The Cost Of Innovation
(Inside Science) -- "Innovate or die": the unofficial motto of many forward-thinking businesses, particularly in the technology world. But what if the innovation kills the result?
Researchers poring over 30 years of data from Formula One, or F1, racing teams found that in some cases the teams who performed best were the ones that did not adopt cutting-edge technology and rather focused on the basics. Their findings were published in Organization Science.
Cars used during an F1 race – which last 56 laps or 120 minutes, whichever comes first – must be designed within a set of parameters.
But every couple of years, the rules change.
"What Formula One does as an organization is they try to even out the competition, so every few years there are some changes they impose," explained Jay Anand, a business professor at The Ohio State University in Columbus and co-author of the study. Those changes include regulatory tweaks to the way the cars can be designed and the option to implement a new technology.
For example, F1 regulations did away with refueling during a race in 2010, meaning all the cars must begin the race with enough fuel to finish. To carry extra fuel, the bodies of the cars grew by 22 cm between 2009 and 2010. Refueling during the race is set to be reintroduced in the 2017 season, just to keep things interesting.
The 2009 F1 season hurled one of the most sweeping and challenging set of regulation changes the sport has ever seen. Among the new protocols were adjustments to the engine, tires, electronics and aerodynamics of the vehicles. To add to the ordeal, FIA, the governing body of F1, banned in-season testing and limited the amount of time the teams could use wind-tunnel simulations.
FIA also gave the teams the opportunity to adopt new technologies – to innovate. Chief among these innovations was the kinetic-energy recovery system, or KERS. KERS-equipped cars are able to store in a battery kinetic energy created by heat from their brakes and use that energy for acceleration.
However, the regulations dictated that the KERS could be used for only 6.6 seconds per lap and deliver only 80 extra horsepower to the car. Teams also worried about fine-tuning the tech to jibe with the already complex system of the car and its team. And drivers had to balance its value against potential costs of using it.
"It's how much I take my eyes off the track, that's the worry," F1 driver Rubens Barrichello told the study authors as he described his first time driving with the KERS in place.
The choice of whether to innovate and adopt the KERS fell to the teams. The four F1 teams that experimented with the KERS in the 2009 season spent a total of $64 million doing so. But their KERS-equipped cars gained only about a two- or three-tenths of a second and saved only 0.021 liters of fuel in their best lap.
The two teams that came in on top during the 2009 season, Red Bull and Brawn GP, did not adopt the KERS. Rather, they opted for small improvements designed to make the best use possible of established technology.
"The teams who ended up with the best championship results were those who opted for standard, reliable, no-frills cars that … stuck to a strategy of more moderate exploration," wrote the study authors.
Interestingly enough, Red Bull and Brawn GP were also rookie teams that few expected to be competitive in the 2009 season.
The authors posit that the folly of the early innovators could be a cautionary tale to businesses contemplating large changes, especially during a tumultuous time.
"Conventional wisdom says that maybe firms should try to change a lot, in other words to do radical innovation," explained Anand. "What we found is that when firms make more radical changes, it disrupts the overall system. Consequently, they do even worse than they would have if they had made smaller changes."
David Owens, a business professor specializing in management and innovation at Vanderbilt University in Nashville, who was not involved in the study, speculates that while Red Bull and Brawn GP may have done better in the 2009 season, KERS-equipped cars may perform better in the long run. The teams that adopted the KERS may simply be taking a temporary hit now for better performance down the road.
"If you're a highly resourced firm, that's fine because you can live through that temporary performance loss," said Owens. Red Bull and Brawn GP, because they were essentially "startup" teams, perhaps did not have the resources to take the hit that the innovation would require. In their cases, the conservative approach paid off.