No Connection

Volume 6 Letter 8

Remember the Iridium phone? Originally developed by Motorola, the Iridium phone was to use 77 satellites to transmit voice and data to millions of satellite phones around the world. Iridium is the element with an atomic number of 77 – thus the name. To bad they didn’t change the name to Dysprosium when they decided the phone only needed 66 satellites to operate. Dysprosium is the element with 66 protons whose root word means ‘hard to get at’. ‘Hard to get at’ is probably the best way to describe the now defunct satellite phone.

The idea of a satellite phone was brilliant – being able to call anyone from anywhere in the world via satellite seemed like a great idea compared to cell phones of the day with spotty coverage and limited range. However, the idea failed to connect for several reasons. First of all the phone could not be used inside buildings or in cars. Secondly, the phone was the size of a brick with a baguette like antenna which didn’t help sales zip along. Finally, due to unreasonably high production costs Motorola decided to pass on the pain to their customers and thus priced the phone out of reach.

What the developers of the satellite phone forgot to create was a compelling reason to buy. Any new product or service that requires the user to dramatically change their behavior must come with the promise of equally dramatic results. An expensive phone that won’t work in buildings or cars isn’t even practical let alone convenient. The only advantage the pricy Iridium phone offered was worldwide connectivity which, it turned out, was not a good trade off for having to stand outside to take a call.

The quest for innovation has long been a faith-based initiative – a trap into which Motorola fell. It used to be possible to throw money at R&D and reap the profits. However, in today’s fiercely competitive markets, success is unlikely without collaboration between R&D, marketing, sales and manufacturing. Motorola’s Iridium experience should remind us all that simply funding R&D does not necessarily produce good products.

What one can learn from Iridium:

  • Collaboration is Key: Successful product innovation requires cross functional cooperation among R&D, marketing, sales and manufacturing etc. This is the number one indicator of future product success (more than budget spent)1.
  • Develop a compelling reason to purchase: Successful new innovations bring exceptional value. Value means either the customer will save money or they can use your product or service to make lots more money.
  • Adoption: One must understand the hurdles the customer faces when using a new product and have a strategy in place to address these issues making it easy for customers to migrate over.

The Iridium phone was a brilliant idea that just couldn’t connect with the market. Make sure your innovations do!

1. Barry Jaruzelski Kevin Dehoff & Rakesh Bordia Booz Allen Resilience Report August 2006

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