Why Great Technology Fails

Great” technology is a relevant thing.  Fifteen years ago, we marveled at the clarity and utility of laser disks.  But by today’s standards LD technology would be tantamount to racing a 57′ Chevy at the Indy 500.  But as technology makes strides in both cost and efficiencies, we are still presented with the same dilemma as we were 15 years ago when retailers are lured to try the latest and greatest techno-masterpiece that promises to deliver us from evil and separate us from the pack. Important questions must be answered, such as…   “What’s the business model?” “How does anyone make money on this new innovative way to digitally captivate our shoppers?” and of course, “Where are the dollars going to come from to make everyone millionaires”?

While the technology is now better, faster, and cheaper, we still must find reasonable answers to those aforementioned questions or else witness more great technology finding its way into the retail techno-dumpster.

But to play in the field of retail supermarkets, even a more specific question must be answered….. “How can the technology solution’s business model find a home in the very tightly controlled flow of dollars between CPG brands, their retail customers, and ultimately the retailer’s customers”? 

Sounds profoundly simple, doesn’t it?   Well if it that were true, the failure rate of business technology innovations in retail would be dramatically less.  As it is, those that succeed typically make it VERY BIG.  The majority that do not, crash and burn,  leaving their angel investors with one more frustrating loss in their portfolio.  Despite this hideous track record of success, the supermarket industry remains very alluring for innovation.  It’s a $600 Billion playground, (although Walmart owns about a fourth of the pie).  Couple that with the false sense of everyone understanding the dynamics of the supermarket business.  After all, we all shop in one from time to time or know someone who does!!

There is a good news, bad news ending to this story.  

First with the bad news.  The failure rate of new technology solutions in supermarket retailing will remain very high, no matter how much smarter we get about what can work and what will not.  There is only so much money in the system to monetarily support the content, the hardware, the software, the marketing, et al, necessary to drive a new digital touch point to a position of “critical mass”.  Only the very best technology with the most cogent business model will win, all others will end up in the same graveyard with video on shopping carts, electronic shelf tags, and in-store television networks, all of which were great technology.

The good news, as I see it, lies in the fact that there is sufficient learning over the past fifteen years that can give the best technology the best chance to build a business model that provides retailers, brands and the consumer the necessary ingredients for success.  With the proliferation of mobile, hand held devices, (mostly cell phones), which now creates a new conduit to the mass marketplace, we have a new touch point unforeseen, even just a few years ago. 

In my next blog on this topic,  I will identify the steps and elements that are vital for new technology companies to consider before they make the first big presentation to a retailer or brand.  It may surprise you what I have found to be the most critical predictors of success.

 

mh

 

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