Tech, the innovator's dilemma, and the S-curve of adoption : Planet Money : Planet Money Summer School For anyone running a business, technology is both threat and opportunity. Today, we run through techniques entrepreneurs can use to take advantage of new tech or defend against the dangers. It's not just about the product you're selling. It's about consumer psychology, and ethics, and taking calculated risks to navigate uncertainty.

But, since this is Planet Money Summer School and we want to set your business on the path to riches, we're going to talk about how to use tech to dream big. Maybe more than anything, technology creates opportunities for the little guys where the big established companies can't be so nimble or have too much to lose.

Take the classic concept of the innovator's dilemma: a company that innovated and succeeded, now faces a choice about any disruptive new technology. Do they risk tossing out their existing advantage and switch to the new tech, or play it safe and risk becoming obsolete?

Most new technologies don't end up disrupting an industry. So it is totally rational for the big existing companies to ignore each new flash in the pan. But nobody wants to end up like Kodak: sticking with film while the digital camera takes off. So what to do?

Our friendly professor has a few ideas – for the little guy and the big old company. He'll explain the shape of how new technology gets adopted, sometimes called the S-curve. We'll also hear examples of what stops promising new tech from taking off: from dishwashers to driverless cars, and even the humble elevator.

MBA 5: Tech and the innovator's dilemma

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Welcome back, everyone, to PLANET MONEY Summer School. This season, we are using every bit of business school jargon we can think of. We're on the bleeding edge of outside-the-box thinking as we 10X our game-changing synergy. Got it? Got it. I'm Robert Smith. So far this season, we've concentrated on the basics of building a business. How do you differentiate your product from your competitors? How do you find customers and craft your sales pitch? But what if you want to dream bigger - not just a new product but something that can change the world and make billions of dollars? What if you want to create a tech company?

This is normally the point where sleepy MBA students in the back of the classroom perk up. Did somebody say market-disrupting innovation? Did somebody say billions? Yeah. Now that I have your attention, I should say that technology is more than just buzzwords and outlandish behavior. Today on the show, how to see technology as an opportunity and as a threat for a business and some techniques entrepreneurs use to take advantage of that. It's not just about the product. It's about psychology and ethics and seeing the blind spots that bigger companies don't even know they have. That's what you learn in business school and hopefully here. Teaching our class today is a man who has guided many a budding tech guru. We brought back in Dan Wang, a professor of strategy at Columbia Business School...

DAN WANG: Thank you - pleasure to be here again.

SMITH: ...To talk about technology. So...

WANG: Sure.

SMITH: We've talked a lot about what students in an MBA program will learn about business. And oftentimes the examples are, I'm selling apples on the corner. I have a hot dog cart. But in this day and age, it seems like most of the business conundrums, the business opportunities are in technology. So when we talk about technology, how do we think about that differently? Does it fit the same business model they were teaching in the 1950s?

WANG: I would say there's a couple of general principles. I think the first one is that in an industry that's technology-intensive or tends to be constantly shaped by technology, companies have to be in constant search for new competitive advantage or new sources of competitive advantage.

SMITH: That's good for innovation. It's good for progress.

WANG: Certainly, but it also makes choices that much harder and that much consequential. Because there's a wider spectrum of ways to differentiate, it makes it harder to move from one choice to another once you've committed.

SMITH: So you think about old-fashioned film companies like Kodak, right? They used to compete on how good their film stock was, how vibrant their colors, small improvements. But then digital photography comes along, and they have to decide if they're going to completely change everything they do and become a digital company, at which point, you know, you're going to need different products, different cameras, different factories, different workers.

WANG: You kind of have to commit to that. And so when confronted with the new technology, they're always caught in this dilemma. Do you adopt the new thing, or do you go with what has traditionally worked?

SMITH: And on the other hand, if you're a small startup, can you wiggle your way into the market while the big guys are hemming and hawing over whether or not to change? All right, Dan will be back with us after we listen to a case study or two. And he'll teach us more about that concept that has sold a million business books - the innovator's dilemma. Disruption after the break.


SMITH: People love to think of themselves as technologically savvy. We're not stuck in the past. We love to try new things. And yet think of all the things that you do every day out of habit - tying your shoes even though Velcro is better, using a knife when the Chop-o-Matic 2000 (ph) can do it faster. It's hard to convince a customer to not just change the product they use but to change the way they behave in the world. Here at Summer School, we like to show you the atomic units of business, the smallest examples that offer the biggest lessons. And our first case study is about a tiny bit of technology that fits on the tip of your tongue. As you listen to this case study, listen for the ways in which big businesses are slow to change and how small businesses have an opening if they can convince customers. This story comes from Darian Woods and Sally Herships in 2021.

SALLY HERSHIPS, BYLINE: I have one word for you - tablets.


HERSHIPS: I'm not talking about a digital tablet. I'm not talking about biblical tablets from Mount Sinai. I'm talking about toothpaste. Instead of buying a plastic tube of toothpaste, then throwing it away or recycling it, maybe you can now buy toothpaste tablets that come in this little, compostable paper package. They're like these little mints that you chew on. You add water on your toothbrush. And they're part of this massive push of eco-conscious products that don't have plastic.

WOODS: All right. But not every consumer gets as excited about new products as we know you do, Sally Herships.

HERSHIPS: That's true.

WOODS: So we decided to send you out to do some informal market research, get to the people. And we decided specifically those people would be children because children are notoriously difficult when it comes to dental hygiene.

LERIT KLEMMER: I don't usually like brushing my teeth because it's just - it's not that I don't like the flavor. Sometimes I just - like, I don't feel like doing it.


That's Lerit Klemmer, and I managed to finagle an invitation to her 12th birthday party in Brooklyn's Prospect Park.

WOODS: Coveted.

HERSHIPS: She is the daughter of some friends of mine, and she was there with her friends Maya, Noah and Deora. And they were painting these wooden jewelry boxes and decorating them with stick-on rhinestones. They were all super-happy to try the toothpaste tablets, but they were tough customers.

LERIT: Oh, wow.

UNIDENTIFIED CHILD #1: Really minty.

LERIT: One more thing...


LERIT: ...Is that it's kind of weird, like, taking the water and brushing as well.


LERIT: It's kind of weird.

HERSHIPS: Would that stop you from using it?

LERIT: It might.

HERSHIPS: How about you? What do you think?

UNIDENTIFIED CHILD #2: I would, like, use it all the time if there was a vayarity (ph) of flavors.

HERSHIPS: What if this toothpaste was really cheap and really good for the environment? Would you consider switching?

UNIDENTIFIED CHILD #2: I'd love to take care of the environment. And I love that it's cheap. But it would really depend on if I like it or not.

HERSHIPS: So if it was good for the environment and it was cheaper but there was only this one flavor, you still wouldn't switch.

UNIDENTIFIED CHILD #2: I would consider switching.

HERSHIPS: To understand why it's so difficult to get us to try new products, first, you have to understand that we are creatures of habit.

JEFF GALAK: We get dressed the way we always get dressed. We brush our teeth whenever we happen to brush our teeth in our routine.

WOODS: Jeff Galak teaches marketing at Carnegie Mellon, and he says that if companies and brands want us to try their new product, then they have to try to force us to break our routines. And that can be really hard to do. Jeff says imagine you're shopping for toothpaste. You go into the store. You're used to the display. You're used to reaching for the same box of toothpaste.

GALAK: You might not even look to the side to see this weird other packaging of tablets in a glass bottle because that's just not part of your shopping routine.

HERSHIPS: Jeff says for marketers or brands to try to persuade us to try a new product, that product has to do three things.

GALAK: Can it do it better? Can it do it easier? And is it cheaper?

HERSHIPS: Better plus easier plus cheaper equals value. A new product has to change the way we behave in such a positive way that it's worth us changing our habits and routines. And even then, it can be hard to win over consumers - case in point, the dishwasher.


UNIDENTIFIED PERSON #1: Dishes, dishes, dishes three times a day. And breathes there a housewife with soul so dead who sometimes to herself has not said...

UNIDENTIFIED PERSON #2: Why can't something be done to relieve the monotony of this everyday kitchen chore?

WOODS: Luckily, the dishwasher had actually been around this entire time. The dishwasher was invented in the late 1880s, and while you might think that that kind of labor-saving device would have been an immediate hit, Jeff says no.

GALAK: People were highly skeptical at the time of adoption. I mean, it took from invention to mass adoption probably 60 or 70 years to get there.

WOODS: I mean, to be fair, at first the dishwasher didn't do all three of Jeff's things. It might have been better and maybe easier than doing the dishes by hand, but it really wasn't cheaper. You'd have to redo your entire plumbing to make room for this thing.

HERSHIPS: But the skepticism was there in large part because the dishwasher was so different. Especially if you go back in time, by and large, dishes were traditionally done by housewives.

GALAK: And you have to convince them that not only is this going to be as effective as their manual sitting there and scrubbing the dishes clean, but it won't undermine their value. So, yeah, it was a huge hurdle to make this work.

WOODS: But sometimes it's not just us as individual shoppers that can be reluctant to change our habits. Companies can also not see the writing on the wall, even when a product is ultimately better, easier and cheaper. Way back in the year 2000, not too long after Netflix had first begun offering movies on DVD via mail, Blockbuster passed up the opportunity to buy the company for $50 million. It wanted to stick with what it knew - people coming into real retail stores, renting movies in person. Later, Blockbuster did try to finally get into the streaming business, but it was a little too late.

HERSHIPS: And I'll just leave this little factoid here. A decade later, the company filed for bankruptcy with $1 billion in debt.

WOODS: I think it's fair to say that was a business mistake.

GALAK: That's a wonderful example, in my mind, of a product that changed fundamentally the way we consume media experiences. Like, that's not a small change. That's a humongous change.

HERSHIPS: But let's get back to today and toothpaste. Marketing aside, do the toothpaste tablets pass the better, easier and cheaper test? OK. So when it comes to better, the American Dental Association didn't take a position. But on the environmental side, the Plastic Pollution Coalition says the paper packaging on the toothpaste tablets is definitely a win for the planet.

WOODS: And as for the cost, well, the last time I went to my local pharmacy just to buy normal toothpaste, it was about $4 or $5 here in New York. So how much are the tablets?

HERSHIPS: They're $12.75 for two months, so maybe a little bit more expensive. But, Darian, what is the cost of saving the planet?

WOODS: It's priceless.


SMITH: That was Darian Woods and Sally Herships from an episode of The Indicator podcast in 2021. Let's bring back in our professor of strategy, Dan Wang. So, Dan, there's two big dilemmas in this episode. For an entrepreneur, how do I convince people to try my new things? But it's also a dilemma for existing companies, big companies, when a competitor comes in with a new technology. There's a real question here.

WANG: Oh, yeah.

SMITH: If you are big toothpaste, do you really want to get on this whole tablet thing? I mean, you've invested all this time and money in your toothpaste machines, puts the...

WANG: (Laughter).

SMITH: ...I don't even know how it works, but it puts it in there.

WANG: Yeah.

SMITH: And you spent a lot of money on that.

WANG: Yeah.

SMITH: So how does a company think about this?

WANG: That's known as the innovator's dilemma. And the innovator's dilemma refers to two choices - No. 1, stick with what you're doing because it's been successful or, perhaps, take a dive into a new technology that's highly uncertain, but there is a small probability that that technology will actually become the dominant technology in the future.

SMITH: And so in the case of the toothpaste, like, if you're big toothpaste, you're just so good at that tube and the advertising on the tube that you can't even picture the market being big enough for little toothpaste tablets, whereas if you're a small company, you think, oh, I'm going to do the tablets, and this is my way to break in. I can be the Colgate of tablets, essentially.

WANG: What you're depending on if you're the tablet startup is precisely for the incumbent to ignore you. What you're hoping is that they actually do evaluate the opportunity, in many ways, is not worth it for them.

SMITH: It's hard - to kill your most successful thing in order to do the next successful thing.

WANG: It's a big decision, and what leaders are afraid of is getting it wrong.

SMITH: 'Cause then you'll be made fun of on a podcast. You'll become the stereotypical horrible decision. We used to use the Edsel as a car that was ugly and failed, but now we have Blockbuster and Google Glass. You don't want to go down in history as the person who embraced the wrong technology.

WANG: Oh, yeah. But you know what? What's also kind of interesting about this is that there are massive investments in disruptive technologies that also fizzle out as well.

SMITH: So I know that technology leaders love to use the word disruption. Is that a real thing, disruption? Like, is that - like, what does that mean? And how is that a useful way to think about the world if everyone's trying to be a disruptor?

WANG: There's two ways of thinking about this. The first way is the generalist layman's way of thinking about disruption, which just signals any type of change that is large in scale. I don't think that's a very useful way or strategic way to think about disruption. The second way to think about disruptive innovation comes from the originator of the idea, who was Clayton Christensen, a professor at Harvard Business School for a long time. And what makes these innovations particularly dangerous for incumbents is because they're easy to ignore. And what makes them easy to ignore is that they are technologies that are decidedly worse. They're seen as worse ways at delivering the same kind of value.

SMITH: I don't quite understand. Like, you would think that someone's launching a new technology because they think it's better, not because it's worse.

WANG: Well, they're launching a new technology because it's different. It's a different way of providing a good or service. And incumbents are used to their way of providing that good or service. They think that's superior. So when they evaluate a new way of doing it and they see it as worse, then it's not worth competing with them because they'll say it's, like, wait a minute. We've already figured this whole thing out. Why would you go with that particular service? It's - obviously, it's worse. It's not what our customers value at all. And so we don't need to do anything. They're going to fail.

SMITH: And that's where the disruption comes in. The case study mentioned Blockbuster and Netflix, but we forget that Netflix was actually worse, at first, than your neighborhood video store. It took them like five days to mail you a DVD versus five minutes to go to the Blockbuster. So Netflix, at first, was easy to ignore, and it gave them time to get better.

WANG: The thing is, most incumbents are right when they choose to ignore and overlook disruptive innovations.

SMITH: But when they're wrong...

WANG: It's fatal.

SMITH: ...It's fatal. And that means the little entrepreneur has a shot at winning.


SMITH: We'll be back with professor Dan Wang in a few minutes after our next case study. What happens when your new technology might actually be fatal? When the stakes are so high, maybe people are afraid to switch. The parable of the self-driving car after the break.


SMITH: Our second case study is about something you might have seen but maybe never used yourself - self-driving cars.


SMITH: We did an episode in 2015, when they first started to be tested. And frankly, we assumed that by now we would all be taken around in self-driving cars - obviously didn't happen. When we did this episode, the whole debate about driverless cars didn't involve Elon Musk or city ordinances. It was about trust in a fundamentally new paradigm. As you listen to this case study, think about the tricks an entrepreneur could use to make the new seem safe and familiar. The show was hosted by Katie Mingle and Steve Henn.


STEVE HENN: Earlier this summer, I took a ride in Google's self-driving car.



HENN: Preplanned route, OK. We were driving through a construction site, and we were going past a guy holding one of those two-sided stop signs. It said slow on one side and stop on the other. And right as we went by, the guy flipped the sign around to read stop.

COMPUTER-GENERATED VOICE: Temporary stop sign.

HENN: The Google car slammed on its brakes all by itself.


KATIE MINGLE: So that was quite interesting.

HENN: The car startled us, it stopped so quickly. None of us had seen that stop sign flip around when it happened.

I think I have blown through manual stop signs like that a thousand times.

This car sees more than we do. It doesn't get distracted. And even though this is kind of a low bar, I'm convinced it is a better driver than I am, already. But if a little drone car pulled up to my house tomorrow and there was no driver inside, no steering wheel, no brakes, would I put my children in it? The statistics, the research say this thing is safe, but it's still scary. There is this moment - this moment when something new is introduced that's disorienting. It freaks us out.

MINGLE: The big question with automation isn't just about technology or economics. It's about how designers make us comfortable with something that's really scary, like screaming down the highway at 65 with a robot at the wheel.

HENN: Basically, there are two ways to make someone really comfortable with the machine. You can either give people the power to turn it on and turn it off, to override the automation and give humans a measure of control.

MINGLE: Or you can make the technology seem soft and fuzzy and harmless, like, convince them that everything is going to be okay. Like elevators - you don't even think about them anymore. You just get in them.

HENN: But if you think about this, you are walking into a tiny box, and it's controlled by God knows what. You hurtle up through space 10 stories, a hundred stories, and we just get in it.

MINGLE: It's kind of crazy. And, in fact, it took a long time and a lot of work from elevator designers to get us to this blissful ignorance we have today.

HENN: When elevators were first invented, they were like cars - big things that could kill you. And so, like cars, they needed a driver. There was an operator who would open and close the doors and use ropes or levers to guide the elevator to the proper floor. And like any humans, these elevator operators occasionally made mistakes.

LEE GRAY: There are accounts in the 19th century of very bad things happening that way.

HENN: This is Lee Gray. He wrote the definitive history of the passenger elevator.

GRAY: There were lots of times when, as a businessman, you might say, ah, the elevator is leaving, and you hurry up, and you sort of jump the gap into the car and land, and off you go just before the operator shuts the door. And if you're athletic, it's all good. If you trip and fall and you're lying half in and half out of the car, the operator's not going to have time to stop. And that ended rather badly.

HENN: This was not the image the elevator industry wanted for its new transportation device. So they tried to make it safer. They automated it. They created automatic doors with safety bumpers, automatic stopping and then a driverless elevator. It was like the Google car of its time.

MINGLE: And people hated it.

GRAY: People walked in and looked and walked right back out and try to find someone to say, where's the operator?

HENN: The elevator industry decided they had to convince people to rethink what an elevator was. It wasn't a gritty, dangerous transportation device. It was an elegant room that magically did your bidding. For the nervous rider, there was a soothing voice that would pipe out of speakers when you walked inside.

GRAY: This is an automatic elevator. Please press the button for the floor you desire.

HENN: And it directed you to the biggest calming device ever invented - a red button that said stop.

GRAY: It would say, you have pulled the emergency stop. If this is not an emergency, please push it back in. If this is an emergency, please use the phone.

HENN: But here's what they didn't decide to do. They didn't give any real control to the people inside. There wasn't a special lever in an elevator that someone could grab and take control and change where you were going. There wasn't an emergency override or a way to open the doors in the elevator while you were still moving. It was safer to just let you listen to the music and stare at that red button.

MINGLE: And it took people years to get used to it. But now an elevator feels really safe. So we said there are two ways to get people used to automation, two ways forward for the Google car - the soft and fuzzy way, the elevator way. Just keep reassuring people until they're comfortable.

HENN: And then there's a second way. Let the humans take control when they need to. And this is how automation works on airplanes. Most of the time you're in the air on a commercial jet plane, no human is really flying it. It's mostly controlled by computers. But we don't think about this or freak out about it because there are men and women in uniforms sitting up there waiting to take over in an emergency.

MINGLE: The automation in planes is extremely safe, and almost all the time the plane flies better with this combination of humans and computers. But designers have to think really carefully about how the two work together because there are rare times when you might allow humans to make a choice and they make the wrong one.

HENN: And that's what happened to Air France Flight 447. This flight crashed into the Atlantic Ocean in 2009, and it highlights the stakes in getting automation right. This flight was flying from Rio to Paris.

WILLIAM LANGEWIESCHE: There was a lot of thunderstorm activity - quite typical, nothing really unusual about that.

MINGLE: William Langewiesche is a former pilot who studied this crash and wrote about it in Vanity Fair. He says the main pilot was asleep, and the two co-pilots were at the controls of the plane. But in a real sense, the plane was flying itself.

LANGEWIESCHE: Suddenly, they lost airspeed indications.

HENN: A pressure probe on the outside of the plane had iced over. The automation could no longer tell how fast the plane was going.

MINGLE: And so at this point, the system told the pilots that something was wrong.

LANGEWIESCHE: And autopilot disconnected with a bell that went off.

MINGLE: But that was no big deal, William says. The plane was still flying straight and steady. It just wasn't getting all the data it normally did. So it gave the human pilots a heads-up and then gave them a bit more control over the plane.

HENN: It was what happened next that caused the problem.

MINGLE: The co-pilot in the right seat put his hand on the control stick, a little joystick-like thing to his right.

LANGEWIESCHE: And he pulled it back.

HENN: Not just a little. He pulled it three-quarters of the way back.

LANGEWIESCHE: The airplane put its nose up and started to soar upward.

MINGLE: This is bad. This can cause a plane to lose speed, to lose lift.

HENN: And here's the thing in this case. If the crew had done just one simple thing when all of this had started, they would have been fine.

MINGLE: All the pilots needed to do to avoid this tragedy was nothing.

LANGEWIESCHE: Had they done nothing, they would have done exactly what they needed to do - nothing.

HENN: The plane would have flown on steadily. The automated system would have re-engaged, and it most likely would have been another unremarkable, forgettable triumph of this machine. If you give people control, they'll use it, and that means sometimes they'll make mistakes, deadly mistakes. But if you take control away, it tends to make us all uneasy, irrationally anxious.

MINGLE: So this is the really high-stakes dilemma facing anyone who wants to make a driverless car. You have to make people comfortable enough to get in the car. You have to give them a sense of control, but then you have to keep them from doing something stupid.

HENN: Essentially, Google is asking, should its self-driving car be more like an elevator or more like an airplane? And here's the guy who gets to decide.

CHRIS URMSON: I'm Chris Urmson. I lead the self-driving car project here at Google.

HENN: When Chris launched this project years ago, the assumption was that drivers would sit and let the Google car drive, but they'd be paying attention to the road, ready to take control when they needed to, just like airline pilots.

MINGLE: And, in fact, they let Google employees borrow the self-driving cars to commute home from work.

HENN: And there was a little camera inside, so Chris could see if they were really paying attention. But he was amazed by what that camera recorded.

URMSON: We had one guy who decided to plug his laptop in, by digging in the back, pulling out the power cord, pulling out the laptop, you know, all while moving down the freeway.

HENN: It was pretty easy to imagine the worst-case scenario, a driver taking a nap. The Google car is doing fine. The driver wakes up all of a sudden, sees something and panics, hits the brake or swerves. So Chris made a call. They had to make the Google car more like an elevator - no steering wheel at all.

MINGLE: Chris is not an idiot. He knows that the idea of a car without a steering wheel is going to freak people out. And so, like the elevator, Google is going the soft-and-fuzzy route. They're using design to make the car as non-threatening as they can.

HENN: Everything is designed to keep you calm. There is a rear-view mirror, although there's no real reason for it. There's a little screen inside that shows you what the car can see. And just like in an elevator in the '50s, there's a reassuring automated voice.

AUTOMATED VOICE: Auto driving.

HENN: Now, you're not totally helpless when you're cruising around in this thing. You can use an app on your phone to tell it where to go. And there is, under a plexiglass shield, the big red button that says stop.

URMSON: Just like an elevator. I've never pressed the red button in an elevator, but it's kind of comforting to know it's there.

HENN: In Chris's ideal world, that is all anyone would ever need.

MINGLE: Chris hopes that by the time his oldest son turns 16 in 4 1/2 years, the steering wheel will be a distant memory, kind of like those old elevator levers.

SMITH: Katie Mingle and Steve Henn from 2015. Google's car program changed its name, by the way. It's now called Waymo, and it offers taxi service in Phoenix and San Francisco, and they're rolling it out to other cities. There's no one in the driver's seat, but it does have a steering wheel, if that makes you feel any better. After the break, we'll invite back in our class professor to talk about why things take so long to catch on. And what does it teach us about the challenges that all businesses face to get customers to adopt new things?

OK, class. Everybody quiet down. Put away your new technology. And welcome back professor Dan Wang, who actually uses this self-driving episode in his classes.

WANG: Absolutely.

SMITH: You make the students listen to PLANET MONEY, which I endorse. All professors should do this.

WANG: Oh, yeah. I quote it. I created slides that follow the narrative, the elevator example.

SMITH: And in your classes, you use this to talk about the morality of technology, which is interesting to those of us thinking of starting a business with new technology, right? We have to ask what the implications are. You put in your classes that a lot of people aren't comfortable with some programmer in Silicon Valley writing an algorithm that makes these life-or-death decisions.

WANG: This is kind of the classic dilemma that's come to be known as the trolley problem.

SMITH: The trolley problem is a classic philosophical question that is, if the trolley is out of control going down the tracks and it's about to kill one person or many people, I guess, so then you - can you change tracks and kill somebody else?

WANG: Exactly.

SMITH: And it puts the moral decision-maker on you in the trolley of saying there's two bad things that can happen.

WANG: Which one do you choose?

SMITH: Which one is morally worse? Yeah.

WANG: Yes. We often face these morally ambiguous situations when we're driving, but with much lower stakes. For example, do you sneak by the traffic light as it's about to turn red? You know, it's like...

SMITH: I mean, I do - sort of...

WANG: Yeah. So I can see that. Certainly, you look like that type of guy, Robert. But I'm just saying...

SMITH: The moment you put that into programming, though, that feels bad. That feels like, wait, are you saying you should violate the laws...

WANG: That's right.

SMITH: ...In the programming?

WANG: This is one of these problems that I think autonomous vehicle companies are thinking about, but there's really no good solution right now to them.

SMITH: There was one big thing that I noticed in both of the case studies, actually, which is how long it takes for these technologies to catch on. I mean, we talked about the dishwasher, the automatic elevator and even self-driving cars. I mean, we did that story eight years ago, and it still hasn't been widely adopted. I know in class you call this the S curve of adoption. So define that for us.

WANG: With this refers to is kind of a pattern that new technologies follow in terms of how they become widespread. And so typically, with a new technology, adoption is very, very slow at the beginning. It's almost always with hobbyists, evangelists and enthusiasts. But those types of consumers are really different from the mainstream types of consumers. There's a long period that has to unfold before it becomes mainstream as well. And so it's during this initial period of adoption that it's impossible to tell whether a technology will become widely adopted or fizzle out.

SMITH: And then the middle part of the S - I take it this looks like an S - it sort of rapidly ramps up?

WANG: It rapidly ramps up. And there are many factors that can influence that as well. It could be there's a dramatic improvement in the technology, the quality - could have to do with the accessibility of the technology. It could be something that has nothing to do with the technology. It could go viral, for example, because there's an endorsement effect from a particularly influential person. There are many reasons that can influence the shape of that adoption curve.

SMITH: And I know this is still a big, open question in business schools and even in Silicon Valley. How do you shorten the S curve? How do you get people to adopt technology more quickly? And I guess whoever figures that out, I guess they're the entrepreneurs who win.


SMITH: Now here are some vocabulary words to help you perhaps be the winner. The first one is the S curve of adoption. The S curve says there's a pattern to who adopts a technology first. That tells you who to focus on first and how it spreads. Our second vocabulary word is disruption. Disruption is not just a new, better product. Disruption is changing people's entire conception of what they want and how they will use something. Moments of disruption are moments of opportunity and danger. And the danger? That's the innovator's dilemma. A big company that's doing well is doing well for a reason, and they have to be cautious about adopting new technologies that, you know, might hurt their cash cow. Their hesitation is your opportunity.

Thanks so much, Dan, for coming on the program. You know, I know a lot of people laughed when I said we were going to do an entire MBA education in just eight easy-to-listen-to episodes. And, in fact, the big business schools ignored us. But here at PLANET MONEY Summer School, I think we're disrupting the business, the education business.

WANG: Hey. Look at that. Look at that. Maybe this is putting all these business schools in an innovator's dilemma, but it's creating serious internal conflict for me.

SMITH: (Laughter) We appreciate you coming on despite any turmoil you have inside.

WANG: Absolutely.


SMITH: We are here disrupting and S-curving - is that a verb? Sure - every Wednesday until Labor Day. If you haven't heard all the Summer School lessons, it's easy to catch up. Just scroll back in the feed. There's going to be a test at the end in order for you to get your electronic facsimile of a diploma, and you don't want to live out that recurring nightmare of being unprepared for the big test. Next week - factories, supply chains, checkout lines. People hate to wait. And we'll show you how to smooth the operations of your business so that people get what they want fast.

Our Summer School series is produced by Max Freedman. Our project manager is Julia Carney. This episode was engineered by Josephine Nyounai. The show is fact-checked by Sierra Juarez. PLANET MONEY's executive producer is Alex Goldmark. I'm Robert Smith. This is NPR. Thanks for listening.

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