Where are breakthrough products like the Wii in education? Textbooks and education technology are stuck in a rut. Just like Sony and Microsoft got locked in a war over processor speeds and cutting edge graphics most of the competition in the education market seems increasingly focused on tangential issues to the customer’s core needs. For example…
* More foil on the cover!
* On-line lesson plans!
* 4 million item bank questions!
These efforts all mask the underlying problem. With everyone writing to the standards for the same 4-5 states textbooks are becoming a low growth zero sum commodity game. In an attempt to differentiate their basal textbooks the major publishers are increasingly cannibalizing their supplemental book bags for “free with order” goodies. They are also bolting technology on in an attempt to sex up the offerings.
Through bold innovation and a laser like focus on deep customer needs Nintendo has won this round of console wars (see Fortune June 4) and opened up entire new markets for video games. What is even more surprising is that they did it by adding a $2.50 part to the last generation of technology not by pushing the performance envelope. They never lost sight of the fact that people play games for fun. Dazzling graphics and other atmospherics help, but that isn’t the root motivation for playing games.
Nintendo’s success didn’t come overnight and to a certain extent it came about because they lost the last round (the Gamecube was a disappointment). It was really the handheld DS that showed them the way towards a new paradigm and allowed them to experiment with some new approaches. They found ways to attract Seniors and non-gamers to the DS. Now we see Wii Bowling nights at retirement homes.
They used what has since become known as a blue ocean strategy. Basically they got out of the red ocean where everyone was fighting each other and found open water where there wasn’t any competition.
In contrast, several major publishers have recently closed or consolidated their supplemental divisions. Because the supplemental divisions need to do something truly different to compete these divisions were the most likely place for this kind of innovation to emerge in the publishers. In what may be an upside down view of the market these products are increasingly being used as loss leaders to close basal textbook business. It isn’t very smart to invest much in loss leaders so we can expect to see less not more innovation from these organizations.
In the education market we should be watching the second and third tier companies who are trying to rethink the whole product mix with a focus on core needs – teaching and learning. This is where hope for the future lies. Who is asking the Nintendo questions? What are organic and powerful ways that the existing sets of print and technology tools can be combined? How can we do this in a profitable way for every component? Where are the opportunities to open up new markets? How do we break out of the cycle of commoditization? Just where is that blue ocean?