Customer Reviews

The Slow Pace of Fast Change: Bringing Innovations to Market in a Connected World

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As the subtitle correctly indicates, Chakravorti explains how to bring innovations to market in a connected world. His contributions in this book to our understanding of both the difficulties and opportunities to do so are substantial. Acknowledging his academic roots, he acknowledges that he "developed an appreciation for a first- principles approach to strategy and decisions...how first principles translate into the framing of trade-offs and lead to timely action." Over time, he learned that true insight "comes from connecting the dots across multiple landscapes [and that] such dots lurk in the unlikeliest corners." He allows his reader to recognize those "corners" and to accompany him as he carefully but rigorously explores the connected world.

I especially appreciate his dry but delightful wit, perhaps most evident in the final chapter whose head note is a quotation from Thelonious Monk: "You know what's the loudest noise in the world, man? The loudest noise in the world is silence." Without apparent effort, he invites his reader to consider the significance of the Galton-Gould evolutionary pool table, a metaphor which suggests that a market is the polyhedron-shaped ball." perhaps recalling John Nash's insight, he suggests that when innovation arrives on the scene (i.e. in a market), it creates disequilibrium. "It is in this situation of rest [i.e. when the "ball" has stopped] which may be viewed as gridlock by some and as a stable market by others -- that innovations in a connect must pry apart."

Given the process of inquiry and exploration which has been completed in the prior chapters, I was intrigued by how Chakravorti achieves at least a temporary synthesis of so many different (sometimes contradictory) factors which interact throughout the innovation cycle: "the eureka moment; the development of technology to give life to an idea; and the creation of an organization to produce and commercialize the innovation." As we all know, few innovative ideas ever reach their intended market and fewer yet survive thereafter. There is indeed a natural selection process during any campaign to bring an innovation into the connected world. Chakravorti suggests four aspects of that campaign:

1. "Qualifying the endgame and, in the process, choosing between several strategic options at the outset;

2. "Orchestrating the changes necessary across the network of players through a mechanism that propagates the innovator's selective interventions into the wider network;

3. "Actively managing with the critical agents that will pass on the innovation's influence; and

4. "Making appropriate choices on how to commit to strategies that lead to certain endgames in the face of uncertainty -- depending on the situation, one must choose between making a bet, reserving options, and seeking insurance."

Paraphrasing an ancient aphorism, Chakravorti suggests that market imperfection is the mother of innovation because it creates the need to innovate both in terms of a given product or service and in terms of the campaign by which to guide it to market. and then through natural selection to at least temporary security....that is, until another innovation (which accommodates the aforementioned four aspects) eliminates the need for it.

I agree completely with Chakravorti that the "slow pace of change is good news for the strategic innovator. In fact, it is essential news." Obviously, when any organization plans to take a new product or service to market, it faces formidable competition and all manner of challenges, only some of which are posed by competitors. (How many innovative products or services have never survived internal barriers which may include what Jim O'Toole has characterized as "the ideology of comfort and the tyranny of custom") In this brilliant book, Chakravorti suggests a number of specific strategies and tactics to help achieve market penetration and eventual success in a connected world. There is also an important lesson to be learned from one of Aesop's fable, "The Tortoise and the Hare": At least in some situations, only a "slow pace" can achieve "fast change."

This is one of the best written books I have read in a long time. The author must have pored over the crafting of every word. It is a serious book and yet it is quite a funny book. Overall it is clear he knows what he is talking about in terms of how real companies act and the game theory behind their actions. And it is about something that most people I know think a lot about. The book is on bringing innovations and new ideas to market. I read it as having much wider social and political consequences because it really does offer a way for us to understand how things work -- or don't -- in our super-connected world. With terrorism and SARS and globalization risks and the proliferation of the internet we are really connected in so many ways. I came away from the Slow Pace of Fast Change with, as the author puts it, a new "mindset" to understand and even strategize in this interconnected reality, where the network is both your best friend and your worst enemy. I know of Moore's law as the rule of the 90s--like everyone else I and everyone else I know lived and breathed it. Slow Pace...will I think give us a rule that may last even longer: Demi Moore's law. Cute, but really quite brilliant if you think about it.
Every chapter in the book helps develop a rich set of ideas interwoven with really well-told tales of strategic games among the best known companies in the world -- and even some that have since flamed out, for reasons the book helped make me understand. The tales of real world games among AT&T, the Chinese, WorldCom, Comcast, Microsoft read like a novel. Even though that particular chapter had the least new material in terms of concepts, the stories and strategic analyses alone made its presence more than worthwhile.
A deceptively easy read but it's deep stuff. I would read it again.

Skimming through the index alone reveals why this book is special. Where else will you find Christina Aguilera, Aerosmith, Nash equilibrium, Larry Ellison, Enron, Prozac, Napoleon, Paul Krugman, Star Trek, Shimon Peres and Napster all wrapped up in a highly compelling, intellectually rich and intensely practical story of why true progress is slow (despite the predictions of the gurus) -- and what you can do to speed innovation's journey to market? I found this book to be where Malcolm Gladwell's Tipping Point and Carl Shapiro and Hal Varian's Information Rules left off. Highly entertaining (don't miss the last chapter which is a children's story with a surprise ironic twist) and makes you think. It will certainly make me change the way I will make decisions in my own business and taking our own R&D to market. A book that is highly relevant for the present time of uncertainty about economic and tech recovery and will be a classic over the longer term. Unlike the slew of business books --that are mercifully fewer these days-- that filled the shelves of bookstores during the 90s, this one actually is very well written, has delightful puns and unusual stories of innovation and seamlessly draws on both high theory and what appears to be intimate knowledge of hands-on practice.

My only complaint: needs more graphics and summaries at the end of each chapter for me to have the overflow of insights handy.

The book opens with a reference to a newspaper article written by the author and illustrated by the picture of American actress Demi Moore. This was a visual pun on the author's version of Moore's Law, which says that the number of transistors on a microchip doubles every eighteen months. The author emphasizes that technological progress runs faster than market adoption, and that technology's impact in a network of densely connected market actors will most likely proceed at only half the speed predicted by Moore--hence demi-Moore's Law. Never shying away from geeky humor, the author adds that considering the limited impact of Moore's Law on productivity, its bark seemed to have been louder than its byte.

Leaving puns aside, this book has several ideas bundled into one. The general idea is that a game theory framework, and more specifically the concept of a Nash equilibrium, can help business leaders predict and influence the trajectory of an innovation in a market consisting of interconnected individuals. To think in terms of strategies at equilibrium first helps innovators understand why the past lingers on, and why the fast change of technological discoveries translates into a slow pace of market adoption. Many good ideas now canonized as revolutions took decades to have an impact. One vivid picture of this slow pace of fast change is the continued presence, well into the 2000s, of VHS tapes on the shelves of video rental stores in the U.S., even though the DVD and the Blu-ray disc were already in existence.

Previous eras of innovation were also characterized by inefficiencies and delays. When the railways were introduced, it took time for businesses and factories previously located near waterways to relocate along railways lines. When electricity was introduced in factories, the necessity of redesigning the shop floor or even tearing down entire buildings to accommodate the superior technology delayed adoption. In 1987, while the PC was becoming a common sight across the workplace, Robert Solow, an MIT Nobel laureate and growth economist, had remarked, "We see the computer age everywhere except in the productivity statistics." It took another decade for investments in information technology to deliver measurable economic returns, leading to another wave of sustained productivity growth.

To succeed, an innovator must achieve two things. It must induce multiple behaviors to unlock in a coordinated manner. And it must recoordinate outcomes in a new equilibrium. A Nash equilibrium occurs when each party in a market makes a choice that it considers to be the best one relative to available alternatives, assuming that all other parties in the network are doing the same. It is hard to dismantle the status-quo equilibrium and recoordinate a new one, which is why the past endures. Barriers exist both at the front end (destruction of the status quo) and at the back end (creation of a new equilibrium) of an innovator's journey to market. But once incentives of dispersed players are aligned towards the adoption of a new technological solution, a new equilibrium can emerge very fast. The innovator's challenge is to orchestrate such a switch, and to accelerate the adoption of the new technology by the market. Game theory gives him the tools to plan and execute such a coordinated campaign.

The author's discussion on strategy highlights four aspects of building a campaign designed to bring innovation into market: 1/ qualifying the endgame and, in the process, choosing between several strategic options at the outset; 2/ orchestrating the changes necessary across the network of players through a mechanism that propagates the innovator's selective interventions into the wider network; 3/ actively managing interactions with the critical agents that will pass on the innovation's influence; and 4/ making appropriate choices on how to commit to strategies that lead to certain endgames in the face of uncertainty--depending on the situation, one must choose between making a bet, reserving options, and seeking insurance.

Each strategic move is illustrated with examples of networked industries: from PC broadband modems to online music stores, from Adobe Acrobat's portable document format to Sun Microsystems's JavaOS, from Xerox's struggle to remain the top document company to Sony's commitment to be at the center of the convergence between entertainment and networking. Some of these examples are dated, as the book was completed in 2002. It is up to the reader to think of other examples, not necessarily in the information technology sector. Two cases in point are, first, the introduction of electric cars and hybrids vehicles leading to a new equilibrium in the automobile industry; and, second, the construction of nuclear power plants in emerging countries, with a few powerful sellers competing to fulfill their energy needs. No doubt strategy experts and consultants have already worked on these cases, but the framework proposed in this book can help structure the thought process on these complex issues.

In an interesting chapter, the author notes that Microsoft rarely takes the lead in introducing innovations in new applications. Instead, it often moves to co-opt the bets of other industry players. Microsoft introduced Excel after Lotus's spreadsheet software had become a "killer app" that helped bring the PC into wider circulation in the early 1980s. The Windows concept followed the innovations in the Apple Macintosh interface; Internet Explorer followed Netscape's Navigator; ActiveX followed Java originally championed by Sun Microsystems; Windows CE pursued opportunities demonstrated by the success of the Palm Pilot operating system; the MSN portal followed the Internet pioneers Yahoo! And AOL; Windows Media Player was a distant laggard behind RealNetworks; the Xbox game console followed the pioneering PlayStation from Sony; and so on. Microsoft is a prime example of what Constantinos Markides and Paul Geroski have labeled the "fast second" strategy.

Bhaskar Chakravorti is not the first to apply game theory to business strategy. Indeed, most of the best recent advances in the field have been borrowed from theoreticians working from the perspective of game theory and its related disciplines, network analysis and decision science. The author has a certain talent to explain difficult concept in simple terms, and to infer theoretical perspectives from real-life situations. The examples he brings forth will be familiar to readers of the business press, but his approach grounded in theory helps bring these cases to a new light. All in all, this book was quite original and reasonably well written. But its ambition remains modest, and its scope limited to the framing of strategies aiming at bringing innovations to market. It says nothing on the management of innovation within the company, or how innovators come up with new ideas and products. Its vision of the introduction of innovation to market concentrates on the endgame from the perspective of the innovator, and does not touch upon the proliferation of products that characterize the cycle of variation, selection, and retention.

It was a really wordy and long book, but it gives some good insights on why a complicated value chain or a multi-sided market is difficult and slow to sell to or innovate within. The short summary: there are many chefs and decision makes who all need to be united. (If you are interested in the details, read the book, but skim some chapters.)

Good Innovation books typically break down into two categories: consolidators and original thinkers. The consolidators create overall frameworks for innovation and make the overall topic more digestable to the general reader. The original thinkers share new knowledge and insights, focusing on much narrower topics, such as Open Innovation (Henry Chesbrough), Disruptive Innovation (Clayton Christensen), or Experimentation (Stefan Thomke). Chakravorti's book, The Slow Pace of Fast Change, is definitely for the original thinkers. His specialization is the network effect of introducing innovations, how to bring complex products into complex changing market places. For example, introducing the hydrogen fuel cell will require many economic agents and individual behaviors to change. A deep understanding of the dynamics of Network Innovation is essential to bringing certain types of innovation to life. Chakravorti draws heavily on the Nobel-prize winning game theory of John Nash to explain how self-interest guides players in the introduction of such innovations.

Unusually for an original thinker, he also provides a reasonable roadmap to allow corporate innovators to find their own path to success. This is not an easy task, but it is better to know the challenges ahead of time and take action. This is an excellent book and deserves serious attention from anyone working on breakthrough innovation initiatives or large-scale business development projects.

Mark Turrell
http://innovationBBL.blogspot.com
http://www.imaginatik.com

Many books have been published on the topic of innovation. But as rightly pointed out by Mr. Chakravorti, these studies are successful in nurturing innovations and bringing them till the gates of organizations. Many of the innovations despite being far superior solutions from powerful multinationals, fail in the market place. In other words, technological or product superiority and even the sheer muscle of giant corporations is not sufficient to ensure that these innovations are accepted by customers.

This book looks at the market as a network of players with dependencies and in equilibrium. Some entities in this network act as nodes and are the main players. Networks prefer equilibrium and it requires a good understanding of what it takes to shift this equilibrium to a new state. This is where the concept of game theory is extensively used and demonstrated through excellent case studies - Communications, Automobile Industry Supply Chains and Software are some examples. "Think Equilibrium" is the key message.

The best part of the book is that it simplifies complexity of theoretical aspects and delivers important concepts and a framework for application by managers. The other book that I enjoyed equally on the topic of game theory in business is "Co-opetition" by Barry Nalebuff and Adam Brandenburger. "How Breakthroughs happen" by Andrew Hargadon and "The Innovator's Dilemma" by Clayton Christensen will be excellent supplements if we need to trace the complete trajectory of innovation from the lab to the customer's lap.

This book is a classic. If game theory owes a lot to "A Beautiful Mind", successful innovations in future will thank this beautiful book.

Today's market faces an onslaught of new products, devices and such, which seek to change the way we work, play and interact. Every innovation is accompanied by tons of hype and an even larger advertising and promotion budget. More often than not, the market spoils the party. It gives many innovations a miss and creates friction for others. The disappointed innovator becomes introspective - seeking both explanations and excuses. Was it the timing? Was it the ad-campaign? Was it lack of "consumer education"? Fortunately, now the innovator has some help from Bhaskar Chakravorti. Chakravorti's book The Slow Pace of Fast Change provides innovators with both a decision framework and an action plan to successfully bring their innovations to market in a networked world. It provides answers to questions of the past - why did Apple's Newton flop and how did Palm make it? And to the future -will e-books ever see mass adoption?

In the year 2000 the future of e-books looked very promising. Leading technology research and consulting firms were of the view that mass adoption in the United States would take three years. It was predicted that in five years, U.S. sales revenue from e-books and e-book dedicated devices would reach anywhere between $251 million and $2.3 billion. Depending on whose research one believed, the number of e-book devices sold in the U.S. was expected to increase from 50,000 in the year 2000 to between 1.9 and 28 million units in 2005.

To be fair, not every research firm was sanguine. Some identified several critical success factors for mass proliferation which can be classified under three broad headings: device, user experience and delivery - or, DUD for short. The buzz was justified. At the time, it appeared as though all the pieces were about to fall in place. A company called Gemstar announced two dedicated devices with the RCA brand which were to be produced by Thomson Electronics. Adobe announced it would buy Glassbook and incorporate the latter's reader technology in its Acrobat Reader. Microsoft struck a deal with Barnes & Noble to distribute content compatible with its reader and a similar deal with Amazon was in the works. By late 2000 the largest English language publisher Random House had placed its bets on the e-book future. It even offered to pay 50% of sales to authors of e-books compared to the usual 5-15%. AOL-Time Warner entered the fray with its digital imprint iPublish.com. Famous authors were also on board - Stephen King published "Riding the Bullet" exclusively as an e-book and 400,000 copies were downloaded within the first two days.

So what do things look like now as we begin 2005? Most estimates for 2004 put sales of e-books at no more than $15 million. The Open eBook Forum indicates that there has been double digit growth in recent years - so let's just double the number to $30 million in 2005 - a far cry from even the most pessimistic of predictions. Barnes & Noble no longer sells e-books; AOL and Random House have given up on their respective digital imprints and Gemstar started winding down operations in the summer of 2003 - about the same time as The Slow Pace of Fast Change hit bookstores.

Chakravorti, explains why technology moves faster than markets. In a connected world, choice is interdependent as are expectations. Adoption of a new technology depends not only on how players behave but also on how they expect others to behave. Consumers will buy e-books if they expect others to do the same and if firms provide complementary products to support the platform. Firms in turn will only do so if they expect consumers to buy. The existing product which the innovation seeks to replace has created such a "lock-in" by validating and reinforcing best choices and expectations. In order to get to mass proliferation or beyond the "tipping point" the innovator has to break the status-quo or equilibrium and create a new status-quo which incorporates the innovation and reinforces a new set of choices and behaviours. In market economies where there is no central coordinating mechanism, this can be hard work. The network presents two faces to the innovator - first as a foe and then as a friend. The successful innovator has to fight the foe and nurture the friendship otherwise the market may just give the innovation a miss no matter how novel. Innovations compete with existing and future products; both inhibit adoption.

Chakravorti provides innovators a framework for a successful campaign to bring new innovations to market. It requires innovators to take an "outside-in" view and spend some time in shoes of every player in the game. The first step is to describe the status-quo so as to understand the prevailing reinforcing choices and behaviours that create lock-in. These are the choices that the innovator must work on to unravel the status-quo. Then, look to the future - to the endgame or desired outcome and reason back to chart the action plan. The endgame will most likely have new players, often from different industries or sectors. Understand their behaviours and identify both barriers to adoption and motivating factors. The target endgame should be qualified using a plausibility check. The innovator should ask if their suppositions about the future are plausible given what they know today about the choices and behaviours of players. This will help to identify influential players - these are the ones that are critical to adoption and deserve the most attention. It will also assist the innovator in determining whether to target all consumers or focus on a particular segment of the market which may subsequently help in influencing the choices of others. An endgame which cannot be qualified in even a segment of the market is unrealistic and most likely unattainable. Might it have been better for Gemstar to focus its initial efforts on professionals such as doctors and lawyers or even students who would have appreciated getting a load of their backs?

It is unlikely that the journey to the endgame can be made without enlisting the help of partners; who in turn will expect a share of the pie - in the game of business competition and cooperation are two sides of the same coin. Who should the innovator partner with and how should they negotiate? Chakravorti helps the innovator develop a coordinated action plan showing how characteristics of an innovation can be matched with the right partners and marketing mechanisms. Should the innovator partner with the producer of a complementary product or a "hub"? All networks have hubs which are powerful players because they are tied to so many other players. The e-books game had many hubs such as Microsoft, Adobe, AOL-Time Warner and Amazon. The trick is to avoid head-to-head competition with hubs, looking instead for ways to complement their products. E-books would help enhance the capabilities and popularity of Adobe's ubiquitous Acrobat Reader; Amazon could increase its product offering without committing to more warehouse space.

As one would expect, the path to the endgame is riddled with uncertainty. Qualifying the endgame narrows the range of uncertainty but the innovator still has make the right bet at the right time. Strategic as opposed to tactical choices are usually characterized by irreversibility. The problem is that the big bet could very easily become the biggest mistake. Chakravorti shows the innovator how to preserve flexibility. When does it make sense to commit resources upfront to make that big pre-emptive bet? And when does is make sense to hold back and benefit from the leader's disadvantage?

Though the book focuses on the world of technology and provides numerous examples, it recognizes in passing that there are other ways in which the world is taking on characteristics of networks. Most products are designed, produced, assembled, distributed, sold and serviced in numerous locations and countries. Connectivity will only increase with the removal of barriers to trade, investment and mobility. SARS and homeland security also require a "coordinated action plan with multiple points of attack".

This is a fabulous book - it is not just a good read or even a great read - it is an engaging and enjoyable read - which is saying a lot for a business book! It is likely to become, albeit at a slow pace, one of the most influential books on business strategy. The book is very accessible and though it is pitched at the business executive, anyone with an interest in technology will find it useful. So will management consultants, B-school students and those who educate them.

In case you are wondering if e-books have fallen by the way side - apparently not! Now technology research firms say that the dominant device will be the Tablet PC and after 2006 e-book demand will drive the sales of Tablet PCs. And there is new technology already in play, with new shepherds - Sony and Philips. Sony's digital e-book reader LIBRIé was launched in Japan in 2004. It uses digital paper technology developed by E Ink. Users can `loan' books for 60 days from Sony's collection of 400 books - no newspapers, magazines or periodicals yet. Initial user reviews on the Internet indicate dissatisfaction on three fronts: device, user experience and digital rights management - another DUD? Perhaps its time read The Slow Pace of Fast Change.

This review first appeared on a now defunct blog on July 13, 2005.

I have never in my life read such an insightful book. It clearly lays out the structure of economics and helps diversify the playing field in terms of market infrastructure. Witty and well thought out, a deserved 5 star book.