In 2004, Motorola created RAZRs, a 13.99 mm-thin phone with a combination of metals, such as aircraft-grade aluminium, and new advances, such as an internal antenna and a chemically etched keypad.
It worked. Millions of people rushed to get one. Motorola sold over 50 million units, while setting a new bar for future products coming out of the wireless industry. This one product was a huge financial success for Motorola.
People called it innovation! Was it?
Less than 4 years later, Motorola was traded at 50% of its average value since the launch of the RAZR. Motorola’s competitors easily surpassed the RAZR’s features and functionalities with equally innovative new phones. Motorola was once again rendered just another mobile phone manufacturer fighting for its market share.
Like so many before it, the company confused innovation with novelty (the quality of being new and different).
Real innovation changes the course of industries or even society. The light bulb, the microwave oven, the fax machine, iTunes — they changed how we conduct business and altered how we live our lives. In the case of iTunes, it challenged the industry to completely reevaluate its business model.
Adding a camera to a mobile phone is not an innovation — it’s a great feature for sure, but not industry-altering. In the case of Motorola, they created a list of great features — metal case, hidden antenna, flat keypad, and thin phone.
Motorola ended up successfully designing the latest shiny object for people to get excited about, at least until a new shiny object came out. That’s the reason features are more a novelty than an innovation. They are added to differentiate but not to reinvent. It’s not a bad thing, but it can’t be counted on to add any long-term value.
Novelty can drive sales — the RAZR proved it — but the impact does not last.
If a company adds too many novel ideas too often, it can have a similar impact on the product or category as the price game. In an attempt to differentiate with more features, the product starts to look and feel more like a commodity. And like price, the need to add yet another product to the line to compensate for the commoditisation ends up in a downward spiral.
Another example: In the 1970s, there were two types of toothpaste. But as competition increased, Colgate’s sales started to slip. So the company introduced a new product that included new features — the addition of fluoride. Then another, then another — whitening, tartar control, sparkles. Each newly launched feature boosted sales for a while, and so the cycle continued. Today they have 32 different types of toothpaste to choose from. They are the leader, but with diminishing market share in India.
Colgate’s competitors also sell a similar number of variants that offer about the same quality, the same benefits, and at the same price.
Once again this is an eg of the newest set of shiny objects designed to encourage purchase.
What companies cleverly disguise as ” innovation” is in fact novelty.
