Tag Archives: segway

What to Learn From the Segway’s Failure

The original Segway, whose demise was announced last week to a chorus of chuckles about mall cops and I-told-you-so’s about the nerd factor, may be the most beautiful piece of design I’ve ever seen. Only the iPhone rivals the Segway, in my mind, in terms of how well the designs anticipated how people would use the devices and in terms of the wow factor when they debuted.

Yet the Segway flopped. Is there then any hope for the rest of us, who lack the design skills that Dean Kamen brought to the Segway?

There is, because he misunderstood or ignored an issue that is key to innovation success: the ecosystem. If you figure out how to plug into and help develop the right ecosystem, you can succeed where even the talented Dean Kamen and his magical Segway failed.

I became acquainted with the Segway shortly after its debut in late 2001. The consulting firm where I was a partner at the time was putting on an innovation-related event and had gathered enough C-suite executives at major companies that Segway sent its president to do a presentation in early 2002. He was slick: He had us set up a ramp so he could bomb down the center aisle on a Segway and up onto the stage. He did the whole talk on the device, darting to some spot on the stage, drifting back to the center and generally showing how the Segway seemed to respond to his thoughts. Just to show off, he’d occasionally do a 360.

He brought a few of the devices with him so the 70 or so of us could take turns experimenting with them in the desert near the resort in Arizona where we were holding the conference. All I had to do was start to think about heading somewhere, and the Segway would do the rest because it sensed my balance shift. Whenever I’d worry about going too fast, the device would sense my hesitation, and I’d slow down. The Segway didn’t have brakes, a throttle or a steering wheel, but it felt like an extension of my body.

I’ll always remember Dan Bricklin, who invented the electronic spreadsheet and who was a fellow with the consulting firm, repeatedly asking people to try to run him over. They couldn’t. They’d build up a head of steam, but then the user would worry as he or she got close to Dan, and the Segway would pull up.

Kamen had already developed a widely used insulin pump and other medical devices, plus a wheelchair that could climb stairs and raise the user to eye height; the Segway was to be his crowning achievement. Steve Jobs said the Segway could be bigger than the personal computer. Venture capitalist John Doerr, who put up funding, said the Segway could be bigger than the internet.

Nope.

The company hoped to sell 100,000 Segways in its first 13 months but sold only 140,000 over the nearly two-decade lifetime of the product. Shutting down production next month only means laying off 21 people.

The key problem was that Kamen and his supporters convinced themselves that cities would be redesigned to adapt to the Segway — a colossally bold claim that, alas, turned out not to come true. In fact, as usual, the Segway needed to be doing the adapting, and it just wasn’t very well set up to fit into the existing ecosystem.

I happen to think that cities need some redesigning — they’re far too car-centric — and the pandemic has provided such a shock to the system that it could accelerate change, but so many trillions of dollars are invested in the current setup that rethinking will take many years, even decades. In the meantime, the Segway was going to have to either fit on the street or on the sidewalk, and it did neither well.

The sidewalk would work, in theory, but only in light traffic. In New York City, you don’t gain much advantage from a device that goes 10 mph or 15 mph if you’re dodging pedestrians who are walking at 3 mph to 4 mph (and who are telling you what you can do with your Segway, in that charming way that New Yorkers have). You also, of course, have to deal with the elements for much of the year, while you’d be protected from them if you’re in a car or taking the subway. Even under the best of circumstances, Segway riders were told to wear helmets, knee guards and elbow guards — fine if you’re a kid but not so great for professionals who aren’t willing to live with permanent hat hair.

Streets are a nonstarter. Someone on a Segway would be moving much slower than the rest of traffic and without the protection that tons of metal provide for those in vehicles. Even in a modified bike lane, the bikes and Segways could wind up going at very different speeds and getting tangled up.

There conceivably was a strategy to be had by working from the edges in. Perhaps if Kamen had seeded smaller cities, as Lime, Bird and other scooter companies are now doing (while facing their own troubles), and let popularity build in ways that would attract bigger markets. Perhaps if Segway had gone after discrete markets in controlled environments, such as warehouse workers, tourists in areas without cars and — dare I say it? — mall cops, then built from there rather than expecting cities to completely redo themselves from the get-go.

The good news is that insurers can learn from the Segway mistakes and, based on the thought leadership I see in the industry, are, in fact, beginning to pay serious attention to the demands of and opportunities in ecosystems.

There are three basic ways to do that: 1) join someone else’s ecosystem; 2) invite others into yours; 3) or participate in and foster an ecosystem that has many parts but not a clear leader.

Joining someone else’s would be, for instance, selling microinsurance through a shipping company that would offer the opportunity to bundle your coverage into the cost of carrying cargo. There would seem to be loads of such opportunities to bundle insurance distribution into car and home sales and all sorts of services supplied to businesses.

Having someone join your ecosystem would, likewise, be straightforward. You sell auto insurance, and you invite a roadside assistance provider to bundle its services into yours. You sell home insurance, and you offer security or maintenance providers the opportunity to plug into your relationship with the client.

Participating in or fostering an ecosystem without a clear leader (just yet) is less straightforward. At the moment, I’d say insurers are mostly consumers of information in these ecosystems — pulling in publicly available data to save people time when filling out forms, gathering the full history of construction work on a building, etc. — but, within the bounds of regulations, will become suppliers of information and relationships to others.

If the world of technology is any guide — and it generally is, because all industries are becoming technology industries — participating in ecosystems and forming them will become easier. That’s because business processes will increasingly be connected via software, which means that every action and decision has to be super-well defined (via an API, for application programming interface). Once processes become like software modules, they snap together at least as easily as the apps on your smartphone.

So, competition will increasingly be based on ecosystems rather than on your native competitive advantage. Perhaps your underwriting, combined with someone else’s distribution system (even from outside insurance) and a third-party claims system will compete against some other ecosystem.

The change to full-on ecosystem warfare is probably a ways off, but the change will be profound. Think back to MS-DOS, for any of you unfortunate enough to use it. It wasn’t close to the best operating system, but it had assembled the best ecosystem based on the software that ran on it and on customer relationships, so it beat IBM’s OS/2, all the flavors of Unix and even the Mac — until Jobs assembled an even better ecosystem via the iPhone.

We’ll never be as inventive as Dean Kamen, but that doesn’t mean we can’t be more successful than the Segway was, if we learn the right lessons about ecosystems.

Stay safe.

Paul

P.S. Here are the six articles I’d like to highlight from the past week:

5 Transformations for a Post-Pandemic World

COVID-19 may be the much-needed impetus for change for insurance organizations operating based on decades-old procedures and tactics.

Insurers Can Lead on Addressing Inequality

Apprenticeships can attract talent from among the underserved, and an industry initiative now makes the opportunity widely available.

Ready for Era of Real-Time Payments?

Consumers and service providers increasingly expect the same frictionless payment experiences they have in other sectors of the market.

Ransomware Grows More Pernicious

The emergence of the Maze variant creates a new threat, that stolen information will be released to the public on the internet.

5 Trends Changing Auto Insurance

Will insurers continue to provide traditional insurance in traditional ways until forced down a dead-end path, or will they embrace new trends?

Time to Streamline Group Benefits Quotes

Current, AI-based technology can cut response time for group benefits quotes by as much as 92%.

15 Hurdles to Scaling for Driverless Cars

Will the future of driverless cars rhyme with the history of the Segway? The Segway personal transporter was also predicted to revolutionize transportation. Steve Jobs gushed that cities would be redesigned around the device. John Doerr said it would be bigger than the internet. The Segway worked technically but never lived up to its backers’ outsized hopes for market impact. Instead, the Segway was relegated to narrow market niches, like ferrying security guards, warehouse workers and sightseeing tours.

One could well imagine such a fate for driverless cars (a.k.a. AVs, for autonomous vehicles). The technology could work brilliantly and yet get relegated to narrow market niches, like predefined shuttle routes and slow-moving delivery drones.  Some narrow applications, like interstate highway portions of long-haul trucking, could be extremely valuable but nowhere near the atmospheric potential imagined by many—include me, as I described, for example, in “Google’s Driverless Car Is Worth Trillions.”

For AVs to revolutionize transportation, they must reach a high level of industrialization and adoption. They must enable, as a first step, robust, relatively inexpensive Uber-like services in urban and suburban areas. (The industry is coalescing around calling these types of services “transportation as a service,” or TaaS.) In the longer term, AVs must be robust enough to allow for personal ownership and challenge the pervasiveness of personally owned, human-driven cars.

See also: Where Are Driverless Cars Taking Industry?  

This disruptive potential (and therefore enormous value) is motivating hundreds of companies around the world, including some of the biggest and wealthiest, such as Alphabet, Apple, General Motors, Ford, Toyota and SoftBank, to invest many billions of dollars into developing AVs. The work is progressing, with some companies (and regulators) believing that their AVs are “good enough” for pilot testing of commercial AV TaaS services with real customers on public roads in multiple markets, including SingaporePhoenix and Quangzhou.

Will AVs turn out to be revolutionary? What factors might cause them to go the way of the Segway—and derail the hopes (and enormous investments) of those chasing after the bigger prize?

Getting AVs to work well enough is, of course, a non-negotiable prerequisite for future success. It is absolutely necessary but far from sufficient.

In this three-part series, I look beyond the questions of technical feasibility to explore other significant hurdles to the industrialization of AVs. These hurdles fall into four categories: scaling, trust, market viability and secondary effects.

Scaling. Building and proving an AV is a big first step. Scaling it into a fleet-based TaaS business operation is an even bigger step. Here are seven giant hurdles to industrialization related to scaling:

  1. Mass production
  2. Electric charging infrastructure
  3. Mapping
  4. Fleet management and operations
  5. Customer service and experience
  6. Security
  7. Rapid localization

Trust. It is not enough for developers and manufacturers to believe their AVs are good enough for widespread use, they must convince others. To do so, they must overcome three huge hurdles.

  1. Independent verification and validation
  2. Standardization and regulation
  3. Public acceptance

Market Viability. The next three hurdles deal with whether AV-enabled business models work in the short term and the long term, both in beating the competition and other opponents.

  1. Business viability
  2. Stakeholder resistance
  3. Private ownership

See also: Suddenly, Driverless Cars Hit Bumps  

Secondary Effects. We shape our AVs, and afterward our AVs reshape us, to paraphrase Winston Churchill. There will be much to love about the successful industrialization of driverless cars. But, as always is the case with large technology change, there could be huge negative secondary effects. Several possible negative consequences are already foreseeable and raising concern. They represent significant hurdles to industrialization unless successfully anticipated and ameliorated.

  1. Congestion
  2. Job loss

I’ll sketch out these hurdles in two more parts to come.

Is This the Day the Data Died?

Who can forget Don McLean’s iconic “American Pie”? Released in 1971, it was a four-week No. 1 hit in the U.S. It is listed as the No. 5 song of the century by the Recording Industry Association of America (RIAA) and the National Endowment for the Arts. The original 16-page manuscript sold for $1.2 million last year.

For me, the most memorable line in the nearly 800-word, eight-and-a-half-minute song is: “The day the music died.” It marks Feb. 3, 1959, where there was a seismic shift in music. The senseless and untimely deaths of rock-and-roll legends Buddy Holly and the Big Bopper (J.P. Richardson) are interpreted in highly symbolic and blurry verbal pictures.

After the recent presidential election, the question before us is whether Tuesday, Nov. 8, 2016, will become known as “the day the data died.”

No matter your political or ideological viewpoint, no one predicted what happened at the polls. Even with mountains of data and 21st century technology, mainstream media and academia completely missed the mark — and not by a little. We now know that the data wasn’t just slightly off track; it was a couple of interstate exits away from reality.

See also: Some Things Are Too Important for Paper

To try to figure out where we in the insurance industry should go from here in terms of thinking about how to use data and of projecting trends, I revisited a number of new technologies that either did not live up to the hype or just never achieved the projected dominance. Here are some of my favorites and their potential insurtech applications:

Quadrophonic Sound

Debuting in 1971, it had four-track sound instead of a stereo’s two. And everyone knows more is always better. Quadrophonic sound was portrayed as not just sitting in front of musicians but sitting in the middle of them. I actually bought a quad system with four speakers and some tapes. The problem was that there are about a billion ways to produce recordings, and no single format was ever agreed on.

Implications for Insurtech

Standards are vitally important for insurance data exchange and widespread blockchain deployment and success. But, as a McKinsey report noted, the insurance industry is not known for its cooperation, its creation of standards, its adoption or its enforcement of standards.

The Segway

Steve Jobs said it would be bigger than the PC. Time magazine called it “reinventing the wheel.” Venture capitalist John Doerr (who backed Netscape and Amazon) said it would be bigger than the internet. Jeff Bezos spurred huge hype, saying the Segway “is one of the most famous and anticipated product introductions of all time.” With pre-orders from the National Park Service and the U.S. Postal Service and with more than $90 million in venture capital funds, the Segway’s inventor, Dean Kamen, said it would be to the car what “the car was to the horse and buggy.” All original 6,000 Segways were rapidly recalled because of customer injuries when the battery was low. While it has bounced back a little bit, the Segway never lived up to its hype.

Implications

If you Google “insurtech,” you get more than half a billion hits. With more than 800 insurtech startups and almost 150 deals worth $3.5 billion of investment since 2015, insurtech is a force to be reckoned with. There is more than enough hype to go around. Remember that just because an analyst, consultant or media outlet writes about a company or technology does not mean it is destined to take over the world — or even survive.

Microwave Ovens

Everyone reading these words probably just about blew a gasket when they saw microwave ovens on this list of technologies that have not lived up to their promise. With more than 100 million units shipped in the past 10 years, how could microwave ovens be declared a failure? Well, microwaves were originally advertised as the death knell of traditional ovens. It’s not that microwaves are a failure, per se, it is that they never lived up to the hype. More than three million traditional ovens are still being sold annually, with a full 33% increase in sales over the past five years. As microwave radiation (yes, radiation) is used to heat water inside of food, it cooks from the inside-out. While microwave ovens are great for popcorn and reheating, they still cannot brown or fry, nor are they terrific for baking. I once caused a minor event (a fire) at work when I reheated some chicken in the microwave. I had failed to notice that the paper wrapping from the grocery store where I bought the chicken was lined with foil. While the ensuing fireworks and smoke were entertaining, my coworkers were less than thrilled.

Implications

While I keep count of the number of times I’ve ridden Pirates of the Caribbean in Walt Disney World (42 as of this article), I have completely lost count of the number of times the death of the mainframe was pronounced with great fanfare and assurance. The tablet was supposed to replace the PC, but, like the microwave, it has become a complementary device. We all need to exercise patience and caution whenever the next “bright shiny object” is set forth.

Razor Phone

No, this is not a spelling error or an April Fools’ prank. Not only did someone actually think it was a good idea to combine two wildly different technologies in a single device, someone else approved and financed it. I find it hard to understand what a cell phone and electric razor have in common other than they are both battery powered and operate next to your face. Having a similar name to Motorola’s Razr phone turned out to create colossal confusion; the bottom line is that consumers were not at all attracted to this “cutting edge” device.

Implications

Putting together different technologies may make some sense or add value on the surface, but it may also have unintended consequences. I once worked for an insurance company that built a 40-story headquarters. It aggressively employed all the latest safety designs and technologies. One Monday morning, I woke up to discover that I could not go to work because of a significant fire on the fourth floor. It was later discovered that an office machine caught fire and burned undetected for about eight hours, causing considerable damage and disruption to the company. How could a fire burn that long without being detected, you may ask? The problem was the same as the Razr Phone: two technologies that seemed to make sense but had results that were problematic (at best). Smoke detectors were imbedded into the ventilation system and, to conserve electricity, the ventilation system had been turned off over the weekend, disabling the smoke detectors’ sensors. With no smoke detectors, the fire was allowed to burn until an overnight computer operator happened to open the door to the 25th floor stairway. With smoke billowing out, the operator manually pulled the fire alarm. One other note: With its reliance on all the latest technology and fire resistant materials, the building did not have sprinklers, much to the chagrin of the insurance company, the architect and city officials who approved the plans. A state-of-the-art sprinkler system was retrofitted, costing much more than if it had been installed during the original construction.

See also: The End of Leadership as We Know It?  

While no one should boast about the outcome of the recent elections, we all should question what is going on when it comes to the media and “the experts” who proudly boast they know the truth because they have the data.

In these cases, their feet were firmly planted in the air.