Why do some technologies take off

Unlike fully electric engines, which need a supporting network of charging stations, hybrids were not held back by ecosystem emergence challenges. At the same time, however, traditional gas engines have become more fuel-efficient, and the ecosystem for the traditional technology has improved, too, as gas engines have become better integrated with other elements in the vehicle, such as heating and cooling systems.

A period of robust coexistence can be quite attractive from a consumer perspective. When the ecosystem emergence challenge is high for the new technology and the ecosystem extension opportunity is low for the old technology quadrant 3 , not much will change until the emergence challenge is resolved—but then substitution will be rapid.

In scenarios in this quadrant, an industry analysis will most likely show that the old technology maintains high market share, but growth has stalled. Because rapid market-share inversion is to be expected once the new technology fulfills its value creation potential, the dominance of the old technology is fragile. It is maintained not by continued progress in the old technology but by setbacks for the new competitor. Once you understand that in the race to dominance, ecosystems are just as important as technologies, you will be better at thinking through how quickly change is going to occur—and deciding what level of performance you need to aim for in the meantime.

We recommend having executive conversations focused on two questions: Which quadrant is our industry in? Without the benefit of hindsight, your response to this question is clearly a matter of judgment.

Some people would look at electric vehicles in and say they are still stuck in quadrant 4 where we have placed them in our framework , pointing out that the charging infrastructure and battery performance are insufficient for mainstream adoption. Other people would position EVs on the cusp of quadrant 2, claiming that acceptance is growing and that better batteries make it possible to drive longer distances before recharging.

Predicting the pace of substitution requires analyzing the competition between the new- and the old-technology ecosystems. Six questions can help innovators and incumbents assess their positions and strategies. These questions drawn from The Wide Lens, by coauthor Ron Adner address the emergence challenges that confront the new technology.

The answers should help innovators decide how to adjust their strategies. The greater the extent to which the new technology is facing any of these risks, the greater the challenge to be overcome, and the longer the expected delay in adoption of the technology. These questions address the prospects for improving the competitiveness of the incumbent technology. The answers should help incumbents identify opportunities they might exploit.

The more positive the reply to each of these questions, the greater the extension opportunity for the old technology. Some questions pertain to the new technology and some to the old—but you will want to consider them all, regardless of whether you are an incumbent or a start-up.

It is precisely by going through the process of articulating different views that teams can make the most of their collective insights. Each quadrant in the framework carries different implications for resource allocation decisions. And since markets are not transformed all at once, the quadrant also suggests possible ways to position yourself during the transition. In quadrant 1 creative destruction , with the old technology stagnant and the new technology unhampered, innovators should aggressively invest in the new technology.

Incumbents should follow the familiar prescriptions for embracing change to withstand the winds of creative destruction. Part of that is looking for niche positions where they can survive in the long term with the old technology.

For example, pagers were largely replaced by cell phones, but they are still used by emergency-service providers. In quadrant 2 robust coexistence , incumbent firms can continue to invest in the old technology and aggressively invest in improvements to the ecosystem, knowing that the new and the old technologies will coexist for an extended period.

As in quadrant 1, they should also seek niche positions for the old technology for the long term, but there is less urgency to do so. New-technology innovators should move full speed ahead on perfecting the new technology along with its complements. That includes testing and refining the offering with early adopters and segments that are potentially receptive. In quadrant 3 the illusion of resilience , new-technology champions should direct resources toward resolving their ecosystem challenges and developing complementary elements, and resist overprioritizing further development of the technology itself.

When the bottleneck to adoption is the ecosystem, not the technology, pushing technology progress is pushing the wrong lever. Incumbents, for their part, must guard against the false assumption that they are maintaining their market position because of the merits of their own technology. The risk is not there because the technology is mature.

You wait, and therefore it takes time for the product to succeed. Within the industry, some brands will grow faster than others. Is there a need to rethink these categories now? Yes, there is. The early market in the old categories was either innovators or early adopters; and the main market is usually divided into two kinds: early maturity and late maturity. There is also the lag of those who come behind but we are not very interested in terms of our marketing efforts.

So the main question is between the early market and the main market. There are major differences between them. The early market is more willing to take risks. They are usually wealthier. They are willing to adopt the product [even if it] is not perfect.

The risk of adopting a new innovation [is not only financial], and part of it is just the innovation failure. So, those are the early adopters. They will adopt the early market in spite of the inherited risks of early innovation.

The main market is not that forgiving. The main market wants the perfect product. So the early market might still be interested in how the product does in the technology itself. The main market is interested only in the functionality. If it functions well, they will buy it. If not, they will not. So, yes, you can try to do what Google does with Google Glass—bringing an imperfect product into the market.

That will work for the early market, but that will not work for the main market, the majority. They are. If they start talking about functionality, then it is.

Funny what you remember. As global technology strategist at UBS, I had a ringside seat for the lates boom. I was in on countless meetings with visiting management teams trying to explain why their tech startups would be the next hot initial public offering.

The marvelous product or Web-based service they had come up with. Their depth as a team. It was a rare thing indeed in those days to hear someone talk about his customers. They turned out to be rather wrong. The tech industry has lost focus on the most important constituency of all—its customers.

It is only when users take out their wallets and spend money that we move from hobbies to actual commerce. Why do people adopt new technologies? People change habits when the pain of their current situation exceeds their perceived pain of adopting a possible solution. When technologists see their products fail, they often blame it on price. For Microsoft -- and other game developers -- it was time for another innovation.

Big Bang Disruptors like the Kinect, however, can have second lives as new innovators deconstruct them and recombine their parts into something new. Telemedicine researchers in the UK, for example, have adapted Kinect for remote tracking of hand and finger movements to guide patients recovering from strokes. Farther afield, the economies of scale that comes from production of millions of Kinect units has made it cost-effective to use some of its components for a fast-evolving market of health, fitness, and monitoring devices.

Companies including Fitbit, Jawbone, and Nike, as well as other startups, are selling low-cost wearable computers that use accelerometers and other sensor technology to track and record an increasingly wide range of vital signs and measurements, including steps taken, calories burned, heart rate, temperature, and sleep patterns.

With the shark fin, companies that have long operated as the flippers of their industry, controlling its speed, direction, and destination, suddenly find themselves the pinball, bouncing around at the whim of forces outside their control. To ensure their future as the former and not the latter, they need to understand where Big Bang Disruptors come from, how they enter and exit the market, and what they leave in their wake. It will be released January 7.

Copyright by Lawrence Downes and Paul Nunes.