Why Winning Technologies Lose Out

A surprisingly common problem in industry is that the technologies and systems that some large companies use are clearly not the “best” choices based on a variety of fairly objective standards. I’m not necessarily talking about difficult trade-offs where the “best” technology involves high cost and high risk, but am also considering cases where there is simply no objective justification for rejecting a proven innovation. Yes, well-proven innovations with superior performance and lower cost may be rejected in favor of older, more familiar approaches. An article illustrating this in the paper industry is “Overcoming Hurdles on the New Technology Path” in Paper360 by Emil Germer et al., May/June 2012. The authors note that many paper companies continue to use a very old technology for bleaching pulp that is easily shown to be inferior to more modern techniques using ozone. The ozone-based technology is not just more environmentally friendly but gives superior costs and performance. It should be an easy win for this innovation, but the older technology continues to be selected by many large mills. How can this be?

The authors identify five problems that can hinder the adoption of innovation. The first one, though, is the focus of this post. It’s the tendency of companies to rely on a few technical experts who may be terribly outdated in their knowledge. Thus, one person who still clings to old biases or who has not updated his or her expertise may make dead-wrong decisions that hurt a company and crush innovation.

The authors give an example of an internal report written by a company’s bleaching expert recommending against ozone technology for bleaching. The report was well written and exquisite in detail, but relied on data that was 15 years old. None of the recent breakthroughs in ozone technology were noted. The expert apparently had been focused on maintaining existing technology and hadn’t done any significant refreshing of his expertise in over a decade. The competence of yesterday is today’s incompetence.

Corporations need to insist on up-to-date technical skills and boot or bypass those who don’t stay current. Executives should also not simply rely on one person for critical input. Talking to multiple experts and getting internal and external review of technical recommendations can save a company from the errors of a single mind.

One can also blame short-term thinking, conservatism, and other flaws, but whatever the cause, when a corporations opts for technology that is clearly inferior in both cost and performance, something is wrong and there needs to be a way for those at the top to correct the organizational or cultural problems that could lead to such wasteful outcomes.

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