Followup - How EESTOR Can Be Disruptive
My innocuous little post on EESTOR has become the most popular/infamous article I’ve written yet. So I thought I would follow it up with a more positive outlook on how I think EESTOR could be more disruptive.
As I expected, almost 100 percent of the commenters disagreed with me. A lot of folks seemed to focus on the coolness of the technology and gloss over the negatives that will impact customer experience. I understand that there is no consensus on whether or not people will support cars that must be refueled at home, no matter how fast they can be fueled there. I believe they won’t alter their behavior to the extent needed for widespread adoption of all-electrics. They’ll want gas stations to support them with high-power fast recharging infrastructure. So that’s why I concluded that PHEVs would stand a better chance of early adoption.
But beyond the the tech aspects, I think they missed my primary point - good products fail if the company doesn’t focus innovation in other areas crucial to success, and EESTOR doesn’t appear to be following a path that will lead to disruption. And the crux of this is focusing on all-electric cars instead of other products that could truly be disruptive.
What is the EESTOR core competence? “Electric cars” is both too specific and off the mark. If their technology is the real deal, it boils down to: highest-density, fastest-recharge, lowest-cost electrical energy storage.
What does it take to be disruptive? I repeat from the last article:
“Low-end disruption” occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market.
Let’s assume that EESTOR has a potentially disruptive technology. Not only does the technology “exceed the requirement for certain segments” - it exceeds the performance of the incumbent in those segments. What might those segments be? Examples:
- Personal electronics power (cell phones/iPods/digital cameras/digital video/etc)
- Portable computer power
- High performance cordless power tools
- Emergency backup power/UPS
- Hybrid electrical storage (enhanced regenerative braking energy capture)
- Plug-in hybrid electrical storage
In all of these cases the EESTOR technology exceeds the recharge time, weight, and total energy density (although the latter two might constitute “mid-level”). The market for these products is well established. EESTOR could gain immediate brand recognition as ‘the product that makes batteries obsolete.’
Having achieved low-end disruption, we move up the curve:
In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.
Higher-end disruption could occur in these areas:
- Mobile emergency power
- Home solar energy storage
- Electric cars
This would give the companies that EESTOR will rely on for networking/supporting innovation - the high-power recharging stations, the lower-cost photovoltaics - a chance to catch up. Then true disruption can occur at the most demanding use level.
If there is one thing I want to get across, it is that I am EESTOR’s biggest fan - I want them to success, and I want them to be disruptive. And I think I’ve outlined a way they can be that doesn’t rely on electric cars - the high-quality use that awaits them at the summit.
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12 Responses to “Followup - How EESTOR Can Be Disruptive”
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I’ve read your first post, and this one, and personally, I think you’re missing the forest from the trees.
You’re correct that if the EEStor ESU does work as advertised, there are much more logical markets to sell the ESU to. But, EEStor isn’t a normal company, being driven by normal players. Personally, I believe that they have internally chosen a goal based on requirements that aren’t logical from a purely business point of view.
Take a look a the players in EEStor, then ask yourself if EEStor’s direction makes sense from the point of view of those players. All of a sudden it begins to make sense, as a matter of fact, it -only- makes sense if you look at it from that perspective.
Also, there may be manufacturing conciderations that might push to a large format for the ESU, thus the focus on transportation. Although, I personally still see much more logical markets if that were the case.
So, their direction from a business viewpoint does not seem to make sense. But from the viewpoint of the people who actually run EEStor, it makes complete sense.
Second Forest from the Trees comment: You said (paraphrasing) you want them to succeed, and that the fastest way to that success is to pick the best markets from a business standpoint (lowest risk, highest return (which, automotive transportation of cource, does not fit into that profile)).
If the ESU works, do you -honestly- believe that they wont be successful? If they pick automotive, power grid PSUs, or cell phones, it wont matter, they’ll be so stinking successful, they wont know where to spend the money fast enough. Ok, going with automotive first might take them a couple years longer to get to that point, but it -would- quickly reduce most industrial nations dependance on petroleum. (Again, doesn’t make sense from a business standpoint, but whatever floats their boat. If that’s their business goal, ok, let’s get it done so we can move onto other things)
All the talk is meaningless though, until someone see’s an honest to gosh ESU. Take a look at this and come up with your own ideas.
http://arc.typepad.com/customercrossroads/2007/07/idea-city-wra-1.html
Then again, historically, this type of claim is vaporware. Don’t sell your car yet.
Rob
If you are arguing vaporware I agree. But let’s assume that it’s not, which I think you do for most of your post.
In this case the ‘tree’ is the new technology and the ‘forest’ is the business world. This blog isn’t about cool technologies per se, it’s about innovation. If you poke around the site you’ll see that innovation success is more related to business model, networking, branding, channeling, and customer experience, to which I attempted to relate EESTOR in my first post. A good primer on this can be found in the Doblin video (see Videos page).
So yes, I think if EESTOR doesn’t do what it takes to be disruptive from a business innovation sense, then I think their product could fail, for the same reason that other great products have failed in the past. Great products winning out in the end is myth. Here is a good reference for that:
http://www.uie.com/articles/myths_of_innovation/
There is a great deal of discussion about EEStor and if it is real or fake.
Well it seems BASF one of the largest chemical companies in the world mentioned in their directors report about a supercapacitor with similar power storage capabilities to EEStor’s unit.
Any student of science history knows when knowledge and material capabilities approach a tipping point, you will get the same invention from several labs at the same time.
I have now shifted my opinion on the veracity of EEStors claims from 50/50 to 80/40, thats 80% chance it’s real.
One fly in the ointment though, a few months ago I read on a blog that someone had traced a very negative opinion of EEStor to The American Enterprise Institute, which is funded by big oil.
For information on BASF’s supercapacitor go to http://www.technologyreview.com/Biztech/18086/
and search or scroll down to the comments mentioning BASF
I think the forest for the trees comment above is on the mark. Your original analysis contains several paragraphs of some of the most tortured contrarian logic I’ve read in a long time!
The main question is: does the EEStor device work as promised? If the answer is yes, the effect will be dramatic and immediate. It solves energy storage problems in a novel way. Engineers will incorporate it into their designs as quickly as they can get their hands on an EESU. Since energy storage is something fundamental to the world economy, it’s hard to see how it wouldn’t be disruptive.
The question of how EEStor goes about commercializing the device seem relatively straightforward compared to the problems of developing it. I agree that it’s not trivial, but it’s been done many times before.
I think your analysis is wrong because I think you made two big logic errors.
The first is because you’re lumping EESTOR in with toaster ovens as ‘good’ products that didn’t make it. This is a product that’s critical to our country. Oil production will max out and then prices wills climb. We need electric cars, or something that runs on an alternative.
The second is your assumption that it’s in a competition with A123 or one of the other battery makers out there, like beta max was with vhs. The comparison is too drastic to consider this as in the same ball park as Beta vs VHS.
It’s not slightly better, it’s enough better that it makes electric cars better than ICE now. It’s enough better that in every important category it is better than all of it’s competition.
The only reason I can see this not being a disruptive technology is because of production problems or material shortages.
I’m going to go with the tortured and twisted logic comment.
Here’s observation/fact #1.
VHS vs Beta, this isn’t the case, what you should have said is…
Apple vs Orange. Anyone with some basic electronics understanding can see that any Lithium based battery system isn’t the same as the EEStor device. Your comparison isn’t valid.
Here’s observation/fact #2.
Disruptive does not equal successful.
Your obsession with the fact that this could be disruptive does not mean that EEStor wont be successful if they choose a non-distruptive marketing strategy.
Here’s observation/fact #3.
-IF- this thing works, do you honestly believe that it wont be copied by every capacitor company in every non-IP protecting country there is? Hell, you wont be able to get anything battery powered in China in 5 years if this works.
Who cares about distruptive? EEStor will get their butts kicked in the consumer electronics market if they decided to go to that.
There are already Russian and Chineese companies claiming that they own the IP on a EEStor device (stragely they can’t seem to make any, and they made these statements after EEStor went public).
-IF- this thing is real, I wouldn’t worry about whether or not you’ll see devices with ESUs. Hell, the only place where ESUs wont be dominant is in the US, probably due to import restrictions.
Quit obsessing.
[...] level change is the EEStor ultracapacitor? As far as ultracapacitors go it is a Level 3 change - improved materials yielding better [...]
[...] Followup - How EESTOR Can Be Disruptive [...]
The disruption that Eestor will cause might be to a number of markets, but perhaps not to the consumer electronics market. At the moment it looks like the limited evidence and patents show that Eestor can manufacture a high energy density electrical storage unit that is charged to 3000 volts - an electric shock from it would be immediately fatal. This does have safety implications, though they should not be overstated.
For the following markets quoted in your blog above Eestor safety concerns would not be a show stopper:-
- Emergency backup power/UPS
- Hybrid electrical storage (enhanced regenerative braking energy capture)
- Plug-in hybrid electrical storage
The people who maintain such devices are going to know what they are doing.
But for the following this is not going to be true:-
- Personal electronics power (cell phones/iPods/digital cameras/digital video/etc)
- Portable computer power
- High performance cordless power tools
In particular anything domestic and small enough for a 3 year-old to get in his/her mouth is going to be risky, or that can be disassembled by banging against a wall.
If you reduce the dimensions of the gap in the capacitor, then presumably the capacitance rises as the square (smaller gap AND bigger surface area because of it), and the maximum voltage falls linearly with the gap size, so you can store the same energy per unit volume. To get down to a safe figure for domestic use - I’m guessing 50v would be low enough - Eestor would have to develop manufacturing techniques to shrink the dimensions by a factor of 60. This might be quite difficult and take some time, depending on how cautiously they set their intial dimensions and maximum voltage of 3000v (e.g. maybe they could have gone for 300v already, but chose not to)
[...] Followup - How EESTOR Can Be Disruptive Posted on August 20, 2007 by Innovation Catalyst Open Source Innovation has moved - here is the new link to Followup - How EESTOR Can Be Disruptive. [...]
[...] level change is the EEStor ultracapacitor? As far as ultracapacitors go it is a Level 3 change - improved materials yielding better [...]