Hybrid Technologies:
A Stepping
Stone to the Future
When
uncertain transformation threatens an industry, jump in or do nothing are not
the only options.
Hindsight is a wonderful
thing when assessing disruptive innovation, but the reality is that deciding
what to do next when new technology threatens to transform an industry, may be
one of the greatest challenges a firm has to face.
Decision-makers may find
themselves not only second guessing whether the new technology will be adopted
by business and accepted by consumers, but also estimating how long the
potential disruption will take. A common fallacy suggests technological
discontinuities come in great waves of creative destruction wiping out all
signs of the technology before them. The greater likelihood however, is
that a transformation will take years - decades even - to play out.
Knowing exactly how a
disruption will evolve and when it will complete is impossible to determine,
but it is a conjecture more easily and accurately made by companies on the
inside participating in the transformation process.
An effective way to manage
this uncertain transition period and to help shape the change is to invest in
intergenerational hybrids - innovation which combines elements from potentially
disruptive new products, services or business models with the status quo. Think
digital SLR cameras, electric/gas cars, hybrid cloud computing architectures
and Microsoft’s Surface, which amalgamates elements of the tablet’s design with
the software of a personal computer (PC).
A
stepping stone for change
Hybrids, can act as both a
placeholder for the firm in the future market and as a source of learning;
giving organisations the opportunity to study the threatening technology before
disruption occurs, while gaining complementary knowledge about the market and
customer preferences, all of which give them a marked advantage over late-entry
competitors. It’s no coincidence, for example, that some of the most successful
computer companies were producers of early model word processors - a hybrid
device coming between electric typewriters and the introduction of the PC.
Hybrids can also help
prepare customers for an industry’s impending transformation. Getting consumers
to alter their habits or preferences is a challenge; creating a product which
includes elements of both the incumbent and new technology lets them experience
the advantage of the disruptive innovation without giving up all their the old
practices. It’s interesting to note that a large percentage of people driving
electric cars today were once owners of the Toyota Prius, a hybrid vehicle
combining components of both internal combustion and electric engines.
In some cases hybrids are
used to temporarily block threatening technology by offering customers an
appealing price/performance trade-off, as gas companies did with their hybrid
lightbulb.
Similarly they can be used
to extend the life of old technology. Kodak for instance adapted its photo
printer system to gain a few years before digital printing services became
popular.
At other times hybrids are
created to satisfy a niche market. The Microsoft Surface, mentioned above,
adopted the form of a tablet (with its size, touch screen and other features)
but, unlike Apple’s iPad, retained the software base of the PC. It may not suit
everybody but it meets the demands of a group of people (who like the size of
the smaller device but require greater functionality) as the technology
continues to evolve.
The
importance of timing
While the purpose of most
hybrids is to help companies adjust to a new landscape, more importantly they
can help leaders better understand the right time to leap into new technology.
At times they can even be used to stave off disruption entirely.
In 1984 MIPS Computer
Systems introduced a microprocessor that used technology called “reduced
instruction-set computing” or RISC. This classic disruptive innovation was
simpler and faster than the CISC (complex instruction-set computing) chips used
by industry leader Intel.
Intel responded in 1995 by
bringing out the Pentium P6, a hybrid combining attributes of both CISC and
RISC, to create a technology which is still being used in most computers today.
The Pentium is an example, not only of a hybrid which endured beyond
disruption, but of the importance of timing. When developing a hybrid,
incumbents gain knowledge not just about the technology involved, but also
about the timing of the discontinuity itself, and can avoid the common mistake
of leaping into a new technology either too early or too late. By waiting 11
years after the RISC was introduced to bring out its competing technology,
Intel balanced the timing factor with getting the product right.
Survive
and prosper in the next generation
When looking back on the
transformation of a technology after the transition has completed, hybrids are
often portrayed as clumsy artefacts; products of organisational inertia created
by companies not fully prepared to commit. However, when we are in the middle
of disruption - in that period looking forward when firms are faced with the
choice of doing nothing or committing considerable resources in the hope they
get the product and the timing right – that we can see the full advantages of a
third option; creating hybrid technologies or business models gives firms the
opportunity to participate in the transformation process and learn about the
future before making a more informed choice.
Of course, if threatening
innovation fails to displace old technologies the hybrid could be seen as a
waste of resources. But, as suggested in the study Intergenerational Hybrids: Spillbacks, Spillforwards an
Adapting to Technology Discontinuities, co-authored with Daniel C. Snow, Associate
Professor of Business Administration at the Brigham Young University, there is
an as great or even greater risk in taking no action at all. The cost is less
than would have been experienced had the organisation taken a full step into
the new technology, while the knowledge gained has the potential to improve the
firm’s existing products, placing it in a better position compared to late
entry competitors.
As such, hybrids should be
viewed as an effective but often overlooked tool available to managers facing a
potentially difficult and uncertain transition. Used correctly they can be
sources knowledge helping firms to survive and prosper into the next
generation.
Nathan Furr, INSEAD Assistant
Professor of Strategy
| November 18, 2015
http://knowledge.insead.edu/strategy/hybrid-technologies-a-stepping-stone-to-the-future-4370
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