The emperor's new clothes: technology is useless if consumers can't use it

'The new net boom,' announces Fortune. In California, venture capital is flowing. After five years in the doldrums, tech is back. And it's back big time.

Last time it was only dotcoms, telecoms and computers that boomed. Today virtually every industry on Earth is experiencing rapid change. Hollywood is digitising. Airlines are digitising. Fast-food service is digitising. Soon, with the arrival of radio ID chips on every package in every supermarket, the humble food and drink industries will digitise too.

But as the world again gets excited by all things tech, perhaps we should pause. And remember how things ended in 1999–2000, when a trillion dollars of technical development crashed into a mountain of user indifference, and tech entered a depression. Millions of people lost their jobs and their pensions. And it could happen again. How?

Digital technology gets twice as powerful every 18 months. And it's predicted to keep doing so for the next two decades. No industrial change in history has happened as fast as today's digital revolution. As this happens, we tend to forget that there is one part of the digital world that hasn't gotten any more powerful.

Not just in the past few years, but in the past 10,000: the mind of its user. Each year, consumers are presented with new, more complex digital products and services. But, each year, their ability to understand them does not rise. Twenty years ago, a phone was a simple device, with one dial. Many of today's phones are packed with complex, badly understood functions.

Twenty years ago a television had one dial and a volume knob. Today's AV systems have tens of each. The technology is leaving its consumer behind. And it's getting worse as technology keeps moving on at high speed. Digital devices will be ten times faster and more capable within five years, and perhaps 100 times within ten.

There is already a gulf between what technology can do and what consumers – both young and old – can make it do. As technology surges ahead, this gulf can do nothing else but grow.

Not funny. We may laugh when consumers fail to understand the full capabilities of their phones, TVs and computers. But the consumer's failure to grasp technology is not trivial. It leads to the vaporisation of venture capital. It is the issue that is increasingly holding back the whole digital revolution. Global growth and the fate of nations depend on rapid adoption of new technology. It is thus the decisive issue of the early 21st century.

THE DARK SECRET OF DIGITISATION

The human mind's inability to assimilate technology is the dark secret of the tech industry.

•  Research by consumer electronics manufacturers reveals that consumers never touch most of the buttons on the remote controls in their living rooms.
• Washing machine manufacturers report that, however many programs they build into their washing machines, consumers rarely use more than two of them.
• Software companies keep building extra commands into their programs, but quietly concede that consumers refuse to use more than a small fraction.
• Banks offer a wide choice of funds in online investment supermarkets, but find that most people don't even browse beyond the basic options.

The consumer simply doesn't use most of what technologically advanced companies build into their products.

The inability of consumers to understand a piece of technology can hold it back, not just for years, but for decades.

Today, consumers marvel at how they can collect shows on their digital video recorder (like TiVo or Sky+) to play back later. But this isn't the first time digital technology has made this promise.

It was already promising time-shift viewing back in 1980 with the invention of the video-cassette recorder. It's just that no one over 14 could program a VCR to record the right channel at the right time. It took 25 years for the electronics industry to design a time-shift viewing device that ordinary consumers could actually use. This pattern is repeated in many other industries.

It is thus the pace of consumer comprehension, not the pace of technological change, that will determine the pace of the digital revolution.

Consumer confusion also slows the introduction of new technological concepts. Sure, consumers can tell you they prefer HDTV to ordinary TV, but when it comes to evaluating really new technological ideas, they struggle.

• When the telephone was first invented, many of its early users thought its main use would be to broadcast orchestral concerts.
• When email first became popular in the mid-1990s, many CEOs responded by putting an email terminal in their telex room.
• When television first arrived, early viewers thought its biggest audiences would go to the newsreels they had seen in the movie theatre, not to game shows.
• And as Henry Ford put it in 1910, 'If I'd asked my customers what they'd wanted, they'd have asked for a faster horse.'

The consumer absorbs new technological concepts slowly, and with difficulty. Even young consumers struggle. 'Don't worry about complexity,' say some tech companies, 'we're targeting digitally literate 17 year olds.' Crap.

Young people may absorb tech concepts faster than old people over 30, but they still struggle with how to make things work.

• Our qualitative research has yet to find a teenager who knows what all the buttons on their phone do.
• Few can explain even a quarter of the functions of their parents' DVD, TV or VCR.
• And Virgin mobile phones sell because they have the only pricing plan 17 year olds (or anyone else) can understand.

So even among young people, it is the pace of consumer comprehension, not the pace of technological change, that will determine the pace of the digital revolution. But the tech industry has failed to acknowledge this. It needs to rethink its attitude towards its consumers, and fast.

TIME FOR A CHANGE

Companies should put the consumer first, not last. An intensive programme of qualitative and quantitative research, consumer observation and analysis helps to set out some of the keys to successful communication. None are intuitive.

Few are reflected in current marketing thinking on the web, in consumer electronics or in telecoms. The keys reflect the ways in which humans have responded to technological advance since time immemorial. As such, they risk being ridiculed by those within the technology community who regard any solution that is more than six months old as being out of date.

But the eternal is eternal for a reason. Genuine marketing insights are no more abundant today than they were in the dotcom boom. Without an understanding of their consumer, technologies will struggle. Companies responsible for them will stumble, and industries will die. And they will do so however good their engineers, however smart their manufacturing – and however much money they spend on their marketing.

CONSUMERS STOP BEING GRATEFUL FAST

Mobile network service providers were the darlings of Europe in the 1990s as they let consumers talk to their friends anywhere, any time.

But now that call quality is perfect, and everyone has a mobile phone, European mobile service providers are rapidly becoming perceived as little better than the state landline companies that preceded them.

In the 1920s, managing a steady flow of electricity into factories was such a critical issue that most companies had a main board electricity director. Once electricity supplies became secure, he disappeared. Does the same fate await CIOs, now that corporate PC and email systems all work?

With 24/7 global email and intranets, information flow within companies has now become so fast that information is no longer the critical factor holding them back. So are we now in the middle of the information age – or are we watching its end?

YOUR AUDIENCE LOSES ITS BRAIN

What simple brands like Kodak and AOL understand, and what most tech brands don't, is that as a market develops, levels of understanding and comfort do not rise. On the contrary, they fall.

First come the nerds, with their love of technology, and their intuitive sense of how it works.

Then come the early adopters, excited by the technology, but with slightly less knowledge.

Then the mainstream flood in, with their fears and ignorance.

Finally come the laggards, who just don't want to feel left out.

Over time, as the market floods with new, less tech-savvy consumers, the average level of understanding in the market falls rather than rises. And among advice-hungry new entrants, the level of tech-savvy is even lower.

Companies need to tune their offer to these successive waves of less and less technical consumers. As time goes on their marketing has to get more basic, not more sophisticated.

THE SECOND GENERATION USES TECHNOLOGY DIFFERENTLY

When mobile phones first became popular in the early 1990s, the first generation of consumers to use them found they were a very useful part of their social lives. If they were late for a dinner appointment, they could call their friends and apologise from their car. If they made a mistake in an arrangement, they could call the other person and find them.

But the next generation to use them do so differently. They no longer make plans in advance, because they don't need to. They know that all their friends can be contacted at any time because they all have mobile phones with them. And so they just arrange their evening by phone on the go.

For the first generation of users, mobile phones were a helpful aid to their existing social lives. For the second generation, mobile phones have redefined them.

So watch the way the second generation uses technology for the way it will really impact the world.

TO COMMUNICATE IS FEMALE

Because women are more focused on communication than men are, the way they adopt technology is different.

If you are the first person in the world with a video camera, no problem. It doesn't matter that no one else has one. But if you are the first person in the world with a fax machine, you have an issue. A fax machine is only useful if there is at least one other fax machine in the world, and even then it's not very useful. The usefulness of a fax machine only rises as large numbers of other people buy them too (an effect known as Metcalfe's Law).

As women are about communication, their use of technology is similar. The attractiveness of a technology rises as more people they know adopt it.

Women therefore adopt later than men, but then adopt in crowds.

CONVERGE WITH CARE

Today, analysts, consultants and engineers have convinced themselves that consumers want 'convergence'. By which they mean any device that has aspects of television, computing and telephony built into it.

But do consumers want convergence? Convergence devices usually offer a range of benefits. And consumers gravitate not to those that offer a range of benefits, but those that promise just one good one.

For example, consider the idea of controlling all digital feeds in a home from the living room – but the last thing most sons want is parental oversight of the online sleaze they're looking at in their bedroom.

At the time of writing, telecoms companies across the world are excited by the concept of triple and quadruple play – the idea of bundling broadband, landline, mobile and other services into one package and selling it to the consumer. There is a clear benefit to the telcos – they get to sell more. Butwhat exactly is the benefit to the consumer?

Mobile telecoms companies have been bitterly disappointed over the past few years by the low take-up of all their new 3G technologies. Perhaps they would have done better to think about the core need mobile phones deliver to their users and try to enhance that instead.

EVERYTHING NEEDS A KILLER APP

Apple's success from 1987 through to the mid-1990s was driven by a killer app: desktop publishing. As the publishing industry moved from paste-board and glue to PageMaker, QuarkXpress and Adobe InDesign, it needed the computer these apps were designed for: the Apple Macintosh.

Many more technologies and devices languish because no one has yet found them a killer app. So the most important role of marketing in the digital world is finding and defining that role.

If the mobile phone industry had recognised before the 2000 3G licence auctions that the killer app for the mobile phone was voice, it could have saved itself a hundred-billion dollars in licence fees.

What's the point of having a GPS positioning chip on a laptop? The computer industry needs an answer quick.

And what's the point of having a GPS chip on a digital camera? The engineers are already starting to build them in. Is there anything more to it than reminding you where you went on holiday?

If you can't find a killer app for your existing product or service, spend a lot of time with your consumers and see what uses they've discovered for it. They may surprise you with their ingenuity.

KEYS TO TECHNOLOGY SUCCESS

1. The key need is for simplicity. Simple devices and software that do one thing, not several, can have an electrifying effect on consumer mentality, clearing minds, and changing the way consumers think.
2. But a technology must work for it to be able to do this. So many – like mobile phone picture messaging – were launched when they didn't.
3. We must also be conscious of the fact that consumers are rarely grateful for the changes tech brings to their lives. Once something works, they forget it exists.
4. We must also be careful not to listen too closely to nerds – the early adopters who buy tech when it first comes out. Their thoughts are not those of the general population.
5. We should think more about how technology spreads from person to person in the population. The resulting infection rate will determine how fast a technology takes off.
6. We must recognise that whether consumers fit a technology into their lives or not is the true measure of success – and that the real impact of a new technology on a society may take a generation.
7. Consumers do not read instruction books. Period. Tomorrow's tech launches need to recognise this.
8. Digital equipment also can get twice as cheap every two years. For the consumer, price is a positioning tool – and something that costs next to nothing can also be perceived as being worth next to no thing.
9. Consumers are also visual creatures: after a while, they forget that invisible technologies – like WiFi – exist.
10. At the moment, the tech world is buzzing with words like 'convergence'. But beware: convergence devices do not necessarily contain a strong consumer benefit.
11. Beware also of the conviction within tech companies that all technologies need to keep developing. True for the company that makes them. Not necessarily true for the consumer.
12. For a tech device to fly, it needs a valuable use, a 'killer app'. Watch out for consumers developing their own – unexpected and often unwanted – uses for a technology.
13. Study videogames carefully – they are taking consumer time away from television because they are much more compelling than television – just as compelling television took share away from passive radio and press in the 1950s.
14. Watch out particularly for women. They are increasingly the key consumers of communications technologies.
15. Watch out also for people in emerging markets. There are four billion of them, and they often use technology more effectively than people in richer countries.

For the full report see http://pubs.yr.com/brain.pdf

This article featured in Market Leader, Spring 2007.

ENDNOTE

• Telex was a key business telecommunication system before the arrival of fax.