Things that have fewer, but better features, start trumping the things that are overloaded with features.
Things that have fewer, but better features, start trumping the things that are overloaded with features.
Things that have fewer, but better features, start trumping the things that are overloaded with features.
Competition, Luke says, is coming faster than ever. With such a low barrier to entry products that compete feature-for-feature are incredibly easy to produce – products now need to differentiate themselves through the quality of the experience, not a vast array of features.
When they launched it [Quickbooks], it was twice the price, and half the features of other stuff out there, but it surpassed the market leader three times over. It actually had a glaring bug, too, that it erased all over your data.
It's not that the sales guys or the engineering guys or the marketing guys or the legal guys or the user experience guys are doing anything wrong. They're just looking at it from their perspective. Right? They're looking at it inside-out. But if you look at it outside-in somebody comes to this form and they're like, 'Holy crap! Forget it!' You know. 'I'm not going to contact these guys!'
In an organization the size of Yahoo! there can be five or six divisions all chiming in on a page, or an interaction, or in this case a form – but they're thinking inside-out, examining the product from the standpoint of the company, not th consumer. Luke says companies need to think outside-in, see things from the user's point of view and design something they'll get value from.
Luke told us a story about Kun-Hee Lee, chairman of Samsung. When he looked at his company and saw that they were producing mediocre products and losing market share worldwide...
He gathered all his employees in his factory, out in the courtyard. He had them take all the things that they were working on and put them in a giant pile. And he lit it all on fire in front of them.
A commitment to excellence can be the difference between struggling as a company and becoming the market leader. As Lee said to his employees, 'change everything except your wife and family;' committing to excellence is a commitment.
We had a great time listening to Luke and took a lot away about how to better focus on product excellence. He had some great points covering everyone from YouTube to Apple – for all that subscribe to the podcast and check out the presentation PDF.
Luke: When they launched it, it was twice the price and had half the features of other stuff out there, but it surpassed the market leaders three times over. It actually had a glaring bug, too, that erased all of your data.
He gathered all the employees of this factory out in the courtyard; he had them take all the things they were working on and put them in a giant pile and he lit it on fire in front of them.
Products that get returned, half of the reason why people return them is because they can't figure them out.
I'm going to give you guys a little context about this talk. I actually pulled this talk together in December of 2006 for an executive off-site at Yahoo. At the time the company was still doing pretty good but we were getting to the state where we were realizing that the quality bar for some of the things we were doing had been falling as the company had been growing. We were on yet another big growth leg, and lots more people joining, lots more things happening, and when you do that it's more challenging to keep things at a consistent level of execution.
This talk was around the EVP of what was at that time the Yahoo network, which was our first time pulling all our products together under one leadership. Previously Yahoo ran as a bunch of separate entities, and that has changed a lot but you can tell Yahoo Sports is completely different from Yahoo Tech or what have you, because those were literally almost standalone companies within the big umbrella.
We got on the bandwagon of "hey, we can actually pull these things together and make something more interesting." So this was the first off-site for that group of all the products together. The leader at that time, [inaudible 01:50], really believed in making things great and wanted to instill in people what does it take to do that, because as I mentioned before, this diversity of leadership and diversity of different teams had resulted in different levels of quality and output across the board.
I gave this talk at his off-site and I gave it at a couple of all-hands in Yahoo for the entire network team. Since then it sat in a folder on my computer for about two years. I still think a lot of the stuff here is relevant, so let's see how it goes. Given that we're at 12:30 and I have a bunch of stuff in here, I'm going to shoot through the first part and get to the more interesting part, spend a little more time on that. By the way, interrupt me if you have questions or want to say something, it's a good forum for that.
I'm Luke, and I spend most of my time doing digital product design, or managing a team that does digital product design, working with a whole bunch of disciplines to make that happen. But I also do reading and writing about design and digital products and things like that. As a result a lot of that reading and writing leads to higher-level thinking about it and putting together some structures around it, which loops back into actually making product. This talk pulls from a lot of the reading and conferences and these sorts of stories that have been around and I've been exposed to, and I try and tell a little bit of a story about that, about what it actually takes to make great products.
Before I do that, and this some of the stuff I'll go over really quickly, you might ask what the heck is product excellence, and when you're a large company you have to define things because there are lots of different people who have lots of different opinions about what's what. I don't think there's a specific definition of what makes a product great, and this is one of the reasons why there's diversity in how people evaluate what's coming up.
A good example of this is diagram from Donald Norman's book The Invisible Computer that he authored a long time ago. It basically highlights a couple of different stages of what's happening as a technology or a product grows. In the beginning there's this big unfulfilled need that people either know they have or they don't have and there's nothing there.
Things start filling it and as people say "Ooh, it does the one thing I like, I wish it did more," features start piling up, and after a point you hit this area where it's good enough, and all of a sudden people start adding more and more crap and people aren't interested in it anymore. Pure function is the first thing. If it's the one thing that does what nothing else does or what I didn't know I needed to get done or wanted to get done, people are going to be happier it works and hits this need.
In the second stage which we call feature wars, the number of features starts to matter because people make their buying decisions about how much stuff does this have. They don't really understand what each feature does, they can't evaluate on a distinction between features, so more features equals ooh, that one's better. As you flip this transition you enter a state called, or what Jared Spool calls, and I'm quoting him on these labels for these phases because I think they're kind of nice, "The experience and total cost of ownership matters most." Here, things that have fewer but better features start trumping the things that are overloaded with features.
Last but not least things become commoditized and absorbed into a broader product mix. You can think of things like the DVD player. How many people go out and buy a standalone DVD player? It's in this computer, it's in your car, it's in every single other device. On the web front, I think instant messenger is moving to the commodity front. It's just a feature in an experience as opposed to a standalone product. The first thing was "ooh, I can chat with people," then it got killed with features, and then you saw a lot of people try and answer into simplifying that experience, we at Yahoo have actually done that as well. The biggest growth we've had in messenger has been in integrating it into mail, and Facebook recently integrated messenger into their products and so forth.
What makes something good in terms of product excellence is different depending on where you are here. It's not always the same evaluation criteria. I think it gets even more specific. If you look at even one of those phases in the feature wars group, these are diagrams that say the same thing.
In here evaluating what makes a good - actually, this Harvard Business Review diagram probably says it best. If you're trying to maximize for repeat sales, a lower number of features might actually optimize customer response. If you're trying to maximize for somebody's lifetime value you might want to hit somewhere in the middle. If you're trying to maximize for initial sales in this kind of feature wars period then you might push toward more features to get a better customer response.
The definition of what makes something excellent from a product perspective is dependent on where it's at in the life cycle and even within the lifecycle there are some other factors you can take to evaluate how good it is.
One of the things that led us to focus more on excellence in stuff we're doing is that we're increasingly playing in this experience war space. The reason why I think that happens has a couple of parts. One: people adopt new technologies at really fast paces. This is analog color TVs, you can see it was a pretty good curve; VCRs; but look at DVD players it's just wham. The rate at which people adopt new technologies as you move through time has really accelerated. If something new comes in it gets utilized much faster.
Customer acquisition, this is Skype's growth curve. In the first 25 months of the company they ended up with 55 million customers which at the time made them the fastest growing application ever - I think I like on Facebook has actually surpassed them recently. But think about that for a second. Within two years you have 55 million customers. That propels you to where the experience for all these customers matters.
Another thing that happens is faster revenue growth. If you plot years of inception against real money that these companies are making and you look at some of the "best" companies - very recognized powerful brands - Dell, Microsoft, Starbucks - and you look at the new age of companies that are coming up after them, the growth curves are sharper and more immediate. So revenue growth happens faster as well.
Another thing that's happening much faster is competition. YouTube launched in 2005. When they were sold to Google two years later there were 100 competitors that could match them directly in terms of features. This is a listing of all the sites out there that had video upload, commenting, sharing, favoriting, all this stuff. Within a year and a half from these guys launching to when they were actually bought, 100 people could match them feature for feature.
So all these things lead to this sort of metapoint, around we're moving up this curve very, very fast. Faster adoption of new technologies, faster customer acquisition, faster revenue growth, faster acceleration of competitors and so forth. Therefore you get more into experience wars sooner than you would have for a long amount of time. Therefore a lot of the product excellence principles begin to matter more and more here and that's what you start seeing in the marketplace at least in terms of how companies try to position their stuff.
The other reason I think product excellence begins to matter is because our access to information technology is creating very complex media products and services. Every day, and this is again from two years ago, there are 60 billion emails sent and 1 billion text messages and around 500,000 blog posts per hour. And if you think that's the realm of nerds on the web, well, take a look at a typical story right on CNN: there are two stories ongoing, three indices, a scrolling feed of multiple things. There's a heck of a lot more complexity.
And it's not just news. This is a diagram from Steven Johnson's Everything Good is Bad for You which shows the complexity of TV plot lines in broadcast media. Back in the Dragnet years it's one storyline the whole show. Starsky and Hutch introduced a radical extension of the complexity of plots, wherein they started one story at the beginning, ran a whole other story, and then ended the other story at the end. Hill Street Blues actually got pretty complex in the 80s in that they ran multiple narratives through a show but very rarely did those coincide at the same time.
If you look at The Sopranos which ran for the past five years or so, not only do you have somewhere around 8 plot lines per episode but many of those plot lines are intersecting across one, two, three, four at a time.
Audience Member: [inaudible 11:56]
Luke: Throw Lost in there now - I don't know what that one's going to look like.
Audience Member: That would look like a checker board.
Luke: This isn't the realm of nerds, Lost is a great example. This is popular broadcast media right now and it's increasingly complex. In terms of not just storylines but the relationships in these stories. If you look at Dallas, which is the quintessential example of a complex web of social mystery, it's actually not that complex. Whereas look at 24, and oh my goodness, you don't even know what's going on anymore. 24, also a very popular show right now.
Speaking of social networks if you look at any typical web product out there now there are all these contribution systems, ways of participating, reviewing, tagging, commenting, discussing. There's all sorts of ways that you can share, collaborate, email, save list, subscribe, add to your site, download, embed, what have you. There are all these different features and functions that tie all this stuff together.
The metapoint is things are more complex and we should care about things being more complex because when things are very complex, this was a study done in March 2006 that showed that of technology products that get returned, half of the reason why people return them is because they can't figure them out, because they said they were too complex or too hard to use. Therefore we care about good product design because if we have good product design it helps manage complexity.
This is an example I like to use for that. This is a system for monitoring the health of a network. How's my network doing? Do I have a problem? Should I call somebody? Should I be concerned? Whereas if we do a redesign of this and you put in a little bit of a communication layer and drive a narrative, you can say "threats are actually kind of high, there are worms and recon attempts happening, I've got a few exposures but thank goodness some defenses are firing" and you can overall see when these things are happening in time, to what traffic, and so on and so forth.
Pulling the design process to this can help you make sense of increasing complexity which is another reason why I think product design and product excellence matters more now. Hopefully, and this is the part I kind of whizzed through, hopefully, I convinced you it matters. It matters because there's a lot more complexity out there that we need to manage, and it matters because we're increasingly moving up that technology life cycle and you get to a state where just working isn't good enough, very quickly. Yeah, it works, okay, this guy already has ten more features on it. You start moving to a place where experience matters.
So if product experience matters, what makes for a great product experience? Sad to say there isn't a 1-2-3 formula. But I think there are a couple of things we can learn from examples out there that I think are pretty meaningful. This is how I wrap these up: the first one is thinking outside-in. What I'm talking about there is the ability to leverage both insights out in the world, what people that are using your products are doing, and the capacity to actually talk to them in coherent single perspective. Let me illustrate that through stories.
Anybody familiar with Quicken? Triple growth in each of the first three years it was out. But each year, and this was a home, personal kind of finance system. Each year Quicken would go and run this survey, and they were asking people how are they using Quicken and so on and so forth.
Every single year in the survey there would be this anomaly. The anomaly was "we're using Quicken in the office." The company was absolutely convinced that this was some kind of weird fluke, this was a home product, why would people be using it in the office? It's nothing that matters, let's ignore it.
After three years, however, they began to think, well maybe there's something here. What they did is they started some studies where they actually went to people's houses and saw how they were using Quicken. They observed that what they were doing was actually doing accounting without accounting software, if that makes sense. QuickBooks which is this follow-on of small business software was the first accounting software without accounting.
When they launched it, it was twice the price and had half the features of other stuff out there, but it surpassed the market leaders three times over. It actually had a glaring bug, too, that erased all of your data, completely erased all of your data and so on and so forth.
But the reason why they were able to have this growth and now 95% of their revenue comes from QuickBooks, the reason why they were able to have this opportunity is through insights. They went into people's houses, they saw firsthand how they were doing accounting, and they designed the product in ways that people could [inaudible 17:01].
They didn't use accounting terms, they didn't use accounting practices. They used things that they observed people saying in these take me home or go to my house studies. That's an example of leveraging insights to think outside-in. When I say think outside-in it's all well and good to look at things from your lens and your expertise and your company or your department or your group, but a lot of times the trick or the hard part is putting yourself on the other side of the wall.
How are people looking in at you? This is an example of actually doing that and having tremendous success at it. They were convinced that this was not a business product - because that was the internal perspective, this is a home product, this is our home product line, they probably had a group, home product division. When they went outside and looked outside-in at what they were doing they saw an opportunity.
Audience Member: [inaudible 18:02]
Luke: I guess I disagree with that. If you only have one customer, you can go over there and see what he's doing and talk to him. You don't need to have 50,000 customers. It doesn't cost you a lot of money. Fill your car with some gas and go over there with a notepad and ask him some questions. So I don't think it's a resource constraint issue.
I like to quote Jared Spool a lot because he's done - this is a guy who runs user interface engineering - he's been doing research for 30 years about how products get made, and he has a rule that says if you're not in front of your customers every six weeks then generally - from the research they've done of all these different companies, the people who are in front of or are talking to their customers at least once every six weeks tend to do a heck of a lot better. So that's insights.
Customer innovation is another way of looking outside-in. There's a nice story around eBay here. In 1999, eBay saw that people were beginning to use PayPal, which is an electronic payment system, to pay for auctions. It was trickling in here and there, it was the alternative to sending people a check which is what was happening before.
So eBay saw this opportunity and said okay, we're going to create an electronic payment system. They invested a ton of money in Billpoint and created this online payment system in 1999, but they built it from their perspective of how it should work. In February of 2000 there were 200,000 listings that used PayPal and 4,000 that used Billpoint. By April 2000, 1 million were using PayPal, and by October 2002 50% of auctions were using PayPal. eBay ultimately bought PayPal for $1.5 billion. If they had invested in PayPal or looked at what PayPal was doing three years earlier instead of going through their own solution, they could have saved themselves a bunch of money.
Audience Member: Coincidentally, Billpoint was actually acquired?
Audience Member: The business was only less than a year old before they acquired them so eBay probably had too much their own grip on the business before it allowed it to actually find out what it could do on its own. Kind of interesting.
Luke: This is the impact of ultimately buying PayPal. In Q4 2006, 11 billion total payment volume and up 36% year over year. PayPal turned out to be a second big growth leg of eBay.
I mentioned Skype earlier, and I think this is an interesting parallel that's going to illustrate my point here. Skype was growing like crazy. It grew faster than PayPal, faster than eBay, faster than Yahoo, it was through the roof. eBay looked at Skype and said oh my gosh, same kind of growth that was going on in PayPal, this thing's huge.
The problem was, you didn't see listings when people were like, "yo, Skype me! I'm selling this car, why don't we talk through Skype and figure it out?" It literally was not happening anywhere. What happened with Skype is in Q3 of 2007 they actually wrote off $1.4 billion which is about what they paid for PayPal.
So they lost close to a $1 billion on this system. The metapoint is if you look at what your customers are doing, again, this outside-in perspective it creates a very different lens and a very different opportunity. There's literally, in the systems that we build, there's a huge opportunity to "innovate" in digital systems, because they're flexible, looking at that and defining opportunities is a great way of identifying [inaudible 21:55] business. So Skype did not contribute to eBay in the way that PayPal did.
Last point around thinking outside-in is this notion of one voice. When people are looking at you from the outside in they don't see your marketing department, your inner structures, your processes or anything like that - they just see a single entity, they see eBay or they see Yahoo.
An example of illustrating this is - I like forms. Here's a really simple form and somebody says we need to create something that allows customers to contact us. Someone in the design or user interface space says I understand what requirements that might entail - I need who's contacting us, how can I get in touch with them, something for them to say, and then a mechanism for them to submit that information to us. Here's a simple wireframe or what have you that enables that.
Sales team finds out about this and they say hey, if we're going to be talking to customers we've got to know why they're contacting us, we need more contact information so we can follow up with them. Engineering says hold on, if we're going to actually be creating these record sets about users we have to be able to differentiate unique entities in our data structure.
We have to delineate first name, last name, have a comprehensive structure for address, laid out in terms of name-value pairs in our database. Marketing says you can't talk to our customers without us getting some demographic information. Are they male, female, when were they born, we have to understand more about these people. And by the way they all want to get these marketing messages from us, right?
But if you look at it outside-in, somebody comes to this form and they're like, holy crap, forget it, I'm not going to contact these guys. This is what I mean about one voice.
Here's another example of one voice. Where do you look? Everything's screaming over here, over here, no, no, no, me, me, me! Personally I gravitate to buying chicken breasts, hormones, and tire wax together. There's no unified communication with people here. Everything is trying to scream and yell at you. Conversely, look at something like VideoEgg or sites like this, the easiest way to get your video online, try it out. Oh, here's quickly how I can do it. So on and so forth. You look at it, you [Grockit 24:49] and you can start interacting, there's a single voice and message coming through with this.
The other nice example to look at outside-in is looking at unpackaging experiences. If I have a great video that I want to share with the world, someone tells me to go to Google video, this is the first thing I get: give me your email, give me your password, re-enter the password, remember me, create a Google account, enable personalized search. What the hell is personalized search? I'm just trying to get a video online. And then comes all this other stuff. It's an inside-out perspective. We need to make sure that people are enabled to make these options we have.
Contrast that to a site like Geni whose only purpose in life is to create the family tree of the world. You come to it, it looks like a family tree. You enter your first name, your last name, you click "start my tree" next thing you know you're adding your parents and your siblings and voila, you made a family tree. In the background it sends you a thing that says hey, if you ever want to get back to your family tree here's how to do it. And then they might ping you and say what's going on? But this approach gave them five million profiles in five months, through a focus on what are people trying to do and how can we communicate with one coherent voice.
This high-level section, think outside-in. Insights is, if you don't understand something that's probably the market telling you something. Customer innovation is trust what people are doing and also don't fight the tide. I see lots of companies that try and get in front of this giant freight train and stop it or turn it to the left instead of trying to hop on for a ride or add another car or what have you. One voice to people, we're one single thing, and when everyone's trying to scream at you actually nobody gets heard.
Audience Member: I'm curious what you think about the Yahoo's homepage?
Luke: That's a great question which I will -- Yahoo's homepage is the mother of all homepage redesigns, or mother of all homepage designs. There are 625 million registered users. There's significant revenue vested in it, so the constraints around that design problem are substantially higher than they are anywhere else. And a lot of the things you see on there are artifacts of those constraints. It's a different world where, let's just remove this thing, well actually 20 million people use that thing. Well, that may only be 10% but it's still a huge quantity of stuff, so the balancing act there is very, very challenging. We're actually in the middle of a redesign of the front page which I have a whole other presentation on, if you're interested I can send it around.
Audience Member: A follow-up question. How do you push this throughout a larger renovation like Yahoo? I know even at a small or medium sized company getting a very experienced perspective out there can be very challenging. You don't know . . . Do you know what I mean?
Luke: Takes a long time, takes a really long time.
Audience Member: isn't that how you worked at Yahoo?
Luke: Yeah. I told you I made this deck two years ago and gave this presentation. At the time we started a small team that was focused on network experience. As of two weeks ago the new CEO, Carol Bartz, created a huge team called integrative consumer experiences where we pulled in mobile, we pulled in TV, we pulled in the front page, we pulled in all this other stuff. So it's happening but it just doesn't happen in a month or a day or anything like that. It's a period of investment. So far it's been a two-year effort to really drive this kind of change.
Audience Member: Like a lot of your time trying to evangelize this?
Audience Member: You try to keep out of people's faces? Or how do you push it without really pushing it, right?
Luke: That's a whole separate conversation too, a lot of people think that the way to get organizations to understand the value of design is to run around and say "design is valuable." It's like the equivalent of the accounting department, running around and being like, "accounting is great! This is how we do balance sheets and this is how we build depreciation worksheets!" Nobody cares.
They just want accounting to do what accounting does that helps everybody move forward. I think it's the same with our stuff. What we've always focused on is getting stuff done and making things happen and not trying to sell what we do. We try to make it part of how we work, but again, that's a whole separate animal.
Next up, know your core. I'm probably going to run a bit over so if you have to go, that's fine, I've got about 10 or so minutes here. Know your core, define yourself, focus, build outward. I ragged on eBay a bit, but I think they did a great thing, especially early on. Pierre Omidyar was great at what I call defining yourself. His basic mission was to create a level playing field for everybody, anyone can buy or sell something at a fair price.
If you compare where the company was in 2006 to this vision they knocked it out of the park. They were the 30th largest economy in the world, 34 markets, they had almost a million people full-time in the US selling on eBay, $1,800 sold every second. Relative to that, they knocked it out of the park. I think this is the core point around knowing your core, being able to define what you're trying to achieve. How can you look at these numbers and know whether or not they did what they were trying to do unless you're able to define yourself?
The other thing about core, is - actually, what do you guys think makes eBay tick? What's the thing that allows them to be this large economy? Anything in particular as part of the product experience that stands out?
Audience Member: Search.
Luke: Search, being able to find stuff?
Audience Member: [inaudible 30:49] cheaper.
Luke: Maybe the deals?
Audience Member: Immediacy of product.
Luke: Having the products there?
Audience Member: [inaudible 30:55] buy it now.
Luke: Buy it now?
Audience Member: [inaudible 30:59] get the right price?
Luke: Right price?
Audience Member: Trust?
Audience Member: What's the intern side of me?
Audience Member: Shut up intern.
Audience Member: I think it's a form of intermittent reinforcement. Every now and then you see a good deal that somebody gets and it entices like gambling.
Luke: So it's kind of the addiction thing?
Audience Member: [inaudible 31:18] training.
Audience Member: It's got the most stuff.
Luke: It's got a lot of stuff? So all those things play into it. A lot of people say it's feedback. If I ask what's at the core of eBay people say it's the fact that there's this feedback system so I know who I'm buying from, I know if it's a trusted thing or not.
I think that's crucial, but here's the really ironic thing about focusing on the core. You can define yourself but how do you create a product experience that brings that stuff to life? Personally, from my time there, I think that it's a simple UI element that runs the whole deal, which is that all your search results are default sorted by time ending soonest.
There are a whole bunch of other ways you can sort the information but what time ending soonest does is it means whether you're grandma in the garage or whether you're Walmart.com everybody gets equal time in front of the customer. Because whatever is ending soonest is showing up at the top. At any point in time everybody gets equal exposure to the deals, to the quantity and so forth.
Recently they've started mucking with this in a very big way, and I think that's one of the core symptoms of why they're not doing so hot right now. There have been these big buyers that have featured placement and all this stuff and they've really broken this level playing field model.
Another example of focusing on the core is Digg. Everybody might be familiar with this little example or not. But basically here, right in line you can just say I like this/don't like this. Kevin Rose, who was a founder of Digg, said that when they shifted to this one-click "like it/don't like it" the thing exploded and that made all the difference in the world. It was another core element of the product experience that helped define what this thing is, "like it/don't like it." They made it the focus, they made it super lightweight and super easy and the thing took off.
The last point I want to make about knowing your core is not building around or to the sides or through or what have you of the core but actually building from the core outward. Flickr is a service that allows people to take photos of something. Everything you do radiates out from that, you can put it in a photostream, you can organize it, you can put it in sets, you can tag it, you can share it with groups, you can favorite it, you can comment on it.
It all builds from that core, a sense of what the product does as opposed to building on top of it and through it. And actually, with the recent launch of Flickr Video, they didn't allow you just to put up video - it's a 90-second, long-term photo, is the way they think of it. It's not a video in the sense of a YouTube or a Hulu or anything you get on TV or anything like that, it's an extended photo, which again speaks to building on the core as opposed to around it.
So, know your core, being able to define yourself concisely, focusing on what defines you and keeping it really sacred, that was my point about eBay time ending soonest; building outward, going from it, and expanding in that manner, as opposed to smooshing it down or shifting it or what have you.
Last but not least, and there's a fun story coming up, is commit to greatness. I know that sounds like, hey, if you want to create excellent products, just be excellent, but there's a little bit more to it than that.
In 1995, Samsung was a third-rate player in electronics. The chairman of Samsung, Kun-Hee Lee, went out to Los Angeles and saw his products basically gathering dust on the shelves. He sent his friends Christmas presents and they basically all returned them to him and said we can't use these things. So the guy went to the company's main plant in Gumi; it's a city in South Korea where most of Samsung's handsets are made.
He gathered all the employees of this factory out in the courtyard; he had them take all the things they were working on and put them in a giant pile and he lit it all on fire in front of them. It was literally $15 million worth of merchandise that he smashed to pieces in front of them and lit on fire. And he said change everything about what you're doing except your wife and family.
Nine years later Samsung actually became the world's most profitable tech company. They had $10.3 billion in earnings and they enforced all these hardcore systems around how things got done. So designers had to take year-long courses in mechanical engineering; engineers and managers had to take design courses and so forth. And at this time, Samsung was responsible for %20.7 of Korea's exports. 20% of a single country's exports from one company.
Really bold move, right? This is what I mean about committing to excellence. If you're going to commit to excellence, you can't half-ass do it. You have to really make a bold move. This is Samsung doing just that.
The other point about committing to greatness is making the time. When Steve Jobs came back to Apple he had no badge or anything like that but he was coming in every now and then. And he - I should tell an earlier part of the story. [Cordell Stuart 36:27], who was running the OS design team at the time, there was an off-site when they were doing OS 8, where it was all the engineering team, the design team, the product team - actually there was no product back then - but the design and the engineering and the marketing teams.
They had this full-day off-site, at the end of the off-site the design team showed off these new concepts for where they thought the operating system could go, they'd been working on it in parallel. Basically the reception was everybody laughed them off the stage because they've felt like we've got way too much to do without trying to tinker with the UI and so forth.
Steve Jobs came back to Apple at the time and he pulled the team working on the operating system into a room and basically said you're a bunch of idiots, what you're doing with this operating system sucks and you have no clue what you're doing. They pulled out these concepts and he said oh, you might have a clue what you're doing, show me what you're really trying to do, so they worked their asses off.
For the next year and a half Steve Jobs, who is obviously a busy man, weekly met with the operating system team for hours, working through what the operating system would be, which turned into OS 10. This is the metapoint, if you're going to commit to greatness you've got to make the time. This is the CEO putting in a year and half of hourly weekly meetings looking at the details of the operating system.
The end result of that, this is 200 people in line in St Louis in a mall to buy an operating system. Think about that for a second, this is middle America, this is 200 people in a mall to buy an operating system, which is Leopard, that sold two million copies in its first weekend. So making the time had an impact.
The last point about committing to greatness is that there are two aspects to making this sort of commitment. You don't just make it at the high level and you don't just make it at the low level. You have to have the ability to drive and putt. Driving is putting together the vision, so to carry through the Apple example.
They have this vision of this digital music ecosystem, this is an example that Peter Merholz used a while back, where he said the iPod is this beautiful simple experience for playing video, the iTunes jukebox is a thing that takes all the complexity off that simple player. That's where you do your playlist, your rating, your altering.
The music store is the way you fill it with music, media, and games. It's this high-level vision of how all these things fit together, and that's the drive. But then to make it happen you've got to actually execute: iTunes one, two, three, four, five, six, and now they're on nine I believe. This isn't a big picture vision kind of thing, this is putting in the time and the mileage and the details to make all this stuff happen.
Similar story with the Wii. The high-level vision is what you're seeing here. It's surprising how many nursing homes have Wii competitions now, they compete with each other and so forth. This is the high-level vision, but in order to get there the Nintendo Wii had a number of core decisions.
One of the things they did was they really tried to lower the development costs for game developers - super simple graphics, really robust toolkits to create a Wii game. As a result when they came out they had lots of great games. It's only now that Xbox and PlayStation 3 developers are catching up with the capabilities of that system and actually creating good games, and those systems are now actually selling on the virtue of their games.
Low price point, that was another thing they committed to. And they also tried to lower the gameplay bar and make sure it's more accessible and fun. Those three tactical aspects of that high-level strategy I showed you before amounted to Wii selling 9 million under 9 months, fastest-selling console of all time. It literally outsells the PlayStation 36 to 1.
In terms of committing to greatness, partial commitments, partial greatness. This is my Samsung fire example, be bold in how you do that. Partial investment isn't going to give you that kind of return. Making the time, and then driving and putting. A lot of companies focus on the big drive, but the odds of you actually putting it in are very, very rare.
In summary, what makes a product excellent differs where it is on the product life cycle. We're increasingly facing things that are experience-war driven, if you will, so we need to distinguish things beyond whether it works or not. We have the capacity to manage a lot of complexity through the actual product design and product experience.
These are high-level principles that I think emerge from a lot of these stories. I don't want to say that there's a set formula for anything like this, but if you have a perspective of taking this outside-in angle on what you're doing, if you know what you're about and you build on top of it and define it well, and then if you commit to making great things by being bold and making the time and doing both driving and putting, I think that there's at least some traction you can get in this regard.
That's it, thank you.