A trade-off between conformity and differentiation is the key to successful innovations

What determines the success of an innovation is rarely its intrinsic quality, its technical or economic performance. The graveyards are full of “brilliant” innovations that were not successful. The success of an innovation rather depends on its capacity to conform to the existing institutional framework in order to be accepted. But how do you stay different if you conform? This difficult trade-off determines the success or failure of the innovation. A historical example is that of Thomas Edison in his promotion of electric lighting over gas.

In 1878, Thomas Edison began work on an incandescent light bulb. On September 4, 1882, he unveiled it to the public along with the associated power generation and distribution system. It is an understatement to say that his innovation was greeted with skepticism. For example, a British parliamentary committee of inquiry concluded, a few months after this demonstration and after a long series of consultations with leading British scientists, that commercial production of incandescent lighting was totally impossible and that Edison demonstrated “the most casual ignorance of the fundamental principles of both electricity and dynamics.”

By 1892, however, Edison’s system had supplanted a gas infrastructure that had been physically, economically, and politically entrenched for over half a century. In fifteen years, it went from being a fragile and implausible innovation to an institution, with its network of utilities, manufacturers and suppliers, investors, standards, uses, and customers. How did Edison manage to establish himself?

The innovator’s institutional strategy

If Edison had relied solely on the technical superiority of his system, he would have failed by running up against the highly institutionalized dominant technology. This is what happens to many innovators who have a romantic view of their task. Introducing change is indeed difficult and risky. By definition, the innovator goes against the dominant mental models, which means that the innovation often literally makes no sense to potential users. Not only is it not understood, but it is found to be useless, unworkable, harmful, or even morally suspect. We often forget that much of what we find commonplace today was originally greeted with hostility.

To be accepted, the innovator must therefore situate the innovation in conformity with the dominant mental models, while distinguishing it from them. It is in relation to these models that users will judge the innovation. The first automobiles were called “horseless carriages” and we still “pick up” the phone. Radically new actions and ideas cannot be assimilated initially because there is no established logic to describe them. One tries to understand, and judge, the new from the patterns of the old. This was understood by Edison, who systematically promoted his system not by clearly distinguishing it and opposing it head-on to the dominant system, but rather by wrapping it in the mantle of the established institutions.

An example illustrates this strategy: In 1882, gas allowed to light with a yellowish and sputtering flame equivalent to that of a 12-watt bulb. Electricity allowed a much more powerful lighting. Yet, Edison purposely limited his bulbs to have an overall effect similar to gas lighting so that no one would realize that the rooms were lit by electricity. Lowering the brightness helped hide behind the dominant technology. For distribution, Edison insisted that his power lines be buried underground, like water and gas lines, rather than placed high up, as was the case with telephone or telegraph companies. Here again, the idea was to behave like a gas company, and thus to become commonplace. Edison also chose to produce electricity in a centralized manner, like the established gas companies. In this way, he introduced the public to a lighting system that was already familiar to them.

The strategist’s trade-off

Edison’s strategy nevertheless creates a dilemma. By moving closer to existing mental models, the innovator risks compromising the true value of the innovation. The risk is that of nibbling away, one small compromise after another, at the end of which the innovation is emptied of its substance. Hence the need for trade-off, which consists of choosing the few distinctive elements that will be put forward, while hiding the others.

This need for trade-off is not reserved for innovators alone. It is the lot of every strategist. To exist, a firm must differentiate itself, but it must also fit in an institutional context made up of customs, laws and regulations, mental models, etc. In its early, entrepreneurial stage, a new firm is generally highly differentiated; but as it develops, important forces push it to conform to the dominant norms. This may lead, for example, to replacing the original entrepreneurs with managers, adopting processes and methods inspired by the “best practices” of its industry, or recruiting more mainstream executives from prestigious schools. If this conformity increases its efficiency (it is “better managed”), it nevertheless undermines its creative capacity and, in the long run, its ability to differentiate.

While for entrepreneurs, the risk is that of an excess of differentiation that prevents them from making the necessary compromises to have their innovation accepted, the risk for established firms is the opposite: it is to give in to institutional pressures that push them to conform and lose their singularity. The ability to maintain this singularity in the face of these pressures is crucial to avoid the decline that is the lot of so many formerly innovative firms.

🇫🇷 French version of this article here.

🔍 Source: Andrew B. Hargadon & Yellowlees Douglas (2001) When Innovations Meet Institutions: Edison and the Design of the Electric Light, Administrative Science Quarterly, 46.

➕ On mental models and innovation, read How mental models block innovation: The case of Alzheimer’s disease. On the entrepreneurial process of establishing a new product, read Effectuation: How Entrepreneurs (Really) create new products, new organizations and new markets.

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