market research

Is Febreze Disruptive? It Might Depend What Job You Hire it For.

I often start by reminding clients and prospects -- anyone who will listen -- that an innovative technology is a nice thing to have, and can certainly enable market disruption if it uniquely enables a large sustainable cost advantage, or a new way of doing things that is easier or more convenient. But technology is neither necessary, nor sufficient for disruption to occur.

Disruptive innovation is not about technology

Netflix was a good example in their early days. Yes, you placed orders for movies through a website, but there was nothing about the website that was novel or necessary in order to disrupt Blockbuster. In fact, they were considered a tech play because of the website, but there was nothing about technology that made Netflix successful (something they would have done well to remember when they tried to force an ill-advised price change on customers last year to combine streaming video and mailed DVDs). When Blockbuster added their own website and copied much of the mechanics of Netflix's ordering, it made no difference to their survival and did not enable them to prevent being disrupted.

Netflix's disruptive innovation was driven entirely by their business model. Apparently inferior to Blockbuster in the lack of physical presence to visit and browse movies and take something home to watch NOW (at least that's how Blockbuster positioned themselves against Netflix), they identified unmet and underserved market needs and created a new business model to serve them. By sending DVDs mail order from a central location, Netflix eliminated the huge cost of stores, and having inventory where it wasn't needed, and in the process enabled:

  • limitless catalog
  • convenience of not having to make a trip to the store either to pick up or return videos
  • low cost for high volume renters aka the best customers (flat subscription pricing rather than per video)

and removed friction in the rental process:

  • no late fees -- the number one complaint against Blockbuster and traditional video rental models
  • frustration when a desired title wasn't on the shelf

Dramatically lower costs could be passed on to consumers (and sustainable cost advantage is one of the key drivers of disruption), enabling rapid growth, and strong word of mouth helped Netflix avoid big marketing costs to grow.

What does this have to do with Febreze? Well, I started with Netflix because it is an example commonly misunderstood to be a technology-based disruptive innovation, when it really has nothing at all to do with technology, but is entirely about the process, the business model and the marketing. It's a company that most of us are familiar with, especially after its recent missteps, and it helps us make the leap to talking about a disruptive innovation that doesn't have any "tech" in it at all.

How the heck is an air freshener in a crowded marketplace an example of disruptive innovation?

Febreze is fascinating, because it started its life doing everything wrong, the way most "big company" new products are introduced to market. It was a product designed to be sprayed on draperies that reeked of cigarette smoke, a smelly sofa that was frequently inhabited by a wet family dog, or a room where cats had done their thing on the floor. It's purpose was to neutralize the odor.

The problem was, this was a made-in-the-boardroom problem. Although it seems reasonable to imagine that people are embarrassed and repulsed by these smells and would want to get rid of them, in the real world, the people who most needed to fix this problem didn't believe that they had a problem to fix. In the real world, people build up tolerances to smells the more they are exposed to them, and may even associate that "wet dog" smell with positive feelings. So, while any visitor to such a home might be hit in the face with detestable odors and wonder how people could live that way, the person who lives there has masked the smells in their mind and has no idea that their house smells like smoke, or like cat pee. And, even if they smell it a little bit, they certainly don't perceive their house to be unclean and in need of yet another kind of air freshener product.

So, when P&G launched Febreze as an odor-killing unscented spray in the mid-90s with ads targeting the homeowner's love for their pets, but hate for their smell, there was no resonance in the market with this messaging (might they have done better to target visiting friends instead?), and it was a complete dud in the market, with sales falling each month, rather than growing.

This scenario is laid out in a New York Times article (see pages 4 and 5 for the bit about Febreze) that details the work of behavioral researchers in understanding habits to influence purchasing decisions. The company was perplexed and sent researchers out to the field to try to understand what was happening with happy users of Febreze who were using lots of it, and what was different about them. Did they have more sensitive noses? Were they more anal about cleaning? Were they more socially embarrassed about the smells when visitors came over?

Febreze became an innovative market disruptor, almost by accident

It turned out that there were some avid users who had built spraying into their regular cleaning habits as a reward for finishing, so when the bedroom was finished being cleaned and tidied, a quick spray of Febreze on the comforter was the icing on the cake. When the laundry was clean, a spray of Febreze confirmed it. When the living room was cleaned and the sofa vacuumed off, Febreze was the finishing ritual. It wasn't that they perceived their homes to be dirty or in need of de-smelling, but that the spray at the end was a finishing detail to signal completion and get that little endorphin high that comes with completing something.

The happy ending is that P&G discovered this counter-intuitive behavior, and built this notion into their marketing. Sales exploded, to the point that it is today a best-selling $1B franchise. The now familiar ad template shows a giddy, self-gratified housewife who has finished the cleaning, gives it a shot of Febreze and closes her eyes to breathe in the warm fuzzy feelings. Or, more prosaicly, a quick spray when finished the task was the reward for finishing - the idea being to associate the product with habit formation and the good feeling of being done with the work and knowing that things were clean. In other words, rather than promoting it as a cleaning product, they are promoting it as something you should do after cleaning was complete.

So, the NYT article is about how statisticians and behaviorists are decoding habits and using them to sell to us, and the Febreze story is just a small piece of it, but it got me to thinking. What's interesting is that the original launch of Febreze was supported by conventional wisdom and conventional marketing. I'm sure they did research that confirmed everyone would like their homes to smell cleaner (a common symptom of bad market research is "confirmation bias", where people selectively remember things that confirm what they already believe to be true, or in this case, remember how much they dislike the smell in everyone else's home even when they don't recognize it in their own). Febreze would have been just another incremental and sustaining cleaning innovation, but for the discovery of this anomalous behavior of a few avid users. It may even have been cancelled for lack of sales had behavioral researchers not discovered the pattern of women using it when finished cleaning a room, rather than as a way to deodorize pet smells.

But hidden in the research story is that Febreze's ultimate success points to some critical factors that all "new market" disruptive innovations exhibit. Most notably:

job to be done. Early on, marketers positioned Febreze as an air freshener because they didn't understand the "job" that consumers were hiring it to do. It turns out that people didn't believe they had a smell problem. But, a quick spray at the end of cleaning a room created a habit-forming ritual that said "I'm done. This is clean and fresh and I can move on to the next room." A reward, and a signal of being clean, rather than a coverup of something shameful. Had the real job not been discovered, Febreze likely would have failed in the market as one of thousands of similar cleaning product innovations. By precisely targeting the job that the consumer identified with, they created positioning that is virtually impossible to dislodge them from. (Download this classic article which describes why identifying the job to be done is so important.)

target non-consumption. There were a small number of people who felt they needed a bandaid solution to mask disgusting smells. However, most people didn't recognize or agree that their house smelled bad, but did see a quick spray as a finishing touch -- almost like putting some sparkle on their lip gloss. By targeting the larger market of people who did not think their houses stunk and needed air fresheners as masking agents, but who did clean their houses, Febreze was able to identify a unique niche to dominate and grow from (now, people do buy Febreze as a quick fix to mask unpleasant odors, but that came later).

serve an unmet need. There was clearly an unmet need to signal "I'm done" and have a little celebration before moving to the next room. I suspect we all have this little celebration, whether we use Febreze or not, we step back and admire our work, smell the air. Febreze sprinkles the fairy dust that completes the job (that's how the ads seem to portray it). Originally unscented (because it was to mask odors, not replace them), Febreze now comes in many perfumed scents to leave behind the smell of "being done".

identify a new market. The new market for a deodorizing spray was people who viewed it as a finishing tool for cleaning. The people who it was originally designed for (those with smelly houses) didn't think they needed it, so the only way to sell it was to identify a new (adjacent) market where there was an unmet need.

Startups who are designing groundbreaking technologies that they believe are "disruptive" do well to remember these lessons. Disruption is a theory about marketing, not about product development or technology. To disrupt a market, you must be able to articulate a "job to be done" for which your target audience believes there is no better solution. You must meet an unmet or under-served need -- it's easier to sell to people who aren't part of the existing market (non-consumers who have opted out, and indicated that no available solution either satisfies the "job to be done" or is priced affordably), than to compete against incumbent solutions claiming to be better. And, you either need to be a "low-end" disruption (one which is targeted at the least demanding market segments based on pricing and sustainable cost advantage) or a "new market" disruption (create a market where none existed before).

Marketing and business strategy drive disruption

None of these characteristics have anything to do with building technology, but everything to do with appropriate segmentation, product positioning, messaging, and the compelling reasons why I would select your solution over all other available alternatives (which aren't necessarily products in the same "category"). Febreze ended up being a disruptive innovation because it succeeded (albeit after the fact) in marketing strategy, not because of how the product was designed.

Your thoughts?


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Boeing's Big Boo-Boo: Top 6 Innovation Takeaways (Part 3 of 3)

In this 3-part series, we dissect the failure of Boeing's inflight satellite-based internet service, Connexion by Boeing. In parts one and two, we discussed the flawed business model and massive marketing mistakes that inevitably led to nearly $1 billion in losses before shutting down the project. In this 3rd and final article, we ask what could have been done differently, and what lessons should be learned.

Recap: A 6-Year Long String of Failures

After looking at the cost structure, revenue models, poor assumptions about market size and demand, pricing, scale of operations and marketing strategy, the inescapable conclusion is that almost everything that could have been done wrong to bring Connexion by Boeing inflight internet service to market, was. Like so much other big company innovation, it was clear that Boeing had no idea how to go about launching and driving market adoption of this service, or how to design a business model that had a chance of working.

Part 3: What could they have done differently?  (Hint: Next time pretend you're a startup.)

Although not in any way a disruptive innovation, or even one with potential to disrupt, the Connexion by Boeing service could have learned a lot from how disruptive innovations are successfully brought to market and how startups launch products.

Here are some of the things they could have done differently and lessons that can be learned from Connexion's failure.

1) Business Model Design

The cost structure that this service was saddled with, from satellite bandwidth licensing to having a business unit with 560 people to incredibly expensive technology needed on each plane, boxed Boeing in. To get the service available in a large enough number of planes and at the right price point to make it economically viable, Boeing ought to have used a strategy more akin to the early dotcom successes like Amazon and Yahoo and Google.

If your product depends on a mass market to be affordable, then you have to seed the market to bootstrap it. That means pricing low -- even giving it away for the first year (like Skype is doing) to get people on the grid and addicted.

Ultimately, the pricing strategy needs to recognize what the average or downmarket consumer considers good value, not be a skimming strategy dependent on only those willing to pay the maximum.

Lesson 1: There are many possible variables in designing a business model, and what works in one scenario doesn't always work in another. Don't assume you got it right the first time, and don't scale your business before you know that it's viable.

    2) Fast Failures

    Boeing assumed that the service they wanted to deliver at the price they wanted to sell it for was the service that the potential customers wanted and were willing to pay for. There was no small scale testing of this before scaling the business into a 560 person business unit, locked into very expensive satellite bandwidth contracts, targeting availability anywhere in the world.

    Fast failure is a necessary part of startup methodology. The objective is to test the constraints, minimum viable product features and alternative business models, and assumptions about the target market. You expect to fail multiple times but learn from each failure until you arrive at the right configuration or determine that there is no product/market fit or viable business model.

    Big companies tend to see failures as something to penalize rather than something to learn from, which means when they fail, they fail big, just as Boeing did.

    Startups without the luxury of Fortune 500 cash backing them are forced to do things in a more lean fashion, and to test all their assumptions before committing them to the business model. This little bit of common sense might have been enough to work out the kinks without blowing a billion dollars, maybe even hitting profitability within months of operation.

    Lesson 2: Failing is a good thing in a startup if you do it fast, learn from it and pivot. In fact, it's a necessary component of identifying the right business model design and optimizing for success. It also costs a lot less than assuming you're right and failing slow.

    3) Cost Structure

    Lean startups need to keep their cost structure pared to the bone until they demonstrate that they have a business model that can scale because VCs wouldn't have it any other way. As noted above, Boeing built an outrageously costly platform making it virtually impossible for the service to be profitable unless every unrealistically optimistic projection came true, and boxing themselves into a price model that customers wouldn't buy into.

    Disruptive innovations tend to have the lowest cost structure, often by an order of magnitude. Boeing choose to implement almost the highest possible cost structure. This left the service vulnerable to lower cost technology advances (e.g. onboard conventional wifi from ground transmission stations and/or plane-to-plane daisy-chaining) that could be expected to compete in the future, undercutting and undermining Boeing's business model.

    Lesson 3: Always try to achieve the lowest possible cost that delivers a product/service that is "good enough" to satisfy your target market, and be conscious of technology advances that could obsolete your innovation using cheaper components or lower manufacturing and assembly costs.

    4) Network Effect Potential?

    One of the factors that strongly favors disruptive innovation is the existence of a potential network effect. In this case, there was a weak potential network effect that could have been exploited, which favored convenience and usability and faster time-to-critical-mass.

    Had Boeing promoted Connexion directly to consumers with a message that they could now get affordable (assuming the price was affordable, which in their model, it wasn't) internet access in the sky, using a single account with a single sign on and promoting the carriers that offered it, and gained a large subscriber base quickly, the other airlines would have to get on board or be left out of the game.

    Achieving this potential network effect / sole supplier status depended on having the right business model to begin with, and getting out of the starting blocks fast once product/market fit was established.

    Lesson 4: Always ask whether there is a possible network effect, and if there is, what you need to do to enable it. Don't get greedy in the early days, because networks can easily stall before reaching critical mass if you overprice or enable alternatives to establish viability.

    5) Customer Development

    The key idea here is that ideas about customer needs formed in a laboratory and without talking to customers are hypotheses, not an accurate description of real needs. The only way to uncover real needs and gain an understanding of who the market is and what its members are willing to pay for with a service of this nature is to go out in the field with a prototype/working model and observe and talk to them. Customer Development is the methodology most commonly used by successful startups to establish what the real needs are and get to Product/Market Fit.

    It appears that Boeing failed to understand that the airlines weren't really their customers, just gatekeepers. Unfortunately, for aircraft sales, the airlines are their customers, which complicates this enormously. Boeing probably shouldn't have been in this business, or should have found a way to work around this fundamental conflict.

    For this service to be successful, Boeing needed direct access to the end customer -- the passengers using the service. They needed to have a few market-test planes where the service was fully available, but could be run experimentally with different ways of constructing pricing. They needed to sit beside customers who were deciding whether or not to use the service and to see directly everything about its operation and the user experience, from how the customer pays to price barrier resistance to difficulties signing on to how it was communicated by flight crew to passengers.

    These and many more attributes needed to be known so that an affordable, easy-to-use, properly communicated and desired service could be introduced. Because this wasn't done, none of the obvious objections about usability, availability of power outlets, space to work, price point, etc. were encountered or thought of, creating numerous barriers to adoption.

    Lesson 5: Understand who your real customer is before you launch a service saddled with $1 billion in cost structure and have no way to reach them.

    6) Establish Product/Market Fit

    Establishing product/market fit is the process of identifying the compelling need that your target customer must have satisfied by the Minimum Viable Product, as well as all the assumptions that this is based on and the risk factors.

    If you haven't spoken to real customers, it's impossible to know whether your product/service innovation meets any compelling needs that they are willing to pay for. It's also difficult to uncover the risk factors that will inhibit adoption, or to know which assumptions are valid, and which are invalid.

    Boeing theorized that passengers were willing to pay for inflight internet access, but never validated that assumption with more than a flawed market survey, nor properly established if sufficient demand could be created at the pre-determined price point to have any chance at economic viability.

    They also didn't observe firsthand customers choosing not to use the service because they wanted to sleep, or to watch a movie, or because they lacked sufficient space to get value, or didn't have access to power or sufficient battery life -- they never learned any of the risk factors so that they could act to address/negate them, or pivot their strategy and work around the risks.

    Lesson 6: With any innovation, you must know how customers view the product, what the risk factors to viability and adoption are, what alternatives exist (to using your product -- they don't have to be direct competitors), what segment(s) you appeal to and what will motivate them to a purchase. You have to get out in the field with customers (not imagined customers) and see it yourself.

    Other Issues

    • Traditional market research instruments and focus groups are useless for designing non-sustaining innovations. They cannot uncover real needs and market drivers. The most you can expect from research with end-users is that they tell you their pain, not a solution or its value. After they've tried it in a real scenario, they can give lots of feedback about what's wrong with it. The conclusions of Boeing's research indicate that the survey used was an invalid research instrument that asked irrelevant self-serving questions - the sort used to fill press release content, not to determine customer needs.
    • Accessibility and Convenience. Every plane needed to be outfitted ASAP for this service to take off. Amazingly, it was not until this year that the first new plane was built and delivered with Connexion installed. Boeing should have made the decision to include it as a standard piece of equipment, and charge more if the airline said no. This way, there is no retrofit cost barrier to laggard carriers deciding to offer the service -- they could even conduct trials without having to plan years ahead and make big commitments.  Furthermore, the cost to retrofit existing planes should have been made much more attractive, even going so far as to bundle it with major maintenance service intervals at cost of materials, or cost of labor, whichever was lower.
    • Take responsibility for your own marketing. If you need to work through the carrier to reach the customer, do their marketing and business planning for them. A Connexion-in-a-box kit, because if they have to think, you've lost the game.
    • Pricing. What the market has clearly said regarding any communication/network service such as this (think landlines, cell phones, earth-based broadband, Tivo, even text messaging) is that it wants a reasonable (read: relatively low) subscription price which is capped, and which an average user perceives as good value. For example, if it costs me $30 for 2 hours of access, I'll wait until I'm on the ground and connect for free at the airport lounge (not free really, but I already have a subscription that works there). Very little email is that urgent, and I certainly won't pay that for gaming or to watch TV over the net.
    • What about the lack of carrier vision? Indeed there is plenty to pin on the carriers too. They don't get marketing either, at least not in a user-oriented authentic context. For any of the US majors, this would have been a cinch to create brand loyalty, much like frequent flyer miles did when American was the only one doing it. Think of this: a premium flyer package, as an add-on to my Crown Room or Admiral's Club membership.  How about a $15-20/month upgrade to my membership that not only gets me Club access, but gives me unlimited internet access on the plane, higher priority waitlisting for upgrades, a free drink on domestic flights and two freebies on international (if I'm stuck in cattle class), plus phone calls, movies, the whole shebang. It's hard to imagine anyone not buying this, with an associated increase in demand for Club memberships and an extremely sticky preference for a ticket on that carrier. Ironically, I would probably pay $30-40 more for a ticket on a carrier where I had those privileges, and that level of increased ticket price is well within most business traveler's discretion at time of purchase.

    In the end, it's about being sensitive to customer needs and perceptions, and offering a product and packaging that removes barriers to adoption, rather than erecting them.

    And carriers, please, power access in every seat should have been done 15 years ago.

    Boeing's Big Boo-Boo: A Very Non-Disruptive Innovation (Part2 of 3)

    In this 3-part series, we dissect the failure of Boeing's inflight satellite-based internet service, Connexion by Boeing. The first article looked at the laboratory-designed business model that was untested before scaling to business unit size, but based on made-up assumptions and faulty analysis.  In Part 2 of this series, we look at the marketing mistakes and myopia that contributed to the colossal failure.

    Recap: An Unworkable Business Model

    In Part 1, we discussed how Boeing was so sure that this innovation couldn't fail that they invested more than a billion dollars over 6 years with only $25 million in offsetting revenue before folding their tents. We can't say for certain that anything was learned because at the end, Boeing maintained that the tragic events of 9/11 were their undoing, even though clearly this was designed as a "Spruce Goose" from the outset.

    The business model was truly unwieldy. Depending on super high-cost satellite service, Boeing needed more than 10x the number of planes that had been outfitted by the time the program was shut down to have the necessary equipment installed, and had they achieved that level of penetration, more than 40% of all passengers on every single flight (assuming the flights were 100% full) needed to pay full price for service just to break even. And, it cost $500,000 per plane to install, and the pricing assumption was that passengers would pay more than the cost of their monthly broadband service at home per hour in the air.

    Moreover it required a presence in the US market where internet usage is still the highest and the majority of commercial flights begin and end. But even on the carriers where Connexion was deemed a success, usage rates were in the single digits, and Boeing never changed its stance or its business model to encourage greater use.

    It brings new meaning to the phrase "what were they thinking".

    Part 2: Counting the Marketing Mistakes

    "Extensive" market research" by Boeing came up with a definitive statement that "38% of frequent travelers are willing to pay at least $25 per flight for full, high-speed access to the Internet and their corporate network". Clearly, Boeing believed that it they built it, the users would come, and had boxed themselves into a cost structure that embedded this assumption.

    Which leads to the first marketing failure: a dependence on MBA-styled market research. Asking dopey questions has never been shown to result in better odds of being successful at innovation than a coin toss would yield (at much lower cost, but then it doesn't seem as scientific), and in this case, not only was the research instrument flawed, but the wrong question was asked.

    Consider this: if I had an urgent deadline that absolutely couldn't wait until I landed, I might be willing to pay $25, so I'd probably answer yes just to influence the outcome (so that the service became available), however, the real question should have been "at this price level, how often would you use the service", just to mitigate the built-in bias.

    And, whatever answer you got, you'd test it a dozen different ways for validity. At this ridiculous price level and with this billing model, I might use Connexion once or twice a year, but more likely never. Certainly on flights from the US to Europe, most of the time in the sky is overnight, so who is waiting for my urgent communications anyway?

    Ignoring all that, and the fact that I represent the prime target market, the really head-scratching fact is that Connexion's business model required between 30 and 40 percent of all passengers on all flights to pay for this service every time they got on a plane, and nearly 10x as many planes carrying the service as had been outfitted.

    What's Wrong With This Picture?

    What really stands out is the lack of a "gut check". No comparison seems to have been done to the pricing models that have worked for similar services, the rate of adoption that they experienced, or when the growth rates exploded and what triggered them.

    Moreover, the obvious comparison to another overly high-priced satellite communication service that was highly touted but also failed miserably, namely Iridium, was clearly missed. Admittedly, a "gut check" is less quantitative, but it can be immeasurably more accurate.

    So, they got the pricing wrong, but that's not the only factor that was going to limit uptake. Marketing apparently never considered any of these barriers to adoption in their business model.

      1. Loss of sleep time. Because most of the travel time on US to Europe flights is overnight, that means the service is competing with sleep time on at least half the potential flights. If I have a meeting first thing on arrival, best case is that I lose several hours of sleep time because of the number of time zones crossed, so unless I'm desperate, I'm highly unlikely to even open my PC. Even if I do work on my PC, the constraint on my available time to use this service is so severe that the cost seems even more ridiculous.
      2. Other activities competing for my time.  Movies, food, bathroom breaks, getting up to stretch, drinking, reading, listening to music, watching a DVD, talking to my travel partner, doing PC work that doesn't require a connection - there are numerous things to do that I don't have to pay anything extra for.  As my colleague Mike Urlocker is fond of saying,"Don't trust what people say; trust what they do".
      3. Scoble notes that most flights don't have access to power. Oops.  Unless I'm in business class, I'm pretty much assured of not having enough battery power to get full value for my connection fee, and even in business class, not all planes have power connections, nor is it easy to know ahead of time if you will have power or not. In the grand scheme of things, as battery life gets longer and longer (mine will go 5 hours at near full power) this is a minor irritation, but it is definitely a nuisance factor that will prevent potential users from plunking down their cash.
      4. Desire to be off the grid. Scoble also notes that many of the techno-geek frequent flyers at Microsoft (if they don't want it, who does?) get some welcome relief from being out of touch for a few hours on their flight. A feeling we can all identify with, I'm sure. And, at the outrageously high price tag, anyone who might otherwise use the service has a good excuse in the high price for not bothering.
      5. Lack of space. Ironically, economy class on long-haul international flights is much more cramped than on domestic flights. I've been on flights where I couldn't get upgraded, and the first thing the passenger in front of me did was recline his seat causing multiple fractures in my kneecaps. As anyone who's been on an older L1011 or a 747 knows, the space between rows is too small to fit in even if the passenger in front of you doesn't recline. Assuming the seat in front of you is in upright position, it is nearly impossible to work on anything other than a micro-laptop, and as soon as the person in front wants to sleep, you not only can't work, your circulation gets cut off too. This is perhaps the strongest incentive to not risk paying the fee and not being able to use the service.
      6. Poor promotion by airlines. In the initial 3-month market test by Lufthansa, the first and most successful airline to offer the service, they claimed an average of 50-80 simultaneous users per flight, 95% of whom were happy with the service. How does this jive with the actual results after launch. How often do you try something once just to see whether it's worth it? Most of us do. But after the first time, value, accessibility and awareness become much more important. Also not disclosed is how many of those users simply logged on to Lufthansa's FlyNet portal, which was a free service. 180 flights per day is a tiny fraction of the actual flights in the air - Boeing noted in their initial announcement of Connexion that there are 41,500 flights worldwide each day. If you were going to be on one of the 0.4% of flights that had the service installed, did you even know it was available and plan your time accordingly? Unlike all the press release hoopla, there was little product differentiation going on in the market, and even less promotion to make people aware when they were going to be on an internet-enabled flight. Even at the gate, there was often no posted notice that you were boarding a Connexion flight. Boeing depended on the marketing efforts of the airlines, and the airlines attitude seemed to be "if we have it, they'll figure it out and use it." At least with Lufthansa, you knew what you were getting because they commited to install Connexion on all long haul flights, and implemented relatively quickly, but their average users per plane (if they were all paying customers) was still only 1/2 what Boeing needed across the system to succeed.
      7. Lack of uptake by US carriers. When the very first announcement of planned service was made in June 2001, Boeing said that American, United and Delta Airlines had signed letters of intent to adopt this service and equip 1,500 planes with Internet connectivity. Of course, on 9/11 that commitment evaporated, and to date, no US-based airlines have signed on. This is a bit of red herring, since if this had gone ahead and all 1,500 planes were outfitted by now, there would still be only 10 times the number of planes that currently have the service, and we've already pointed out that they needed 400x the number of users to make this fly. However, it would certainly have increased awareness, and possibly led to price drops or more innovative business models that would have given this a chance to reach critical mass.
      8. Lack of direct communication with end-users. Connexion considered their customers to be the airlines, although they were clearly dependent on very large scale adoption by the real customers - the end-users. In an utterly amazing statement of 'not getting it' Boeing said "Each of the airlines brings an unprecedented level of knowledge about the in-flight connectivity needs of passengers." as it announced the pending partnerships with US carriers.  Right.  Just like they understand my need for sufficient room to sit, and my need to pay a fair price for services, and my need to be treated like a customer rather than a filled seat. Boeing, as a near monopoly provider to US carriers also didn't get that if you want a mass market to develop, you can't dictate the terms.

        And, I didn't even have to think hard to come up with this list of show stoppers. I'll bet there are others, but since I don't need to think that hard to make the argument that product marketing didn't even do a half-assed job, I'll leave it at that.

          Bottom line: the market research was garbage, the assumptions the business model was built on stank, and almost everything about how this was packaged, priced and marketed was wrong. Even if the US carriers hadn't dropped out of the picture, it is highly doubtful that this service had a fighting chance.

          In Part 3

          In parts one and two, we look at the absurd business model and financial assumptions, as well as the "big dumb company"-styled product marketing and lack of gut check that led to the stillborn Connexion service market failure. In the third and final part, we ask "what could they have done differently", what lessons could be learned, and whether any other approach could have succeeded.