The Slow Pace of Fast Change: Bringing Innovations to Market in a Connected World. By Bhaskar Chakravorti. Harvard Business School Press.
The Slow Pace of Fast Change: Bringing Innovations to Market in a Connected World
by Bhaskar Chakravorti
Boston, Massachusetts: Harvard Business School Press, 2003
Why, in a world where new technologies develop so rapidly, does it take so long for innovations to take hold? Why is the pace of “true” progress so much slower than our expectations of progress? For example, broadband access has been around for years, billions have been invested betting on its take-off, yet most people still connect to the Internet through their phone lines. Why, after the idea of music-on-demand over the web has been around for years and still seems to be struggling, does it seem that Apple may have hit on a formula that could break the gridlock? Why does digitization in healthcare take so long, while digital photography takes off like a rocket? Why the erratic and slow pace of fast change?
Bhaskar Chakravorti of Monitor Group explains the vagaries of market adoption by highlighting a paradox of networked markets: While everyone loves a great idea, they will embrace it only if they believe that others will too. This chicken-and-egg dilemma slows the ability of a connected but fragmented market to absorb new technologies. In his new book The Slow Pace of Fast Change: Bringing Innovations to Market in a Connected World Chakravorti addresses the question of why some innovations take hold and others don’t, and more specifically, why progress is so much slower than we would expect based on technological considerations alone.
According to Chakravorti, if an innovation is to achieve widespread adoption, innovators must overcome two major points of discontinuity: They must break already “locked-in” behaviors or products in the market; and then they must create a new equilibrium — a new state of lock-in-incorporating their own innovation. Innovators whose go-to-market strategies recognize this end up winning. For those that don’t, they may be able to upset the system for a while, but then it snaps back to status quo.
To help companies bring successful innovations to market, Chakravorti presents the following framework to establish the ground rules for an innovator’s campaign:
Make current choices by working back from a plausible “endgame” — The choices involved in the introduction of an innovation, such as a viable business model for online music downloads for example, will have different consequences depending on how the various interconnected parties respond. In turn, there will be a domino effect of counter-responses. In the case of the online music offer from Apple, there are many such parties including the customers, artists, and producers, but in addition, there are the major music labels, traditional retailers, and technology providers such as RealNetworks and Microsoft, as well as sites such as KaZaA. Beyond these, there are those who make appliances and devices on which music can be downloaded. It is critical to work back from a targeted, plausible, and desirable “endgame” where the various participants in the market have re-coordinated on a new outcome, and then make choices today that help in getting there.
Selectively enable influencers that can propagate the innovation across the network — Several market participants must be influenced; but that would be a challenge for a single innovator without the necessary influence across such a wide group — and must, therefore, be selective. In Apple’s case, it has influence in some quarters, but is quite limited; in fact, such propagation would be a challenge even for Microsoft in such a fragmented and diverse network of players. However, the selective intervention must be with the few critical players in the network who can help orchestrate multiple behavior changes necessary to break out of status quo and set the market on a path to the endgame.
Make room in the business model to accommodate deals to win over pivotal influencers — There are in any network, some pivotal players who can help spread the influence. It would be key to arrive at a sustainable agreement with such players to motivate their interest in helping propagate to the wider network. Typically, this means the innovator must be prepared to sacrifice part of the value of the endgame to such an agent of influence; from Apple’s past history of going it alone, this would be a renewed challenge. Such economic flexibility lies at the heart of a successful business model for the innovation.
Assess the uncertainties to decide how much to commit to such a strategy — Given the fragmented network of players, there is bound to be uncertainty about the payoffs to the innovator’s strategic choice. In early stages of the innovation’s introduction, the direction the various inter-connected decisions will take is inevitably hard to anticipate. The five music labels have learned this lesson in the early online sites MusicNet and pressplay, as has Napster, the bad boy that set this ball in motion. This means the innovator must make room in the innovation’s product and marketing plans for flexibility. You may need to distinguish between situations that call for a pre-emptive bet, or reserving further options, or investing in an insurance policy.
Chakravorti shows that in highly connected markets, it’s not enough to be innovative. Strategists and managers need to know how to introduce innovations to the market in a way — and at a pace — that the market can absorb. The Slow Pace of Fast Change presents strategies for ensuring a company’s innovative breakthroughs in the lab are the products that stick in the living room.
Bhaskar Chakravorti is Partner and Thought Leader at Monitor Group, the global strategy firm headquartered in Cambridge, MA. He leads Monitor’s practice advising the world’s preeminent companies on growth strategies that involve high uncertainty and high payoff, through the practical applications of game theory. Dr. Chakravorti has been published extensively in academic and policy books; in journals such as Journal of Economic Theory, Journal of Economics and Management Strategy and International Economic Review; and in the media, including op-eds in the New York Times, Financial Times, and The Wall Street Journal Europe.