History is littered with high quality innovations that never had their day. There is the Dvorak keyboard that wasn't taken up even though it is more efficient than the ubiquitous Qwerty keyboard design and the Sony BetaMax video format that, despite being first to market and boasting superior picture quality, couldn't entice the market away from the VHS format. Professor Sterman says these failings arise from "a failure of our mental models, a failure of systems thinking."
Recent examples of failed systems thinking stifling new technologies can be found in the area of sustainability. Even at current energy prices many green products such as home insulation and LED lighting would actually save consumers money. Yet these off-the-shelf, ready-to-go technologies are not being used as extensively as they should be, and many initially promising attempts to promote innovative technologies fail later, a pattern Professor Sterman calls "sizzle and fizzle."
Professor Sterman says new green technologies are particularly vulnerable to "the narrow boundaries of our mental models", the most damaging of these being what he calls "the open loop mental model" where we typically ignore the feedback effects of our decisions. As a result new technologies can get stuck in vicious feedback loops.
To illustrate, Professor Sterman points to the case of alternative fuel vehicles such as electric cars. A growing stable of hybrid, plug-in hybrid and pure electric vehicles are now available. But consumers won't buy such vehicles until they are sure that power to recharge them is readily available, while firms won't invest in the infrastructure to make alternative fuel ubiquitous unless they are sure there will be a market. This Catch 22 situation traps the new technology product in a set of "feedback loops" that can prevent the market from taking off. Social and economic policy changes, not only technical innovation, are required to break the cycle.
"The social innovations needed to create the market (for new products) haven't been equal to our technical innovations," says Professor Sterman.
What does this mean for entrepreneurs?
"It's not enough to have the better mousetrap. You need to understand the ecosystem into which you are launching your new product or service...otherwise a competitor who better understands the ecosystem can defeat you with an inferior innovation."
Sterman says that "to create markets that are sustainable ecologically and economically, business and government must work together to push new technologies over a hill. If we don't push hard or long enough the innovation stalls and fizzles. We need to get over the tipping point. If we succeed, learning, R&D, scale economies, and growing infrastructure will lead to self-reinforcing adoption, product improvement and cost reduction, benefitting all."
Professor John Sterman delivered this special lecture to alumni on 9 May, the first of a series of events marking the AGSM 35 Year Anniversary in 2012.