The "best" technology does not always win

M.R. Ragaswami, founder of the Corporate Eco Forum, has an intriguing new blog post titled New vs. Now: Grasping the Real Green Opportunity. He argues there is a significant market opportunity for solutions that retrofit existing buildings, vehicles, and equipment vs. requiring a replacement path:

"It appears to me that the 80-20 rule is at work here: Approximately 80 percent of investment in green innovation is aimed at new projects, while only 20 percent is aimed at “Now” projects. I believe we could greatly advance our progress over the next decade by shifting that balance by even 20 percent or 30 percent — or better yet, realizing a 50-50 split between new and “Now” innovation."

Those looking to profit from technology innovation often focus much of their attention on disruptive, industry shifting solutions. To be sure, great technical leaps create large market opportunities, but they often face significant adoption roadblocks. These roadblocks can be particularly fierce in industries with long upgrade cycles and complex decision-making criteria.

Managers in charge of large facilities, networks, buildings, or utilities are always wary of pursuing “forklift upgrades” – changes that require wholesale replacement of mission critical equipment. They are doubly wary of pursuing these changes when the new equipment is being supplied by an early-stage venture.

Underlying Ragaswami’s argument is an important insight on cleantech adoption that can, at times, be overlooked by many technologists: the “best” technology does not always win. Often, it is the technology that is easiest to implement, or the one that best balances the upside of efficiency returns with the downside of implementation risk.

This should not dissuade entrepreneurs from pursuing game-changing technologies. But it should focus some segment of innovators on listening intently to purchasing managers, procurement officers, and consumers and developing solutions that will offer seamless, albeit potentially incremental, improvements to current technologies.

As the market for cleantech solutions rapidly expands, there will be plenty of room for both quick hits and home runs.