The ten million dollar lesson

Last week, PDA pioneer Palm announced that it was canceling its soon-to-be released laptop, the Foleo.  The company will have to take a ten million dollar charge as a result. Product development is an unforgiving business. 

While many were enthusiastic about a companion to the Treo that could be used for email and web browsing, the product was said to be plagued by software problems and deemed not to be ready for prime time.  Palm also faced increasing pressure to complete its next-generation handheld operating system, especially with the launch of Apple’s iPhone, which was astonishing users with its innovative user interface.

So it was decided, according to Palm’s CEO, to refocus the company’s resources on completing its new platform.   From everything I have read in the press it was the right decision, though no doubt it was a very tough decision to make.  But all leaders face these situations from time to time, even in very successful companies.  Tom Peters would tell us that unless we experience a significant failure once in a while, we are not really trying. 

The real issue is, what do we learn from these moments?

Western companies tend to be fairly adept at implementing mechanisms, techniques such as root cause analysis.  But what really matters (and is usually missing) is a certain attitude, one that says that things can and should always be improved.  Japanese culture has the concept of Hansei, deep reflection for the purpose of self-improvement.  Hansei has been part of Toyota’s culture from the very beginning.

In contrast, most high-tech companies I talk to engage in deliberate reflection only when there is a real crisis.  A slight struggle is usually not sufficient to make people step back and question whether they are doing the right things and doing them in the right way.  Instead, people tend to just work a little harder and find workarounds for minor issues.  This is known in American business as “blocking and tackling”.  Leaders are expected to focus on getting things done, and looking back with regrets or doubts can make them look weak. 

When an organization continues in this manner for too long, it can easily go blind to dangerous problems and threats.   Software companies and IT departments often find themselves finding and fixing the same types of problems again and again.  Not a good way to impress customers and shareholders.

Many experts recommend that leaders manufacture the perception of a crisis even when there isn’t one (yet), just to get people to think and stay on their toes.  Leaders at Microsoft and Intel are known to try to maintain a sense of healthy “paranoia”. True to form, Toyota refuses to expend any energy boasting about how it is now passing GM to become the #1 automaker.  It is more concerned with meeting the challenges that its rapid growth brings.

Real or imagined competitive pressures do not make the ONLY good starting points for Hansei, however.  There is a saying in sales that the best time for a salesperson to do prospecting in product development, the most fruitful time for deep reflection in product development is probably when a team has experienced a big win or met a big milestone.   When people are at their most relaxed they also tend to be more mentally agile, energized, and creative.  That is a great moment to challenge your people to think of something even better.

I am a very happy Treo user, so I hope Palm learns its ten million dollar lesson.  That lesson probably goes something like the following: “Why did we not cancel this project much sooner?  We need to get better at listening to customers and responding by aggressively improving our existing product platform even when we are leading the market.”  And hurry.  If the iPhone had a capable task manager and a faster Internet connection I would probably switch.