Lateral Thinking: The Battle for VR

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In August 2012, 19-year-old Palmer Luckey released a Kickstarter campaign for his new device that promised to transport users anywhere on the planet or even into their wildest dreams, at least virtually. The Oculus Rift was a turning point in Virtual Reality (VR).  For the first time, users would be delighted by high-definition visuals in 360° that followed their head movements seamlessly. The cost of this new technology? Only $300.

Fans of this blog might be anticipating my usual question “Why didn’t Samsung, Apple, Motorola or any of the market leaders with access to billions of research dollars and the newest screen and motion sensing technology beat Luckey to market?” but at this point I would pretty much repeat myself (see: Innovator’s Dilemma).  Instead, the story of Oculus provides several great examples of lateral thinking.

Popularized by Dr. Edward de Bono, lateral thinking is the act of testing, evaluating and ultimately replacing underlying assumptions behind a problem to develop a creative solution.  It is the act of overcoming functional fixedness, or using common objects in ways counter to their customary use.  Some examples include using a stack of books as a coffee table or using a bicycle and old lumber to build a wind turbine.

The first Oculus VR headset was built by Luckey tinkering around with whatever commercially available technology a late teenager could afford, including duct tape.  By virtue of being a hobbyist and not a highly-educated employee of a well-funded R&D outfit, Luckey was forced to think laterally. He could only use technology that was readily available and relatively cheap.  As a result, driven only by passion and what information he could find on the internet, he developed a prototype that jump-started the otherwise stagnate VR industry.

Here’s where the story gets interesting. Prior to the Oculus, VR had already been pursued (and largely abandoned) years earlier by industry giant Nintendo. Nintendo’s Gunpei Yokoi, had built a career of successful innovation with such hits as the Game and Watch, Donkey Kong, Mario Bros., and Game Boy. His secret to success? Lateral Thinking with Withered (“Weathered”) Technology.  According to Yokoi, profitable innovation came from using existing technology (which was abundant, well understood, and cheap) in new ways.  This avoided the high cost and risk of new technology development, while still pursing innovative products.

However, in the mid-nineties Yokoi failed to follow his own advice and bet heavily on Nintendo’s Virtual Boy, a red laser-grid screen VR headset that became a huge commercial flop.  Those of you from my generation that remember the 6 months or so where Virtual Boys were available know why it failed… the design focused too heavily on the new technology of VR and not enough on making fun games to make the technology successful.

Which leads us to a hot summer day in San Francisco in 2014 – where the Occulus met its first true competitor.  At its annual developer’s conference, Google IO, Google announced that it had developed a VR competitor with similar functionality to the Oculus and it was shipping to customers that day for less than $20. To an audience struck in disbelief, the company announced that Google Cardboard provided a similar VR experience to the Oculus, for less than 1/15^th of the cost.

Google Cardboard is the definition of Lateral Thinking.  By 2014, the “VR explosion” had hit and many major companies were working on a response.  You can almost hear the executive board rooms at places like Samsung and Sony shouting, “get every Ivy League PhD in 3D-screen design you can find and let’s build a competing product.” Meanwhile, two Google employees David Coz and Damien Henry during their 20% time threw together an old shoebox, some magnets, and some plastic lenses to create a viable VR competitor.

VR enthusiasts will argue (and trust me, they will) that Google Cardboard doesn’t provide the same video quality or field of view as the Oculus.  However, I think this shows even more clearly the functional fixedness of most consumers.

The genius of Google Cardboard is that rather than pursue the straight-forward strategy to build the entire headset from the ground up, Google started with a device that was already  available to most consumers, their cell-phone.

As a result, Occulus’s success relies on being able to continuously improve their own headset and convincing consumers to purchase the new expensive PC equipment to run it (relatively unlikely given the plunging PC market).  Conversely, Google Cardboard’s success merely relies on consumers continuing to purchase better and better cell-phones, which barring some global disaster is inevitable.  As it turns out, in both the real world and virtual one, lateral thinking often wins.

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