Companies are Copycats; Customers crave Novelty

Source: Glenn Francis
(via Wikimedia) 

In Unlocking Creativity, I described how benchmarking practices tend to lead to copycat behavior.  Firms imitate, rather than innovate, after studying their rivals closely.   Many reasons exist for this phenomenon.  I focused on the considerable body of research in psychology regarding fixation.  Specifically, we know that human beings "become attached to a specific mental set – a way of thinking about a problem based on solutions that have worked in the past... Mental sets can facilitate problem-solving at times, but becoming fixated on an inappropriate solution from past experience can inhibit creativity."    One glaring example of herd behavior within a prominent industry:  broadcast network television's approach to primetime programming.   Time and again, after a new genre gained popularity, copying became rampant.  The original Hawaii Five-O, for instance, spurred a wave of imitation that vaulted police dramas from 1% of the primetime schedule in the mid-1960s to nearly a third of the programming by the mid-1970s.  In the late 1970s, the sudden popularity of the CBS drama Dallas spawned a wave of copycats in the primetime soap opera category.  

Interestingly, we have mounting evidence that consumers prefer novelty over imitation.  A new neuroscience study has examined consumer preferences in music.  This research demonstrates that customers love novelty.   Robert Hackett and Declan Harty reported on this work in Fortune:    

A new study in the scientific journal Frontiers in Human Neuroscience finds that, over the decades, people tend to prefer newness and variety in music. In an analysis of Billboard top hits spanning from 1958 to 2019, researchers determined that the trend holds true not just for individuals over a lifetime, but population-wide over generations. People crave constant novelty, in other words. Chart-topping tracks tend to demonstrate more “harmonic surprise” over time, the authors say.

Robert Kennedy's research regarding the television networks demonstrates a similar result. While the networks love to copy one another, ratings tend to be higher for novel programs.  Of course, novelty brings with it increased variability.  Perhaps copycat behavior is the safer choice:  low risk, low return.  Managers in many industries have strong reasons to prefer the safer choice; career concerns may compel them to avoid high variability strategies.  

Still, we have to take these findings seriously as we consider our decisions about new products and services.  Doing what's best for our managerial careers may not be what's best for our customers.  How can companies help managers get more comfortable pursuing strategies of novelty rather than herd behavior?  

The Customers You Do Not Want

New product launches often do not succeed.   That's the unfortunate reality facing many business leaders.  Strong early sales presumably are a leading indicator of a profitable success story to unfold in the near future.  However, some new research suggests that not all early sales, and all early customers in particular, are a positive thing.  Scholars Eric Anderson, Song Lin, Duncan Simester, and Catherine Tucker have conducted a new study examining new product launches.  They have identified a set of customers that they call "harbingers of failure."   If these customers are buying your new product, you might not want to celebrate... you may want to become concerned, quite concerned.   Here's an excerpt from Kellogg Insights: 

The researchers found that just 40 percent of new products are still in stores three years later, a number in line with previous estimates. But critically, a product’s chances of succeeding depend not only on how much is sold but also on who is buying.  The surprising finding is that when sales increase to a segment of consumers whom the authors label “harbingers of failure,” then the new product is more likely to fail.  This finding contradicts nearly every metric of new-product success: How can more sales signal that your product is about to fail?  

Who are these harbingers of failure?  Apparently, there are a set of consumers who consistently demonstrate unique niche tastes.   Their preferences clearly fall outside the mainstream.   According to Kellogg Insights, "Harbingers with a history of making four or more repeat purchases of a failed product are nearly twice as likely as other customers to buy another product that fails."  If these harbingers are involved in your early market research, they may convince you to launch a product that is ultimately going to fail.  So, you have to be on the lookout for harbingers long before launch.   The scholars suggest talking to consumers about the OTHER PRODUCTS that they like, not just the product that you are launching.  If they like mainstream popular products, you are probably on solid ground.  If they cite other niche products that have not become hits, you should be cautious.  They might be harbingers of failure. 

Don't Ask Your Customers To Invent New Products

Steve Jobs used to say that the iPod and the iPhone didn't emerge from focus groups. Steven Spielberg says a great movie is not created in a focus group. We need to remember that customers often tell us about incremental improvements they would like to see in existing products. They have a hard time imagining a brand new future. That does not mean, however, that we should not engage customers in our radical innovation efforts. We should engage them. We need to focus, though, on the pain they feel when using existing products. What frustrations and obstacles do they experience? If we understand those deeply, then we can begin to develop ways to alleviate that pain. Radical innovations can emerge from that deep understanding of customers' pain.