Segway case study: The Segway is a prime example of technology
innovation
At their introduction, the best minds in technology were awed by the self-balancing device. The
Segway “will be to the car what the car was to the horse and buggy” said the inventor, Dean Kamen.
Countless people believed him. Famed venture capitalist, John Doerr, predicted the Segway would
be “bigger than the internet.”
Kamen was no stranger to innovation having previously released a long string of successful
medical devices. The Segway itself was based on a wheelchair he designed that stood on two
wheels to go up and downstairs.
Others thought that a non-polluting, electric, self-propelled device was a great idea that suffered
a botched execution. “Its shape is not innovative, it’s not elegant, it doesn’t feel anthropomorphic,”
said Steve Jobs.
In any event, the public didn’t see enough value in the Segway to purchase a meaningful number
of the $5,000-devices. Kamen had recognized the value the Segway was supposed to offer,
especially compared to cars. “Cars are great for going long distances,” he said, “but it makes no
sense at all for people in cities to use a 4,000-lb. piece of metal to haul themselves around”.
However, by loading the Segway with too much technology, he increased the price and size to the
point where it didn’t make much sense to buy or use the machine.
Technology innovation vs value innovation
Technology innovation is the creation of a product or service feature that focuses on new or
improved technology. Often, the technology is cited as the differentiating factor. The utility of the
technology is put front and center, with an expectation that buyers will find a use for it either now
or later.
The Segway electric scooter’s key attributes were that it self-balanced on two wheels and had a
battery that made it capable of scootering all day without the need to recharge. In hindsight, the
self-balancing was gimmicky – it looked cool but offered little real utility.
Furthermore, it was dangerous for people who could not already balance on a scooter or bicycle.
The big battery was unnecessary as people tend to scoot to places where they can recharge. Few
people, if any, need to zoom around on a scooter all day.
Finally, the large form factor made the Segway impossible for sidewalks or streets, too large to
bring to office buildings, and an eyesore when stored at home. The price was entirely out of sync
with the utility the Segway offered.
Why Segway failed? Unlike e-scooter, it didn’t offer value innovation.
E-scooters are an example of value innovation
E-scooters, in contrast, are an example of what Chan Kim and Renee Mauborgne call value
innovation, which is the cornerstone of blue ocean strategy. Value innovation is the simultaneous
pursuit of differentiation and low cost. E-scooters are a good example of value innovation: an
offering that solves real-world problems in a way that makes the competition irrelevant. Learning
from the mistakes of the Segway, the makers of e-scooters took the idea of a self-powered mobility
device and turned it into a successful business.
E-scooters have batteries strong enough to power journeys between a few locations, but they’re
also lightweight enough to be plugged in and recharged at an office. E-scooters require users to
balance on two wheels, but their low center of gravity makes balancing easy. They’re faster than
walking but need virtually no physical effort.
Finally, e-scooters are small enough to be easily stored in a house or apartment, carried in the
trunk of a car, or brought onto public transport. The value proposition the Segway promised was
recognized with the creation of the e-scooter.
Segways, e-scooters, and the buyer utility map
The buyer utility map is a blue ocean tool to assess whether potential buyers – customers, but
more importantly, noncustomers – find adequate utility in a proposed product or service. Buyer
utility maps visually show whether a product or service unlocks substantive buyer value and
differentiation.
For personal transport devices, we’ve identified the following as our buyer experience
cycle: purchase, use on streets, store while shopping, hand-carry, carry in cars or public transport,
and charge.
On the vertical axis are the utility levers that we didn’t change. These are customer
productivity, simplicity, convenience, risk, fun & image, and environmental friendliness.
Blue Ocean Strategy Buyer Utility Map: Segway and E-scooters
© Chan Kim & Renée Mauborgne, Blue Ocean Shift: Beyond Competing – Proven Steps to Inspire
Confidence and Seize New Growth.
The red circles indicate where the industry or existing offering typically focuses. In the case of the
Segway, plotted in red, we’ve marked some cells with a plus (+) sign if the attribute differentiates
from the larger industry (such as the car industry) and a minus sign where there is little or no
incremental value.
The blue circles show our new offering, the e-scooter, where the intersection of the experience
cycle and utility lever offers breakthrough value.
As we can see below, the buyer utility map could have predicted the demise of the Segway or the
success of e-scooters.
Let’s examine a few cells to see how this works.
On the left, for purchase, the Segway is marked with a red minus sign for customer productivity
and risk. That’s because Segways were purchased from dealerships, like cars, that required special
trips and training. Buying a Segway was a hassle. Furthermore, at $5,000 and with its large size,
buying a Segway was an expensive and risky proposition.
In contrast, buying e-scooters is simple and convenient. They can be purchased from a myriad of
sources, online and in stores. Online channels have countless product reviews and comparisons
and stores have in-person help. After purchase, the e-scooter can be easily carried home by hand
or in the trunk of a car and used with no training.
We’ve repeated the exercise for each column and row. There are some cells where Segways and
e-scooters both offer positive utility that cars do not, marked by a plus (+) sign for the Segway and
a blue dot for the e-scooter. Specifically, they’re both more environmentally friendly than cars.
Summary
As the exercise and the map illustrate, the demise of the Segway and success of the e-scooter
were predictable. None of the plot points are counterintuitive nor especially difficult to predict.
Even before its release, several news articles discussed the blocks to utility apparent in the
Segway.
However, the company – and their investors – were apparently fascinated by the admittedly fun
technology and chose not to listen. That’s too bad because they might have unlocked utility for
the world, and a large business for themselves, earlier and at a far lower cost.
