The Pursuit of Happyness is a phenomenal movie. Our protagonist, William Gardener, makes a series of decisions that leads him into a troublesome financial situation. He loses his home. His wife leaves him. From that moment on, he is tasked with scaling the daunting mountain of his circumstances. With only his intellect and perseverance to rely on, he must pave a new life for himself and his young son.
His negative spiral is precipitated by a dubious investment. He pours his savings into a newly invented ‘Bone-Density’ scanner. With excitement and enthusiasm, he is certain this technological breakthrough will replace X-ray machines in hospital and surgeries. It proves to be a disaster. His meetings simply won’t convert to sales.
As he struggles forward, William narrates his own story. He tells us that although his new technology provided superior images to the XRAY, it was only slightly better. What William discovers is that being marginally better is not enough to make his potential customers change their behaviour.
He tells us;
‘What I didn’t know, is that doctors & hospitals would consider them unnecessary luxuries.’
Put simply, he overlooked a fundamental law of behavioural economics. Former Harvard Business School professor John Gorville put it best;
‘Customers irrationally overvalue the old and producers rationally overvalue the new.’
For any customer there is a sunk cost attributed to their past purchase decisions. If the new product or service you are offering them is only marginally better, it is unlikely to tip the scales. It needs to be so superior that customers will discard old behaviours and adopt new ones to use your product.
The ‘QWERTY’ keyboard has been ubiquitous since the typewriters were invented in the 1800’s. It is completely illogical. It has been suggested that Christopher Sholes, who invented the first typewriter in 1868 actually designed the keyboard to slow down typists. He feared that increased typing speed would cause his new contraption to jam!
Once the inefficiency of the ‘QWERTY’ keyboard became clear, there have been a whole host of proposed layouts.
The DVORAK, launched in the 1930’s, was proven to significantly increase typing speed and reduce wrist strain. It enabled a user to type faster with less error. It was designed with the central idea of placing the most commonly used vowels and consonants on the middle row.
The COLEMAK, introduced in 2006, permitted typists to move their fingers nearly 2.5 times less than when using a QWERTY Keyboard.
There are also x35 words you can type on the central row of a COLEMAK keyboard in comparison to a QWERTY Keyboard.
Despite the clear superiority of these two new designs, when released to market they failed to gain significant traction. In the mind of users, who were accustomed to the QWERTY layout, it wasn’t worth learning anew for sake of faster word processing speed.
The 1994 launch of Virgin Cola is another interesting story. At the time, as it is now, Coca Cola was the dominant force in the soft drinks market.
Virgin sought to topple their dominance. They famously launched into the US market at New York’s Times Square. Richard Branson rode a Sherman Tank through a barricade of rival products, crushing them in the process. The spectacle reached its culmination with him shooting down an enormous Coca Cola sign before he emerged to the crowds. Nevertheless, within a few years, the wheels were coming off.
With Coca Cola’s far superior distribution relationships, they were able to run Virgin Cola off the store shelves.
Branson’s retrospective own words give us the best insight:
…”We had a great brand. But Coke had a great brand. The taste of the Cola was maybe marginally better. But it was neither here nor there. So since then what I learned from that was only to go into businesses where we were palpably better than all the competition.”
Being better is simply not enough.
You need to be so much better that you can overcome engrained habits of the marketplace.