Investor Network on Climate Risk (INCR) , a coalition of unions, public pensions, and faith-based institutional investors in Money magazine recently identified ten companies, including Exxon and Bed Bath & Beyond , that it believes are too slow to address climate change. INCR suggest that companies that are slow to evolve their business operations to address climate change and, more specifically, to a changing regulatory environment, may see their bottom (aka profit) line damaged.
Technology Adaptation Life Cycle
These companies may at some point be fossilized, but probably less by direct regulation and investor activism than by disruptive innovation crossing into the mainstream market. Oil can be regulated to the hilt, but unless we come up with viable fuel alternatives to the mainstream market, oil will never be a dinosaur. Thus, the $2 trillion dollar question (the combined size of the energy industry) is if, when and how the already abundance of energy innovation will make it to the mainstream market and send oil back to the Mesozoic.
Clues may be from high tech marketing maven Geoffrey Moore 's description of the Technology Adaptation Life Cycle where he identifies specific customer types whose litmus test an innovation must pass. Moore's model is often considered to be unique to high tech product innovation, but it also seems to apply to much green innovation. His types are:
Innovators: Enthusiasts who like technology for its own sake.
Early Adopters: People who see the adaptation of emerging technology as an opportunity.
Early Majority: Forward thinking mass market who don't like the risks of pioneering but can see the advantages of tested technologies. They are the beginning of a mass market.
Late Majority: Traditionalists who dislike discontinuous innovation and who buy into high tech products reluctantly.
Traditionalists: Laggards who are unlikely to switch to an innovative product anytime soon.
At the core of his model is an impenetrable market chasm between the early adopters and early majority. Many superior products are believed to have won over both innovators and early adoptors, but just can't get that market approval by the early majority (of the mainstream). This is the same problem facing much green innovation. We have reached an inception point where there is an abundance of top flight green innovation. The problem is crossing the chasm.
Regulation, Activism and Bridging the Chasm
Al Gore's "Live Earth " concert this July may be a bridge to that chasm. For the first time, green innovation may be seen as being really cool not only to tree huggers and sophisticated innovators and early adaptors, but more importantly to the mainstream marketplace. Regulations, among many things, help undistort distortions, and investor activism works at the edges, but only once disruptive green innovation crosses the chasm into the mainstream market, will the likes of Exxon, Bed Bath & Beyond and others identified by the INCR, fall back 100 million years to the Mesozoic era.