CUSTOMER INDIGESTION

Here's a factoid to chill your blood: The CTIA said this month that the wireless industry has seen a 27.6% decline in revenue per minute, year over year — just when the need to spend billions on building out new 3G networks is looming.

And here's one that will stop the heart (yes, we do have them) of any venture capital fund partner: In the space of six recent weeks, six major VC funds handed $2 billion in uninvested capital back to their investors, admitting that they can't find ways to invest it profitably.

So how did we invest so much over the past five years, only to get back a trickle in ROI? What happened to that magic goose — the business and residential customer — that was going to lay golden eggs? Did we kill it?

I don't think so. But we gave him a very bad case of indigestion, and he isn't likely to return to egg-laying until we help him get rid of his discomfort. In our headlong rush to develop new telephony-based products and services over the past five years, we lost sight of a basic human characteristic: our inability as a species to accept unlimited amounts of change in our lives.

Remember the “innovation diffusion theory” from the 1940s and '50s? How about Geoffrey Moore's popularized version, 1995's “Crossing the Chasm”? Like most great theories, what this one tells us is intuitively obvious: Only a small percentage of the human population actively embraces new ideas. In fact, those innovators and early adopters typically represent only 20% or so of a given group. For the majority of the population, then, innovations have to “cross the chasm” by proving that they deliver concrete benefits.

That's where we are now: facing skeptical businesses and consumers who sampled the innovations we pushed at them and found them lacking in the basic measurement of life improvement.

In our business, we are making bets today on the basics — on a company that makes low-cost equipment to improve the reliability and speed of switching between ATM and frame relay backbones and new IP loops; on a company that automates and secures the movement of data across a hodgepodge of systems and networks; on a company that uses the Internet to deliver home care to seniors so their grown children in distant cities can feel confident their parents are well cared for. Maybe none of them is wildly sexy, but these solid, substantial improvements to “what is” will find favor over the next three to five years with those change-glutted customers.

And the next time I have an important cell phone call dropped in mid-word, I hope I will remember that my reaction wouldn't be any more pleasant if the call was a videoconference.

DOSSIER NEAL HILL

Occupation: Managing Director of Venture Investment Management Co.

Location: Boston

Current reading: “Business Without Borders” by Don DePalma, “Snow Falling on Cedars,” by David Guterson, 10 business plans a week

Favorite Web site: www.storydata.com, www.tremblant.com, www.nba.com

Next project: Keeping up with my 4-year-old on the ski slopes and reading the next 100 business plans