Products and services sell when they are just new enough to fulfill an unmet customer need without reinventing every other aspect of the customer’s life; revolutionary services rarely do. Because they are so innovative, revolutionary services typically suffer from a slow pace of adoption, meaning that many fail because they take too much time to generate cash.
Rosabeth Moss Kanter, a professor at the Harvard Business School, expressed this same idea, in an article in Business 2.0 : “The path to success involves staying a little ahead of the competition but close enough that customers can understand your product and incorporate it into their lives and businesses.” Kanter extensively studied the reasons some companies succeed and others do not. Her conclusion: “Years of research shows that the innovations most likely to take hold are those that don’t demand excessive change from the customer.”
This truth was vividly brought home to me in a discussion I had with Dr. Ross Jaffe, one of the nation’s leading health care venture capitalists. Jaffe, a managing director at Versant Ventures based in Menlo Park, California, was analyzing the business I had developed selling health insurance online, Health Plans Today. This business, which allows prospects to access a database of thousands of potential plans and compare offerings, is a pure use of my expertise in Web marketing.
Jaffe noted that although I might be employing some innovative techniques, I was actually just a new kind of middleman in an industry that was accustomed to working with intermediaries. The business might operate in the online medium, but, Jaffe said, “Health insurance companies accepted long ago that they would need to work through brokers because consumers wanted to compare different options. You may have figured out the Internet equivalent of this activity, but from the perspective of a health insurance company or the consumer, it’s not a dramatic change.” And he was right.
