Putting change on the fast track

Because the Minister concerned did not do his homework on Game Theory.

This is not as facetious as it sounds as an important plank in the Game Theory is equilibrium. Prior to CAS, there was an equilibrium of sorts among the players "" the broadcaster,the multi-service operator (MSO),the cable service provider and the consumer.

For the Government to succeed in introducing CAS, it had to induce multiple behaviour to unlock in a coordinated manner to arrive at a new equilibrium. Failure to do so resulted in this innovation becoming a victim of the gravitational force of status quo.

Game Theory was first propounded by John Nash about 50 years ago and he later won a Nobel Prize for it. His tempestuous life has been well documented in his biography by Sylvia Nasar in her book A Beautiful Mind, which later was made into an award-winning movie.

This theory has been widely used in developing marketing strategies. The author of this book, Bhaskar Chakravorti, is a practitioner of the Game Theory and is a partner in a leading strategy consulting firm, Monitor Group, in Boston, Mass.

Earlier he was in academia, having lectured in economics at a few American universities.His main concern in this book is to explore why innovations, whether in products or services, travel slowly into the market and to develop strategies to hasten their pace. In this, he draws extensively on his academic and consulting experience.

The rate of change in technology is encapsulated in Moore's Law. Gordon Moore of Intel predicted that the number of transistors that can be packed in to a chip will double every 18 months. Chakravorti's observations,however, led him to believe that the benefits of this change took much longer to reach the marketplace. He estimated that the lag is of the order of three years or so.

So he decided to term this phenomenon 'demi-Moore'. This rather cute turn of phrase brought him more publicity than he bargained for when the Financial Times published his piece on this subject alongside a picture of Demi Moore!

There are many reasons why the pace of innovation is slowed down in an interconnected market. For example, the benefits of broadband have not percolated to the market because of the restrictive 56K modem which is fitted as standard on the PC.

Then there are inefficiencies in a networked market due, for instance, to fragmented decision-making. The author examines these at some length before working out a strategy framework.

Typically, the questions he seeks to answer are: who are the players in the critical path to the innovation's adoption, what is the nature of the status quo to be unravelled, what must happen for a new outcome to be created, what are the innovator's levers,etc.

The author suggests beginning with an end game and working back to current choices. He has bolstered his arguments with a number of case studies, the most interesting of which is Oracle's debacle with the Network Computer.

Larry Ellison thought that he could make the PC much cheaper by transferring many of its largely unused capabilities to the common server in a local network. He set up a formidable coalition with IBM and Sun Microsystems. He expected the NC to be considerably cheaper than the PC and a runaway success. Yet it sank into oblivion.

The author has analysed in detail the reasons for this failure and discussed alternative strategies which could have worked better. For example, the NC sought to disturb the equilibrium which the PC had already established in the market without getting enough leverage for the new product.

He contrasts this against the strategy for the Palm Pilot, a hand-held computer, which appeared on the market at the same time and which was a huge success. The Palm Pilot enhanced the capabilities of the PC without disturbing the market equilibrium.

In this context the recent high profile launch by Reliance Telecom of its CDMA-based mobile telephones offers an interesting study of the strategies adopted. The starting point was the user in a remote village who needed to be offered an alternative means of communication comparable in cost to the existing facility "" the postcard.

Working backwards, they were able to make appropriate choices regarding technology, investment in infrastructure and, more importantly, a marketing strategy where they would retain sufficient leverage to ensure that a new equilibrium could be established. And within a year, they have been able to achieve a marketshare of over 25 per cent in a highly competitive field.

The style of the book is rather academic, more like a text book, and as such makes for heavy reading. However, for the serious student of marketing strategy, this would be a useful book as it is extensively referenced and contains a number of illustrative case studies from healthcare as well as entertainment and communication industries.

Will it help reinstate CAS? Not likely. But it will certainly provide insights if alternative technologies are proposed to be introduced.

vasgok@hotmail.com

The Slow Pace of Fast Change
Bringing Innovations to Market in a Connected World

Bhaskar Chakravorti
Harvard Business School Press
Pages: 216
Price: $29.95