Hayagreeva Rao is the Atholl McBean Professor of Organizational Behavior and Human Resources at the Stanford Graduate School of Business. He specializes in organizational change, organizational design, and customer-focuses cultures. He recently published a book called Market Rebels: How Activists Make or Break Radical Innovations . In this interview and book he explains how companies can foster the adoption of new products and services.
1. Question: What is the theoretical construct of a new product success?
Answer: New products that constitute radical innovations challenge existing cultural conventions, norms, and interests. Often, they are perceived as strange, incomprehensible and evoke doubts, opposition and controversy. For a radical new product to reach the mass market, it ought to become legitimate, that is, unquestioned and taken-for-granted. Market rebels—activists who challenge the status quo and champion a cause, play a crucial role here.
Consider the history of the gasoline-powered car. When it first appeared in 1895, it was labeled as a “devilish contraption’!” One producer of electric cars even quipped “You can’t get anyone to sit on an explosion!” Farmers opposed the car because it damaged their fields, and anti-speed vigilantes put down speed-traps in urban areas. The gasoline-powered car also had dubious reliability—early cars came with harnesses so that horses could pull them if they broke down. Advertisements were distrusted.
In such a scenario, how did the gasoline-powered car become legitimate? Unlike France, where the government became a big customer, the War Department and the Post-office got into the act much later by 1910 or so. Trade associations of auto producers were fragmented by factionalism. In such a situation, auto enthusiasts banded together into automobile clubs—they lobbied for state-wide speed limits, laws for driver licensing and car registration, and undercut opposition to the car from farmers and anti-speed vigilantes. They also pushed for good roads. Most importantly, they organized hill climbing runs, cross-country endurance runs to demonstrate the reliability of cars.
Winners acquired reputations, and advertised their track records. The first such race was in 1895, and by 1912, the car became unquestioned and widely accepted, and these hill climbing runs and endurance runs were discontinued. Only then did Henry Ford put into place the assembly line, and mass produce cars. Thus, it was not the invisible hand of the market that made the car possible, nor the visible hand of Henry Ford—the joined hands of auto enthusiasts were essential for the cultural acceptance of the car. Without such cultural acceptance of the car fuelled by auto enthusiasts, the mass production of cars would have been implausible.
2. Question: Why did computers take off?
Answer: Nearly all of the technical aspects associated with personal computing—small computers, microprocessors, key-board based interfaces, individual usability—were available in 1972. But culturally, large firms such as IBM or DEC were dedicated to a centralized conception of computing in which the mainframe was tended by a priesthood of managers, engineers and operators who prevented users from touching and working with the computer.
Their focus effectively blinded them to the other possibilities—that fans and tinkerers should have access and that they could in fact make a bundle by serving that market. But the idea of using computers as personalized tools for individuals only took root because of the efforts of hobbyists and engineers. The ?rst shot of the personal computing movement was in 1966 when Steven Gray founded the Amateur Computing Society and published a newsletter for hobbyists, which became a model for hobbyist clubs around the country. The People’s Computer Company, a bi-monthly newsletter, was started in 1972 and claimed that “computers are mostly used to control people instead of to free them…it is time to change that.”
In 1974 Ted Nelson, who had founded Project Xanadu in 1960 with the goal of creating a computer network with a simple user interface, published his book Computer Lib/Dream Machines, an evangelical appeal for computing to be made available to all without complications or servility. Soon, the ?rst kit-computer, the Altair, priced at $397, was featured on the cover of the January 1975 issue of Popular Electronics.
In March 1975, two members of the People’s Computer Company, Gordon French and Fred Moore, founded the Homebrew Computer Club in Menlo Park, California. Those who assembled were fans or hobbyists who made personal computers for personal consumption on a small scale, and the name Homebrew symbolized their approach—to go out and claim technology and adjust its recipe to meet personal needs. It also represented a sense of camaraderie, a chance to gripe and to bask in friends’ acclaim, and exchange ideas and tips.
Soon homebrew clubs were started elsewhere in the United States, quickly becoming spawning grounds for inventors and for founders of companies such as Apple, as well as for developers of programs and games. This groundswell ?nally woke up IBM and other manufacturers, establishing the market for personal computers and making it possible for larger ?rms to then enter the market.
3. Question: Why has it taken so long for electric cars to become popular?
Answer: Electric cars have suffered because there were no market rebels promoting them. There was no social movement championing it—no hot cause fuelling emotions of consumers, and no cool techniques of mobilization getting them to purchase them.
Indeed, in 1990, California was the first state to issue a “Zero Emissions Vehicle” mandate and virtually ordered automakers to produce electric cars as a growing percentage of their business if they wanted to participate in the market in California. General Motors launched the EV-1 in 1996 and Toyota’s introduced the RAV4 EV, which plugged into wall outlets and could travel for 80 miles or so before a recharge.
Automakers, as the trenchant documentary “Who Killed the Electric Car” shows, were, at best, half-hearted in their commitment to the electric car, and at worst, fiercely lobbied against the mandate because of their pre-existing investment in the gasoline-powered car. Despite the endorsement of celebrities like Tom Hanks and Mel Gibson, the electric car industry failed to take off. A principal cause of the failure of the car was the disinterest of the Californian consumer.
Only a social movement powered by evangelists dedicated to the electric car, framing it as a solution to the hot causes of oil dependence and global warming, mobilizing excitement and interest, could have saved the electric car. Had it taken off in California, a bellwether state, the electric car industry might well have found a firm footing throughout the United States.
4. Question: Why hasn’t something as life-changing as cochlear implants caught on?
Answer: But for the deaf-rights movement, cochlear implants could have transformed the world for deaf children under the age of five. Unlike other hearing aids that amplify sound, the cochlear ear implant stimulates auditory nerves. Sometimes referred to as the “Bionic Ear,” the implant was thought of by its makers as a cure for deafness because children who used it could easily acquire language skills and become assimilated into society.
Thus, from their point of view, the bionic ear was a device that could transform a deaf person from a disabled to normal, but manufacturers of cochlear ear implants were surprised when the National Association of the Deaf spearheaded a social movement challenging the depiction of the deaf as the disabled and instead arguing that the deaf were a minority culture with a distinct identity and language being oppressed by the majority “hearing culture.”
A telling illustration of the deaf community’s perspective on cochlear implants was a cartoon in Silent News, the national deaf newspaper, by Bruce Hanson, which showed a jackboot labeled “Hearing” crushing small ?gures named “Deaf.” In France, for example, a deaf coalition called Sourds en Colere (Deaf Anger) organized demonstrations against doctors who promoted cochlear implants. In the United States, deaf pride activists lobbied state legislatures, ?led suits for the protection of the rights of deaf parents, and pushed for the regulation and restriction of cochlear implants for young children.
5. Question: What makes a cause “hot”?
The challenge for market rebels is to arouse to action individuals who are usually busy, distracted, uninvolved, or apparently powerless. Hot causes permit arousal because they frame reality. Hot causes create shared emotions about an external object or threat, and reciprocal feelings among movement participants. Often the shared emotion is one of anger at an external threat, and the reciprocal feelings are those of pride.
These emotions induce individuals to change their beliefs, and invest time and energy. A classic example is the quality movement that transformed the American automobile industry—this example is classic because one would expect quality improvements to be undertaken by ?rms because of normal pro?t incentives. However, American automobile producers overlooked quality and initially disregarded Japanese innovations concerning quality circles.
It was only after a threat was named—the death of the American automobile industry—and aroused feelings of anger, and allowed quality activists were able to mobilize support for quality institutes and initiatives. The establishment of the Baldrige Award also provided encouragement to the quality movement and led to the restoration of pride in American manufacturing.
6. Question: What is the concept of “cool mobilization”?
Answer: Like hot causes, cool mobilization activates emotion and enables the formation of new identities, but it does so by engaging audiences in new behaviors and new experiences that are improvisational and insurgent. The origins of cool go back to jazz that was improvisational—and in contrast, to the big bands.
Later, Marshall McLuhan, the media theorist, distinguished between hot media and cool media on the basis of their de?nition and the extent to which they elicited participation.Hot media like radio and newspaper engage one sense (hearing or vision) and are highly de?ned and so require little involvement. By contrast, cool media like television engage multiple senses and the involvement of an audience because they are not as highly de?ned. I use the term “cool” to capture the insurgent and improvisational dimension in jazz, as well as the low-de?nition and high-involvement experiences mentioned by McLuhan.
Consider the Slow Food movement—a collective endeavor seeking to defend traditional culture and cuisine that arose in Italy. The hot cause was fast food and its stultifying homogeneity and unhealthiness. The cool mobilization was “slow food”—the communal enjoyment of locally available cuisines. The movement started with a “lightning rod” issue—the establishment of a McDonald’s near the Spanish Steps in Rome—that instantly crystallized the movement’s grievances.
Carlo Petrini, a leader of the gastronomical branch of ARCI (a national network of social clubs tied to the Italian Communist Party), and his associates organized a cool experience that mobilized the interest and commitment of the audience—a sit-in and pasta-eating contest that rewarded the slowest eater. Their protest action proclaimed that Rome was about “slow food.”
Hot causes intensify emotions and trigger new beliefs. Cool mobilization also evokes emotion, but by engaging participants in new collective experiences that transform beliefs. Hot causes are highly de?ned, and their de?nition gives them emotional resonance. Cool mobilization has lower de?nition and requires conscious participation—indeed, participants have to “?ll out” the experience through their actions and experimentation. Both underlie the formation of new identities.
7. Question: Can any cause be hot to some niche?
Answer: Yes—think of the craft-brewing movement. Here the “hot cause” is watery and tasteless beer—but it fires up a niche of people interested in beers made in a small scale using authentic ingredients and artisanal techniques in brewpubs. As this niche grew bigger, it also attracted the attention Big Beer producers who launched their own beers or acquired small producers. So intense is the emption around craft-beer that vigilantes ‘outed’ impostors—Big Beer or for that matter, contract brewers who did not make beer on their premises but outsourced beer.
8. Question: What if you have a stone-cold cause?
Answer: If you have a stone-cold cause, you should ask yourself the following questions. Who is the enemy? How do we focus anger at the enemy? How do we build collective pride and identity?
9. Question: Most Web 2.0 entrepreneurs think they only need to create a viral product and success is assured. Is this true?
Answer: The idea of virus is a beguiling metaphor but very oversimplified. Practitioners of marketing innovations have treated the diffusion of innovations as an epidemic whereby contact with a prior adopter induces others to adopt the innovation. However, they often overlook the distinction between simple contagion and complex contagions.
Diseases usually entail simple contagion in which multiple exposures to a single source is suf?cient to spread the disease. For incremental innovations where the costs of adoption are low, simple contagions suf?ce. By contrast, for radical innovations where the costs of adoption are high because adopters have to topple existing conventions, complex contagions featuring exposure to multiple sources are needed.
The metaphor of an epidemic is attractive device to use to understand the spread of an innovation, but it relies on the logic of spontaneous combustion—you catch ?re when a neighbor catches ?re—yet says little about how the neighbor catches ?re in the ?rst place. The problem is all the more acute in the case of complex contagions where we need to understand how the multiple sources caught ?re. This is where market rebels play a crucial role—they construct hot causes and cool mobilization techniques to get people to catch fire.
10. Question: What is the role of clubs in the adoption of new products?
Answer: Clubs composed of enthusiasts play a number of roles in promoting radically new products. They create a community, they facilitate the exchange of ideas, they spawn new entrepreneurs, and they can even beta-test new products. Most importantly, they signal the identity of consumers and solidify a brand community. Harley clubs are a great example of this.
11. Question: Do these clubs have to form “spontaneously” or can a company put them in place?
Answer: Clubs can be formed spontaneously—sometimes a “lightning rod issue” can spark the formation of clubs. For example, the decision to withdraw the old version of Coke and introduce New Coke led to outrage among fans of old and triggered the formation of activist groups who eventually forced the Coca Cola Company to reintroduce Coke Classic. It is vital that clubs be formed by members themselves. Companies can make the process easier but sponsorship may compromise independence and in turn, credibility. Companies, however, can institute events that bind members together and sustain clubs.
12. Question: Can clubs work on a purely online manner?Are Facebook groups “clubs” that can make products successful?
Answer: Clubs that rely on face-to-face interaction develop personal bonds because they use verbal and non-verbal communication and can create and sustain emotional energy. It is much harder to create emotional energy in online clubs—but yes, Facebook groups can be seedbeds for the formation of clubs.
13. Question: If you were the CEO of Alltop, what would you do to make it successful?
Answer: I found Alltop to be a fascinating digital magazine rack. I liked the reliance on Twitter enthusiasts. I found myself asking: What conventions or norms does Alltop challenge? How can it generate heat? What is cool about it? I would emphasize personalization so that you can “assemble” your own magazine if you use your own filters.
Reply: Maybe we’ll provide people with the ability create “MyAlltop” magazines then!
