BOOK REVIEW:Jonathan Birchall reviews Market Rebels: How Activists Make or Break Radical Innovations by Hayagreeva Rao
WHEN HENRY Ford opened his first assembly line for Model T Fords in Highland Park, Detroit, in 1913, he was at the forefront of a revolution. However, the groundwork for the new age of the internal combustion engine had already been laid.
In the first years of the century, it was clubs of automobile owners – rather than any fledgling carmakers – that staged reliability and endurance tests, pitting motor cars against each other and against rivals powered by electricity or steam. The petrol engines won – they just kept running.
So by 1912, when the last reliability test was held, it had become generally accepted that a motor vehicle could get you there and back, and buying one was not a risky investment in a dubious technology with uncertain prospects. Market Rebels uses the grassroots movement that led to the widespread acceptance of the motor car as the starting point for a series of brief case studies that look at “how activists make or break radical innovations”. The author is Hayagreeva Rao, a professor of organisational behaviour at Stanford University.
The marketing world is in hot pursuit of the idea that small groups of enthusiasts can promote social innovation or acceptance of new products, as demonstrated by word-of-mouth marketers or Procter Gamble’s Tremor marketing.
But Rao sets out to extract a broad theory from an extremely wide range of case studies, ranging from the development of micro-breweries and the “real beer” movement in the US, to activist opposition, to bioengineering in Germany in the 1990s, which forced BASF, Hoechst and Bayer to reverse their strategic investment plans in areas such as genetic engineering.
He argues that successful activism requires a “hot” issue – the generally unsatisfactory performance of horses, in the case of the motor car – combined with “cool mobilisation” systems for achieving change, such as the motor car enthusiasts’ clubs with their reliability and endurance tests.
So rebel beer drinkers, disgruntled by the “hot” issue of industrialised beer, used the “cool” structures of artisanal microbrews and brewpubs to spread their message. Moreover, US shareholder activists have used the “cool” mechanisms of filing shareholder resolutions to bring about changes in corporate thinking on shareholder rights and corporate responsibility.
Rao’s overall principles for successful rebellion would not be surprising to the average activist, whether in the market or anywhere else.
“Hot issues” have regularly been used to foment dissent – you only have to think of the Boston Tea Party in 1773 or Gandhi’s 1930 salt march.
“Cool” local organisation and mobilisation are surely the established way of turning dissent into effective action.
Rao detects his hot/cool principles in the rise of the nouvelle cuisine movement in France, and to the failure of the Segway scooter to gain wide acceptance.
Sometimes the definition of “activist” becomes blurred. At the same time Rao’s attempt to argue the broad principle leaves no room for the economic and political factors at play.
In his discussion of US opposition in the 1920s and 1930s to the spread of chain stores such as AP, the activists are the associations of small shopkeepers, representatives of the status quo who used their local political clout to pass anti-chain store tax regulations.
But they were ultimately defeated by a more powerful national coalition as the interests of organised labour and agribusiness combined to back the chain stores – in which economic power, rather than activist organising, was the key.
All the same, it is an intriguing subject. In his introduction, Rao makes the point that the development of personal computing in the 1970s was not spearheaded by IBM and the dominant computer companies, which clung to the idea of an all-powerful central mainframe, but by activists and enthusiasts who in turn paved the way for Silicon Valley’s garage-based innovation.
It would have been good to hear more about this kind of “revolt”, in which people spontaneously choose to develop existing ideas in creative – or even uncreative – ways that were unintended, and even opposed, by the original proprietors.
The Frisbie Baking Company of Connecticut, for instance, was presumably not that happy about students throwing its metal pie plates at each other, in a clear act of market rebellion. Foolishly, it kept on making pies. – ( Financial Timesservice)
