gas it used. I’m pretty sure it averaged well over 50 mpg.
Now, the hybrid engine in the Prius is truly innovative. Toyota introduced the Prius 10 years ago (initially only in Japan). But the rest of the car is pretty standard: doors, windows, steering wheel, gas tank, mirrors, cup holders, radio etc. It’s not a perfect car, but it’s a pretty good 4 door sedan and it get excellent gas mileage. And given the price of gas these days (over $4 per gallon in California), it will likely have a great future.
Now compare the success of the Prius, with the the complete lack of success of a the Honda Insight. The Insight was actually the first hybrid car introduced in North America (1999). It preceded the Prius by about 6 months. It also had better gas mileage than the Prius, with an EPA rating of 70 mpg. But the Honda Insight sold only about 18,000 units total in the US. The Prius has sold over 1,000,000 units worldwide.
While there is no single reason for the lack of sales of the Insight, the styling of the Insight, the fact that it was only a 2 door hatchback (vs. a 4 door sedan for the Prius) are certainly a big factor. The Insight didn’t look like a “normal” car was something that was said of the vehicle.
The point here is that while one car, the Insight, was first to market and had what appeared to be technical superiority (much better gas mileage), the fact that it didn’t fit well with how people wanted to use the vehicle made it less successful than the Prius, which fit people’s vision of what they wanted in a car. It wasn’t simply the technological innovation of the hybrid engine (or high gas mileage) that was key, but all the other aspects of owning and driving a vehicle that they wanted.