Thinking around product and product features

Prospect theory was developed by Daniel Kahneman, professor at Princeton University’s, and part of this is risk thermostasis, which is the model on how we perceive risks.

We all know that security is difficult, but in fact when it comes to selecting a security technology, there are certain drivers:

  • Buy what everyone else bought (Authority), this is what IBM leveraged on in the early days
  • Go with the known brand (Authority), this is companies such as Nike
  • Buy of greed (“I want this”), where the product has certain qualities that attract the customer. Apple have managed to get into this position, providing a user-experience not previously seen
  • Buy of fear (“I want to prevent something”), this is how insurance companies are making money.

In general it’s difficult to sell based on fear, therefore clever companies turns the buy of fear in buy of greed, which makes the sales much easier, “When people are afraid, they are much more willing to buy security to be safe“.

Buying security from a large company is much easier, and therefore it’s much easier to accept the deal. Buying from a large company isn’t necessarily bad, in fact it can actually be quite good, as the large company is able to share development cost among a larger customer base, and must always deliver good quality and cannot take the risks as small companies sometimes need to make. Consider the following, you are going to do skydiving and you need a parachute, two companies are selling what you need. First is the huge company, known to everyone, the second is a small niche-company that have cost-effective parachutes. Which brand would you select? For many, the answer would be based on Authority and buy what everyone else buys, and would accept the higher price. Companies that have authority must maintain their reputation, therefore they must deliver product consistently that people depend on.

User care very little about technology, and he shouldn’t for various reasons. But you still want to be safe, there are certain things you never buy based on price.

Social Sophistication, is what brings values to customer, provides relevant information to him, in his present context.

Technical Sophistication is what brings unique properties and solves a need, as the needs are satisfied using technology. Technical Sophistication happens in emerging industries areas, where engineers are developing new and innovative concepts that satisfies real customer needs. Once the technology is understood and mature, technology is hidden, and Social Sophistication,

Technology is digital and Users are emotional…..

A classic example is Ericsson, in the 90’s it was possible to check the battery level on the mobile, and the result was 3.8V. That didn’t mean anything for a user, the developers had absolutely no understanding of what users wanted to see, and instead the user had to adopt the technology instead of vice versa. Once a technology has matured, it is followed by a commercialization, which brings the technology to the market. In this transition, is when innovation happens, which is basically turning knowledge into money. The definition that 3M has of R&D is that research generates knowledge, and innovation creates money. 3M measures their innovation power in the amount of revenues they make on products that are 5years or younger, this is what makes them stay alert.

  • In the beginning, Cars was sold with repair kit included, after some years, this was removed, as customer didn’t know and didn’t care on how to fix problems
  • In order to get things working, we need to remove the complexity for the user.
  • We cannot train users in security, instead we need technical intermediaries, that package security into their product, where security reaches an acceptable level, and the product can be sold on greed, instead of fear.
  • Facebook is a technical intermediary, and care very much care about their technology, and how that works.
  • Personal ócommodity
  • Security will be integrated as a part of the way you buy“, where solution providers buy security, and being the technology intermediary´
  • Solution providers buy security companies
  • Solution providers are the technical intermediary, becoming utility companies.
  • “Security is provided bundled in greed sale.”
  • Cars sell security, as part of the package
  • Awards, reputation are signals, and that gives us the Lemon theory

Buyer have problem evaluating sellers, one good example is the “Used car signals”. In order to maintain a high price, it’s essential that the product have high trust, otherwise it will become commodity, and nothing to compete against.

Reputation is very valuable, companies take great care of their reputation, and they should, and security is not different.


~ by petergullberg on August 25, 2010.

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