Strategy. Innovation. Brand.

Innovation and the Installed Base

How could God create the entire universe in only six days? He didn’t have to worry about an installed base.

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It’s fairly easy to innovate technically when you don’t have customers. You can adapt new technologies or new ideas without fear of alienating current users. Once you have customers, you have to pay attention to their needs. That includes the ability to upgrade seamlessly from one generation to another. Your customers feel that they’ve paid you money for a long time so their needs should dominate your planning. That may mean that you have to slow down new releases of your product to help your installed base tag along.

Think about it this way: which company is more innovative: Apple or Microsoft? Most people would say that Apple is far more innovative. But which company takes better care of its installed base? By and large, Microsoft has. When Microsoft releases a new operating system, they actually test to determine if old applications will run on the new platform. Apple is much quicker to dump the old stuff to keep the new stuff coming. The latest example is the new plug for the iPhone 5. If and when I upgrade to the iPhone 5, I’ll obsolete half a dozen perfectly good cables that no longer fit. That’s irritating but it may well get me into new technologies that work better than the old.

So do innovation and good customer care always conflict with each other? Not necessarily. Your fundamental commitment to customers is not that you’ll help them to move from release to release. Your promise is actually simpler — that you’ll stay in business to continue to serve your customers. I’m a veteran of a number of companies that no longer exist. Our customers were totally out of luck — they got nothing. Much better to give your customers something new — even if it entails ripping out the old — than it is to give them nothing at all.

When is it acceptable to ship an innovation that disrupts your installed base? I think there are two answers: 1) When a new technology emerges that allows you to provide much better solutions at a lower cost. You need to hop to a new platform to take advantage of the change. I saw this happen in the transition from host-centric to client/server software. It’s happening again today with cloud computing and mobile platforms. 2) When a competitor is shipping a solution that will disrupt your relationship with your installed base. Better to disrupt your own base than to let someone else do it for you.

And, how do build innovative new solutions while also maintaining and developing your traditional, bread-and-butter products? It’s not easy. The best answer I’ve seen is the ambidextrous organization which you can read about here.


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