Why Tech Companies Need to Think More Abstractly
For many technology companies, 2020 was a trying year. COVID-19 has impacted the economy, and many have found their markets drying up as purse strings tighten. Innovation has become more vital than ever to stay afloat. But while many have tried to achieve this through the creation or launch of new products, in a stalling economy that doesn't require investing in the development of a brand new product. Instead, it involves abstract thinking and common product lines.
If you’re not selling enough of your current product suite to reach your company’s revenue goals, you might think the best next step is to create something new that you can add to the market. But creating a new product from scratch is an enormous gamble: it takes a ton of time and money, all for something that might not have a clear path to success. That’s why, instead, tech companies need to ask themselves how they can take what they already have and use it as a tool to solve other problems. In other words, if you have a successful product, don’t simply try to think of another product you can sell. Deconstruct the most successful one you have, think about what it’s really doing, and find out where else it can be applied.
An obvious example of a company that excels at this is Apple. After the success of the iPhone, they realized their core offering wasn’t actually a phone—it was an experience facilitated by their software, iOS. They've since used their success at creating a merger of software and hardware to jumpstart their entry into new categories: the iPad, Apple TV, and now with their M1 chips, laptops. The experience of using all of these products is integrated and smooth because of the common software, which increases buy-in into the ecosystem of hardware Apple makes its money from.
An older example is the automobile industry. Most car manufacturers reuse the same chassis and engines for many of their core vehicles but will tweak certain stylistic elements and feature offerings so they can add a “new” car to the market. What these two examples share is that these companies have taken what they know works, what they know makes money, and they’ve used it to make more stuff and generate further success.
In school, you learn about levers, a simple tool that can be used to open doors, operate a wheelbarrow, and launch rocks from catapults. Successful companies think of themselves not as the catapult, but as the lever. As exciting as manufacturing catapults might be, when you think more abstractly, you can imagine how the basic components can be applied to other concepts, and then the trebuchet is born. Looking at yourself as a whole machine may not be the best long-term strategy. It’s better to look at the pieces of the machine and see what they can be used for. Struggling startups tend not to think this way, wanting to make a ton of sexy new products. But the successful ones embrace becoming building blocks for generations of new products.
One example of a company that doesn’t think this way is Tile. They set out with the mission to produce the ultimate bluetooth dongle to find lost objects. Of course, they are very good at that—and with a great product, you can be successful without thinking abstractly. But if you want to be a truly great tech company, like Apple, Google, or Samsung, you need to deconstruct that great product and ask “What’s in it? How else can this bluetooth beacon be used?” It will not only help you innovate faster, but it gives you a surefire way to replicate your existing success.
I try to think this way as a CTO. When I started working at Penthera, we sold a video download solution. But if you deconstruct the download feature, what do you see? Essentially, what it does well is move video bits from the network onto a disk. So I’ve thought about where else we can apply that same technology to solve other problems, like buffering. And now instead of thinking of ourselves as a company that enables users to watch content offline, we think of ourselves as content source shifters. While DVRs “time shift”, so that people can watch video any time, we help people watch video any place with any device on any network. Sometimes the user may be aware of the feature, as they choose to download content to watch later, but in other uses, the user may never be aware of the improvements we provide. They are only aware that the issues they used to have with streaming, such as buffering and stalls, have been reduced or eliminated.
The tech industry is enormous, and whether you’re selling a consumer device or B2B software, you’re going to have a lot of competition. Part of what’s so exciting about working in technology, especially in startups, is that it is high risk, high reward. But if you can break down your product conceptually and discover where its value truly lies, you’ll be lightyears ahead of your competitors and will have a shot at being one of the few companies with real staying power.
Ready to gain a competitive edge?
Learn if you're a candidate for our Penthera Innovation Partner Program