When innovations meet institutions: Edison and the design of the electric light

Administrative Science Quarterly,  Sept, 2001  by Andrew B. Hargadon,  Yellowlees Douglas

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This paper considers the role of design, as the emergent arrangement of concrete details that embodies a new idea, in mediating between innovations and established institutional fields as entrepreneurs attempt to introduce change. Analysis of Thomas Edison's system of electric lighting offers insights into how the grounded details of an innovation's design shape its acceptance and ultimate impact. The notion of robust design is introduced to explain how Edison's design strategy enabled his organization to gain acceptance for an innovation that would ultimately displace the existing institutions of the gas industry. By examining the principles through which design allows entrepreneurs to exploit the established institutions while simultaneously retaining the flexibility to displace them, this analysis highlights the value of robust design strategies in innovation efforts, including the phonograph, the online service provider, and the digital video recorder. (*)

The pursuit of innovation increasingly drives organizations in rapidly changing environments, where risks are high and missteps have serious consequences (Brown and Eisenhardt, 1997; Drucker, 1999). Introducing change into otherwise stable social systems is a risky endeavor, but this is exactly what entrepreneurs with potentially significant innovations must attempt to do. To be accepted, entrepreneurs must locate their ideas within the set of existing understandings and actions that constitute the institutional environment yet set their innovations apart from what already exists. Recent research has highlighted the social embeddedness of such economic actions as innovation and entrepreneurship, in which value and significance are shaped as much by cultural as economic influences (Granovetter, 1985; Dacin, 1997; Dacin, Ventresca, and Beal, 1999; Lounsbury and Glynn, 2000; Ventresca et al., 2000). One cultural determinant of an innovation's value is how well the public, as both individuals and organizations, c omprehends what the new idea is and how to respond to it. And it is the concrete details of the innovation's design that provide the basis for this comprehension, as well as for new understandings and actions to emerge, which then, in turn, change the existing institutional context.

When innovations meet institutions, two social forces collide, one accounting for the stability of social systems and the other for change. These moments provide opportunities to observe the shifts in collective understanding and action that throw the otherwise static institutional background into stark relief (Czarniawska-Joerges and Sevon, 1996). Because the changes that accompany innovations often occur over years and even decades, historical cases can provide the necessary distance to observe how an innovation both emerges from and reshapes its institutional environment (e.g., DiMaggio, 1992; McGuire, Granovetter, and Schwartz, 1993). By analyzing a specific moment in history when an innovation first begins to affect the landscape of existing institutions, we can identify the means by which innovations displace existing institutions and suggest how future innovations could be designed to exploit such means.

We do this here by examining what is perhaps the prototypical example of innovation, Edison's development of his system of electric lighting, an innovative new technology that gained rapid and widespread acceptance and profoundly altered the institutional landscape. (1) We chose this case because it was not a simple story of one innovation's demonstrable technical and economic superiority over an incumbent rival. Rather, the evidence suggests that for its initial success, Edison's system of electric lighting depended on the concrete details of its design to invoke the public's familiarity with the technical artifacts and social structures of the existing gas and water utilities, telegraphy, and arc lighting. Although this familiarity provided the public with the means for quickly understanding the value of his new system and how to interact with it, Edison's system of lighting ultimately was able to displace many of those established institutions and become itself the model for successive ones. Our analysis o f this case led us to focus on the nature of Edison's design, which exploited past understandings but also preserved the flexibility to evolve beyond them and build wholly new institutions. A careful analysis of the interplay among design, innovation, and institutions has the potential to enrich our understanding of innovation in contemporary organizations.

INNOVATION, INSTITUTIONS, AND THE LANGUAGE OF DESIGN

Explanations for the successful (and unsuccessful) introduction and diffusion of innovations typically focus on the inherent functional and economic advantages that new technologies provide over traditional ways of doing things. Innovations are variously differentiated from established institutions with such terms as revolutionary, radical, discontinuous, competence-destroying, or disruptive (e.g., Rosenberg, 1982; Abernathy and Clark, 1985; Tushman and Anderson, 1986). Tushman and Anderson (1986: 441) suggested that discontinuous technologies represent price-performance improvements over existing technologies so significant that "no increase in scale, efficiency, or design can make older technologies competitive with the new technology." As a result, the primary focus is on whether innovations enhance or destroy incumbent firms' existing competencies (e.g., Tushman and Anderson, 1986; Henderson and Clark, 1990) and on how organizations can overcome the barriers to adopting the new and inherently better techn ology (e.g., Leonard-Barton, 1992; Bower and Christensen, 1995).