There is actually a really good article over at news.com over the usability testing travails of hotmail 2.0. . I can’t tell you how many times I’ve been in exactly the same situation . . . trying balance innovation, strategy, and immediate user feedback.

The program was too slow to load, too different and, well, just not like the old Hotmail it was intended to replace.

It was a painful realization for the more than 100 managers and developers on the project. In banking on a snazzy Web 2.0 application to try to catch up to rivals Yahoo and Google, Microsoft had dramatically overshot its audience.

Classic mode wasn’t the only bitter pill the development team had to swallow. Even in the full version, it turned out that many customers still wanted to select messages using check boxes rather than a mouse click or keyboard shortcut, much to the dismay of Microsoft’s programmers.

“They were digging in their heels,” Sim said.

In the end, users hates any types of change (good or bad) . . . they will eventually adopt changes that are clear improvements, but that will still take a while. . . there is no such thing as a magic switch in the first place.

People that believe being “customer focused” is the ONLY goal of any product manager doesnt really understand innovation and strategy (ie innovator’s dilemma). On the other hand, product managers that are married to pushing the envelope on innovation and un-reasonably attached to their frameworks (information architecture, product strategy etc) really belong on Sand Hill road instead. There is a middle ground but its a case by case basis . . . knowing when to turn back (like the hotmail team) is a good first step. For all of MSFT’s faults, I’m actually quite impressed by this story.

Another random note, M&A teams of major companies are usually completely clueless on stuff like this. They believe that 1+1 = 3 while in reality 1+1 = 1.5. For example, taking a popular rumor over the weekend, if Microsoft and Yahoo merged what would be the combined userbase of their instant messaging product in 12 month if they tried to merge the two clients into one product? It would for sure be less than the combined marketshare of the two clients currently. The disastrous Sprint + Nextel merger was another perfect case study . . .