Also, from a strategic perspective, you can look at it this way.
You can say, well, you know, they're trying to change things.
I think this is a useful chart, a useful way to look at innovation.
So, on the, on the horizontal axis here, it's about the technology.
And so, if you're in the far corner down there, it is it's an existing technology
that you currently use. Then, you might use existing technology
that you, that you you don't currently use.
It is a technology that exist, but you don't use it.
And then, we have new technology on this side.
things that are brand new. And in the vertical axis, we have
existing markets that we already serve. Markets that exist, but we don't serve.
And then, brand new markets. And so, as you look at this, where would
you put the Segway? Where do you think the Segway lies?
Which of these, these squares, which of these nine squares, where would you place
the Segway? Well, here's one place to think about it,
is that new market and new technology or is it here?
You know, where it's, it's it's a new market, but the technology is, exist was
this the iBot again or, you know, where is this thing?
And I think some confusion that they had about which kind of product this was and
what was the new technology, what is the new market, the confusion about that is
something that got in the way of innovation, that got in the way of them
being clear, being strategically aligned with what is it we're trying to do
together. Let's talk about organizational strategy
constraints further. So, there's two possible strategies that
they might have undertaken. in the one project, like swinging for the
fence, let's just go big, go hard. if, if it's super important, we think
there's some time pressure and some competitor pressure.
Let's just make it happen and let's go big and let's go fast.
The next one is contingent action, action, where we assume that we have
time, that we can actually segment the needs and market and understand and work
our way into it. It's really is just kind of a an
incremental step. And we may get to a place where we just
have to kill the project or we understand that.
We have to wait and acquire, that we just let it go through.
Basically, this is a slow second mover, wait, wait until that it works, if they,
if there's an emerging technology, just buy them up.
This may be a way that you think of Microsoft when they buy small companies,
or Google when they buy small companies to, to basically, to, to put on, to hook
onto their big mothership. They don't do the innovation, but they
allow others do the innovation. And then, purchase them.
And then, we have the second strong second mover.
And that's where people are watching carefully.
They are watching early entrance as they succeed or fail.
And as soon as they see an opening, they move into the market or as soon as they
see it dive, they pull out of the market. And they're just very attentive to the
market. So, these are some possible strategies.
So, which of these do you think would you say that Segway was using?
Well, one way to think about this is, in this quadrant is this way.
At the top is things that where there's, let's call it a high opportunity cost of
delay, it is waiting, it is costly. If there's some kind of problem that if
you wait too long, then you'll get you won't succeed because of that.
And then, down below are the ones that have a low opportunity cost of waiting.
That is that there's not, it's not super competitive.
There's not a time there's not a rush. And the vertical axis is where
uncertainty is high and its going to stay high for some time.
And in the other axis over here is where uncertainty can be, basically can be
reduced over time. And one thing is we can reduce
uncertainly, actually by willfully that, we, we,we can do it on purpose.
We can do, there are things we can do to drive down uncertainty.
So, it looks like in the red up here is where Segway thought they were.
That they thought it was a high opportunity cost of delay, but they had
to hurry that if they waited to long, it was all going to be over.
What, what do you think drove that? It's interesting to me because there were
no competitors and any rush they were in seemed to be brought in from the inside.
They were rushing themselves, but there was no one outside who is saying, hey,
hurry up, hurry up. Or was there?
Maybe the Venture Capitalist, in their short time horizon said, you know,
they're expecting a return. They've given this company so much money,
more company that they ever given any company before, as my understanding.
And so, they said, you know, we need to see that money come back quickly.
And so, they created this artificial high opportunity cost of delay.
That in fact, they had more time, they could have done more things and more,
more thinking and more thoughtful exploration.
But they perceived that there was not time for that.
Normally, it's, it's calendar things, like getting a product out before
Christmas or getting, getting a product out before a big gift giving holiday.
That might be a real window of opportunity cost.
If the walls are about to change, that may create an opportunity cost.
If there's a competitor in there, working really hard to unseat you, that may
create a competitive opportunity cost. But generally, you know, Venture
Capitalist should not necessarily do that if its not good for the business.
And then, we have on the blue circles where they might have been.
This is a place where if there's low opportunity cost of delay, where you can
actually buy down risk. So, in other words, if something is risky
and if I do a market study, I can bring down the risk a little bit.
So, remember the, the marketing thing I showed you that my it had to do with my
students. And everyone marks the, you know,
definitely will not buy. Well, that's a study you can do early on
and begin to probe in and understand why is it that people believe that they won't
buy it and what can I do to change a product, in order to get them to buy it?
And I want to do this early in the process because I don't want to change it
after I already designed it and I've already made it.
And it could be that, in fact, what's happened is this, you know, constraint
that is people not wanting to buy their product as it is, that Dean Kamen and the
crew, they did not want to, they didn't want to hear that.
They didn't want to understand it. So, the best way to insulate yourself
from that information is that the people don't like your innovation is to not do
the market study. So, the kind of constraints we saw, a
business strategy constraints, organizational structure constraints.
They had the resources, they had the money.
And a few weeks ago when we talked about resource and the true cost of capital,
you have to understand that, that money comes with covenants.
That money come, comes with something attached.
In this case, it was the urge or the need to push forward, to push forward, to push
forward, when in fact, there was not really an external need to rush through
the project, through the development process.
