🤔 What if I need to charge, and I can’t find one and get stuck on the edge of the road?
🤔 What if the charger is someplace that might not be very safe?
🤔 What if I need to go for a longer trip, will I need to rent another car?
🤔 What if….
Despite homeowners being able to charge in the safety and convenience of their home 99% of the time, these edge cases loom large in purchase decisions, with drivers, especially women, concerned about the downside risks.
Unfortunately innovators and evangelists tend to ignore these issues as edge cases not worthy of worrying about, because of their rarity.
The problem is that edge cases drive the overwhelming majority of large purchase decisions, because the perceived risk of failure is so high.
The reality is that overlooking rare but critical edge cases is the key reason why so many technology projects fail, and adoption is so slow.
If you are trying to get people and organizations to switch from one solution to another, it’s critical to understand how these edge cases drive buying decisions and impact the transitions from one technology platform to another.
Unfortunately, the traditional MVP model intentionally ignores edge cases as the goal is to focus on delivering the smallest solution possible required to meet some slice of the market.
The Minimum Viable Replacement concept/ framework, on the other hand, focuses squarely on why and how to address these edge cases into your product development processes, as edge cases drive a huge percentage of the cost of development, impact, and decision making.
If you are trying to replace legacy systems/technologies, whether people, machines or software, you need to understand the edge cases that drive:
– Purchasing decisions
– The overwhelming majority of the complexity when designing/building systems.
– Impact
Loss Aversion: A bird in the hand is worth two in the bush
The challenge is, we’re hardwired to focus much more on the potential loss of something and maintaining the status quo, than we are on the potential gain of something else, i.e. a bird in the hand is worth more than two in the bush, even when we rarely ever use the bird we have.
The concept is known as loss aversion. According to psychologists Daniel Kahneman and Amos Tversky, users generally fear a loss twice as much as they are likely to welcome an equivalent gain. In the world of technology, loss aversion makes people more likely to stick with what they have despite compelling reasons to change, i.e. the devil you know versus the devil you don’t, which is just one reason why it’s so difficult to get rid of rarely used features.
So not only do we have a psychological aversion to losing rarely used capabilities, but our fears have an actual basis in reality.
After all, even if you’re doing a great job 99% of the time, you’ll still get fired by your boss or your customers, when you fail at critical points, e.g. even if your ecommerce system works great 363 days a year, but it can’t handle the loads on Black Friday and Cyber Monday, you’re still going to lose customers, revenue and your job.
If the concept of loss aversion is too abstract, just remember that it takes 10 or more, “Great job!”s to make up for every, “Oh crap!”, whether at work or at home.
In the following sections, I’ll explain in detail how this plays out with electric vehicles.
Unfortunately, I couldn’t find the detailed data required to create detailed charts, but since my goal is to illustrate a concept versus provide an accurate detailed analysis of the electric car transition, I went ahead and created some data to illustrate key points.
The data, while not necessarily accurate, is directionally correct enough to highlight the pitfalls and analysis required to help you think about transition strategies.
Loss Aversion & Edge Use Cases: Why customers often do not care about averages
As you can see in the above chart, 90% of all customers drive less than 60 miles each way to work, therefore if you can develop a car with a 100 mile range, that should meet 90% of your consumer needs. And today, the typical electric car can easily be driven nearly 100 miles without recharging, so why haven’t customers adopted them?
Could it be because customers don’t just care about having a car that meets their needs 90% of the time, but want a car that meets their needs 100% of the time?
In the chart below, I’ve incorporated not just the average daily miles driven/commute, but the max driven for vacations as well. Even though these longer trips are semi-rare events for most people, they loom large in our mind.
As individuals, despite the fact that our average commute is only 16 miles, many of us refuse to buy electric cars because of the rare days that we actually drive more than the current 200 or 300 mile range of electric cars.
Most of us are accustomed to be able to just jump in our cars, and know that if we wanted to, we could drive across the country in our existing cars without worrying about running out of gas, and the thought of switching to a car that might prevent us from doing that is unappealing to say the least.
If we are going to invest $40,000 in vehicle, we don’t want to have to budget another $500 to $1,500 a year, plus the associated headaches for a rental car to enable stress-free road trips.
Even if we rarely if ever use this capability, and we could potentially just rent a car for those few days, the idea of giving it up is very disturbing to say the least.
Loss Aversion: A bird in the hand is worth two in the bush
The challenge is, we’re hardwired to focus much more on the potential loss of something and maintaining the status quo, than we are on the potential gain of something else, i.e. a bird in the hand is worth more than two in the bush, even when we rarely ever use the bird we have.
The concept is known as loss aversion. According to psychologists Daniel Kahneman and Amos Tversky, users generally fear a loss twice as much as they are likely to welcome an equivalent gain. In the world of technology, loss aversion makes people more likely to stick with what they have despite compelling reasons to change, i.e. the devil you know versus the devil you don’t, which is just one reason why it’s so difficult to get rid of rarely used features.
So not only do we have a psychological aversion to losing rarely used capabilities, but our fears have an actual basis in reality.
After all, even if you’re doing a great job 99% of the time, you’ll still get fired by your boss or your customers, when you fail at critical points, e.g. even if your ecommerce system works great 363 days a year, but it can’t handle the loads on Black Friday and Cyber Monday, you’re still going to lose customers, revenue and your job.
If the concept of loss aversion is too abstract, just remember that it takes 10 or more, “Great job!”s to make up for every, “Oh crap!”, whether at work or at home.
And for Women, the concern for personal safety looms large
As the article above outlines, women are even more concerned about the potential risks than men.
Of course this risk aversion, isn’t just isolated to EVs but applies to a whole host of scenarios, as research shows women tend to be even more risk averse than men.
How small numbers can drive big impacts
Total Miles Driven by Segment vs. # of Drivers by Segment
If you’re developing an MVP, it 100% makes sense to target your efforts on the 90% of the market that drives less than 60 miles per day. However, 40% of the miles, and therefore greenhouse gases are driven by 10% of the drivers, so even if you migrate 90% of your customers, you are still nowhere close to being able to declare victory.
In fact, even if you migrate 99% of all drivers over to electric, you still face the fact that the 1% are responsible for 10% of the miles driven.
In many companies, 1% or less of the customers actually drive more like 30 to 90% of their business, e.g. despite UPS literally having millions of customers, just one, Amazon, represented 12% of UPS’s revenue at one time.
Unfortunately, getting the data required to really understand which portion of your customer base really drives your business can be difficult, but it’s critical to understand, otherwise your expected victories may just be mirages, with the actual finish line, much, much further away.
Summary
Driving adoption beyond the early adopters, and especially for women, will require automakers to focus on overcoming the fears about safety and the inconvenience and costs of infrequent edge cases.
Instead of arguing why they’re not really issues, e.g. how you don’t really mind renting a car, instead focus on solving for the edge cases, and educating consumers how and why you solved them in a way that resonates with the intended audience.
Contact me at kevinjmireles at gmail.com if you’d like to learn more about the Minimum Viable Replacement framework and how I can help you with your modernization initiatives.
And sign up to Lean & Green! , the Sustainability & Profitability Newsletter, to get regular insights from me about how to cut your costs and emissions while growing your sales and profitability.