Scorn the latest advances and you risk being left behind, as when Sony kept investing in flat-screen versions of cathode-ray televisions in the 1990s while Samsung piled into liquid-crystal displays (LCDs), and eventually replaced Sony as market leader. Embrace new ideas too early, though, and you may be left with egg on your face, as when General Motors spent more than $1 billion developing hydrogen fuel cells a decade ago, only to see them overtaken by lithium-ion batteries as the preferred power source for electric and hybrid vehicles.
To determine when to proceed with a new technology many managers and engineers employ popular heuristics, some of which are seen as “laws”. The best known is Moore’s law.
In reality, however, such laws are unreliable because progress is rarely smooth. So Ashish Sood of the Goizueta School of Business at Emory University, Atlanta, and his colleagues have come up with their own law, which is explicitly based on the tendency of technology to progress in stops and starts. As the number of competitors in a new field increases, both the size of the steps and the length of the wait for the next step can change.
Their “step and wait” (SAW) model, recently published in Marketing Science, notes that advances in performance are often followed by a waiting period before the next step forward.
Read more at The Economist
