Technology creation has been a key driving force for many breakthrough innovations over the past several centuries, be it printing press, electric bulb or PC. However, the same passion that creates technology can also blind the innovator in seeing the real need of the customer he is trying to fulfil. Thomas Edison took the idea of phonograph from concept to cash. However, Edison’s adamant view that “every problem has a technology solution” led to the downfall of his phonograph business. We call this view – that every problem has a technology solution – Edison Syndrome. Let’s see how Edison Syndrome hurt Edison.
Thomas Edison invented phonograph in 1877. However, for the next few years, he decided to focus on commercializing electricity and the practical lamp. In the late 1890s, Edison went back to phonograph after making many improvements to his original invention. He founded National Phonograph Company and by 1904 sold over 113,000 talking machines and seven million records. This meant a market share of more than 60%. By the end of 1920s it came down to 2%. How did this happen?
Edison’s phonograph was rivalled by the Victor’s Talking Machine Company. Victor made technical improvements to the machine as well. However, Victor also focused on packaging – creating an enclosed horn in a handsome wooden cabinet. According to a historian “(Victor) was to make the phonograph for the first time a piece of furniture.” Banker’s panic in 1907 impacted both Edison and Victor. However, Victor’s recovered much faster.
The following quotes from Edison captures the essence of Edison’s approach: “We care nothing for the artists, singers or instrumentalists. All that we desire is that the voice shall be as perfect as possible.” And in another quote, “It is not our intention to feature artists or sell the records by using artists’ name,” Edison wrote, “we intend to rely entirely upon the tone and high quality of the voice.” In fact, Edison called promoting records by celebrity artists “fakery in music”. An Edison dealer asked in 1923, “Where do you expect to be in ten years without an artist of reputation?” And Victor did exactly that. As Edison’s biographer Andre Millard notes, “Many people bought Victor phonographs because they wanted to hear the famous singers who recorded on Victor records.”
What is the moral of the story? Technology creation and improvement is a great source of innovation. However, not every customer need requires a new technology for fulfilling it. Sometimes the differentiation lies in designing a superior customer experience, the way Victor did by creating famous artist labels. Steve Jobs certainly understood this well when he launched iPod a hundred years later.
DeGraaf, Leonard, “Confronting the mass market: Thomas Edison and the entertainment phonograph”, Business and Economic history, Fall 1995, pp 88-96.
Photo from wikipedia.org