Hayagreeva Rao, Market Rebels: How Activists Make Or Break Radical Innovations. Princeton University Press, 2008.
On the front cover of this book, former Intel Corp. chairman Andy Grove is quoted as saying that “Rao’s shrewd analysis provides an ‘Aha!’ moment.”
While this is a bit of the usual cover hype, the book does offer some unique and interesting insights into the role social movements and activists play in the evolution of markets and the acceptance of radical innovations. In this volume, Hayagreeva Rao, the Atholl McBean professor of organizational behaviour and human resources at Stanford University’s graduate school of business, provides a perspective on the evolution of markets that is largely absent from traditional economic and business literature.
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Drawing on the extensive research on social movements, his thesis is it’s often informal groups of activists who support or oppose an innovation that determines its ultimate acceptance or failure. Mr. Rao suggests the acceptance of radical innovations is a complex process, one often involving the transformation of social practices and social relationships and that can pose a challenge to existing norms and conventions.
As a result, activists and the social movements they create can often influence how markets respond. A variety of interesting anecdotes are used to support his thesis. For example, he shows how hobbyists and tinkerers rebelling against the perceived tyranny of centralized computing organized themselves into groups like the Homebrew Computer Club and created the market for personal computers, paving the way for companies such as IBM. One of his earliest examples is the automobile sector, where he argues that enthusiasts established the industry by staging highly publicized reliability races and lobbying governments to enact licensing laws.
Henry Ford then came along and exploited the popularity of the car by using new mass-production technologies. He also demonstrates that if it were not for what he calls “evange-ale-ists” and craft brewers who crusaded against “industrial beer” and proliferated brewpubs, there would be no specialty beer industry in the United States.
Mr. Rao also provides a number of examples of where social movements have thwarted innovation. These include the strong opposition of the deaf rights movement to the cochlear implant, where the innovation was characterized as leading to the destruction of sign language and deaf culture.
He also cites opposition in Germany to the biotech industry by activists who depicted biotechnology as a Faustian barging that risked resurrecting Nazi eugenics and genetic discrimination, which eventually drove much of the biotech research of German pharmaceutical companies offshore.
Similarly, he demonstrates how consumer activists have taken on chain stores and big-box retailers. The process by which this social mobilization takes pace has two dimensions: a left-right combination of what Mr. Rao terms “hot causes” and “cool mobilizations.” Hot causes can be used to raise awareness and in some cases stir intense emotions, as in the anti-tobacco movement. Cool mobilizations involve unconventional techniques that bind people together, engage them in collective action and create a commitment to implementing solutions to influence markets.
While some readers may find early sections of the book overly academic – the chapter that outlines the research on social movements, although interesting, reads too much like a literature review for a PhD thesis – it is well worth persevering, as Mr. Rao provides a very useful perspective for those involved in innovations requiring major behavioural or market changes or in creating new industries.
One can think of a number of contemporary examples of where industries and markets are driven and shaped by activists. For example, environmental activists have played a major role in the development of markets for hybrid cars, wind and solar power, etc. The anti-nuclear movement, on the other hand, has posed significant challenges to the expansion of the nuclear power industry. The Internet and modern communications technology provide market rebels with new capabilities for attracting and mobilizing supporters that may further enhance the influence that they are capable of exerting.
Mr. Rao’s advice to managers is to stop thinking like bureaucrats and start thinking like insurgents. This requires understanding the relevance of activists and considering the kind of impact that they can have on the markets for new products and services.
It also means recognizing the opportunities to work with them to mobilize networks of supporters and customers.
Micheal Kelly is dean of the Telfer School of Management at the University of Ottawa.
