Why Reed Hastings Didn’t Build a Faster Horse
By Zach Kliger
Henry Ford’s famous, and possibly apocryphal quote about faster horses is often cited in arguments against the customer-driven experience. For over a century, these words have stirred unending debate about innovation and product development:
“If I had asked people what they wanted, they would have said faster horses.”
Ford’s point was that customers don’t know the best way to actually build what they want. Since they can only see what’s in front of them (horses), it’s up to the innovator to dream up something new for them (the Model T). Acolytes of the late Steve Jobs have embraced this mantra in the form of his axiom: “People don’t know what they want until you show it to them.”
The Lean Startup and the gospel of the minimum viable product form an opposing camp, arguing that customer feedback is absolutely essential to successful product development. To them, it’s customer inquiry and constant iteration that leads to innovations that achieve product/market fit.
As often is the case, the real truth falls somewhere between those two schools of thought. Ford and Jobs are right that simply asking customers what they want isn’t productive. But, when a brand is humble enough to watch, listen and learn about how customers use their product, it opens the door to better experiences for those users. The key is parsing and understanding four-legged feedback that can inspire the combustion engine.
Prior to founding Instagram, Kevin Systrom and Mike Krieger created Burbn. It was an app designed in the mold of Foursquare, allowing users to make plans, hang out with friends, and post pictures. The app had been developed to bring people together in new places, and share those locations, but by paying attention to customer behavior, they observed that of the app’s features, users most enjoyed posting pictures with filters.
Kevin and Mike were perceptive enough to recognize that they needed to evolve their app to better suit what their users were already doing. What they intuited was not that their users wanted more filters; people enjoyed the photo sharing enough that the product could become an application specifically designed to do that. Now 500 million people use it every single day.
If Systrom and Krieger had held bullishly to their original vision, and not been humble enough to hear the story their customers were shaping, they almost certainly wouldn’t have built a product worth 100 billion dollars. Instagram’s success isn’t a fluke; it’s a reminder that the behavior of users is a blueprint for success — if you can read it correctly.
Remember BlackBerry? The keyboard phone that every high-powered executive carried in his pocket a decade ago? In its heyday, the Blackberry really was the ultimate smartphone, and it helped to pioneer one of the biggest technological shifts of our time. In ten years, Apple and Google have gone from plucky outsiders to the iPhone and Android being a ubiquitous and absolutely essential part of daily life. Meanwhile, BlackBerry closed up shop on phone manufacturing two years ago.
BlackBerry’s big mistake was that they stopped paying attention to the ways that the phone market was changing, and they stopped thinking about how to engage and excite new customers. As more and more users flocked to the iPhone and the new touch screen technology that would quickly become the standard, BlackBerry got conservative and stuck to their guns. They tried to protect what they already had, they refused to learn, and they faded into irrelevancy as a result.
A big piece of why BlackBerry fell behind was because they heard that their current customer base loved the keyboard. And they kept listening to a small subset of people who were saying that year after year as their share of the market dwindled. They paid a little too much attention to the vocal minority — a trap that is all too easy to fall into.
This is a textbook example of why parsing customer feedback is so challenging — and so important. It’s easy to start listening to the loudest voices and miss an incredible opportunity as a result. If there is one lesson to take away from the stories of Instagram and Blackberry, it’s that actions speak louder than words. More often than not, there is value in taking the time to understand the journey customers are on from their perspective, even if they can’t quite articulate it for themselves.
In 2011, while consumers were ditching BlackBerries for iPhones, Netflix tried to split their streaming and DVD rental services in two and charge separate fees for both. It’s hard to think of Netflix as a DVD rental service, but at the time, it was their core business. Customers were outraged: 800,000 subscribers quit the platform, the stock prices tanked, and the company was rated as one of the 10 most hated businesses in the US.
Netflix quickly learned to start paying attention to the right kind of behavior and to ignore the wrong kind of feedback. CEO Reed Hastings admitted his mistake and announced that the company would formally establish the brand Netflix as an exclusively video streaming service. The DVD rental line was relegated to a secondary brand, Qwikster, which met a swift and unceremonious end.
In the face of the loud outcry from their customer base, it would have been easy for Hastings to reverse course and cling to the DVD businesses as if they were the precious keys on his BlackBerry. What he recognized, instead, was that, despite the outcry, Netflix subscribers were widely embracing video streaming.
While the evolution wasn’t without its struggles, Netflix’s ability to distinguish between direct customer feedback, and the more meaningful understanding of customer behavior, was the turning point that transformed them into the behemoth they are now (130 million subscribers and more Emmy nominations than any traditional network).
Fundamentally, customers know their own pain points best — even if they can’t articulate them. It’s on the innovator to interpret them to develop solutions.
The key is to study behaviors closely and pay attention to what people love and keep coming back to. Systrom and Krieger did that with Burbn photo sharing. Hastings did the same with Netflix video streaming. All three refused to bow to the loudest voice.
They took the time to watch, to learn, to understand, and to empathize. They got under the surface of the issue and recognized a need for change, then they were decisive enough to make a bold move, even if many called them wrong for it at the time.
Companies must stay in touch with their customers and be prepared to take the next step forward. The world is moving faster than ever, and complacency is death, as BlackBerry eventually had to accept. One innovation is not enough to sustain success, no matter how brilliant it might have been.
Even Henry Ford had to learn that painful lesson.
As Patrick Vlaskovits of Harvard Business Review explains, Ford stopped paying attention to his customers’ desire for more than a single line of car — allowing General Motors to develop new car models that appealed to an increasing variety of market segments. Instead, Ford stuck to his guns.
“In 1921, the Ford Motor Company sold about 2/3 of all the cars built in the U.S. By 1926, this share had fallen to approximately 1/3. And in 1927, when Ford belatedly responded (at tremendous financial cost and internal strife) to changes in the market’s tastes and competitive innovation by shutting down production temporarily to re-tool his factories and bring the Model A to the market, that percentage fell to about 15%.”
Whether or not Ford ever said those words about faster horses, his actions prove that he wasn’t interested in empathizing with the evolving needs of his customers. In his hubris, he never thought of his customers as the hero of the story. He didn’t stay attuned to their real needs, and he paid the price for it.
No hero is ever going to figure it out on their own. They need help from a mentor who recognizes their strengths and their struggles and empowers them with some kind of gift to defeat the challenges in their life. Only the mentor — the business — can ultimately decide what shape that gift takes, but it’s useless without a customer to wield it.
The great innovators don’t ask customers what they want, and they certainly don’t just bring a minimum viable product to market and tinker with it until it gains traction. They recognize that a business is only as valuable as its customers make it, and that through truly empathizing with the customer’s journey and pain, they can understand not just the need for a faster horse — but for something more amazing than could possibly be imagined.
Zach Kliger is an associate at Woden. Whatever your storytelling needs may be, Woden can help. Read our extensive guide on how to craft your organization’s narrative, or send us an email at email@example.com to discuss how we can help tell your story.