Sep 19, 2011Running a small business does not give me much time to read books and magazine articles unrelated to radio frequency identification. But I recently picked up Freakonomics, the wildly popular book by economist Steven D. Levitt and journalist Stephen J. Dubner, which I'd always wanted to read. To my surprise, this publication might just explain why companies are slow to adopt new technologies, including radio frequency identification.
First, let's review how new technologies are adopted, which I've written about a lot over the past few years (see The [RFID] World According to Moore). Geoffrey Moore, author of Crossing the Chasm, suggests that visionaries embrace a new technology and help creators of that technology to build early prototype products. Then, early adopters can begin to use these solutions to solve a business problem.
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Once the solution is mature, a technology company will then emerge as the go-to provider for that solution—the "gorilla," in Moore's terms. At the same time, once a sufficient number of early adopters have proved that the technology works, other businesses will begin to adopt the solution with an almost herd-like mentality. (All focus on return on investment is lost, and companies just adopt because everyone else is doing it.)
In a chapter about parenting in Freakonomics, the authors discuss the role of fear in decision-making. They point out that many parents would prevent their children from playing at a friend's house if they know that the child's father kept a gun in the home. But they would never think of preventing their kid from playing at a friend's house if the family had a pool—even though more people die by drowning in pools than are fatally shot (even in the United States, where there are more guns than people.)
The authors conclude that familiarity—or the lack thereof—plays into our fears. Parents know what swimming pools are, they know the risks and they are willing to accept the possibility that their child might drown in a pool, because they understand that the risks are small. Being unfamiliar with guns, however, they might not comprehend the risks, and thus might make an irrational choice.
The authors write that "fear best thrives in the present tense." They note that a bureaucrat charged with securing funds to fight one of two killers—terrorist attacks or heart disease—would have far more success getting money from politicians to fight terrorism than they would to combat heart disease, even though far more people will die of cardiac problems. This, they conclude, is because a terrorist attack could potentially occur right now, whereas heart disease might kill people quietly at some point in the future.
CEOs might not admit this, but we are motivated by fear. If you are the founder and primary shareholder of your company, as I am, then you fear losing everything you worked so hard to build. If you are an appointed CEO, you are probably afraid of losing your salary, perks, social prestige and so forth. So faced with the question, "Would you rather risk losing your job now by investing in a new technology, such as RFID, or risk losing your job in the long term because your company is less efficient than its competitors?" you would likely choose to lose your job at some point in the future, after a long, slow slide.
Fear also explains why the herd follows early adopters after they reach critical mass. Press reports start saying that companies are adopting a new technology, and suddenly, the CEO no longer fears losing his or her job for being too far out in front, but instead for being too far behind. Concerns about achieving a return on investment, as well as other roadblocks thrown up, give way to a sense of urgency.
I'm sure most CEOs would say this is not the case, but I believe it is so. And in spite of all their talk about innovation, they fear losing their jobs over an ambitious bet on new technology. This, of course, is no way to manage. You should invest in a new technology like RFID when it can deliver value—and because it will deliver value. That should be the primary, if not sole, motivator.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.
