The transition challenge for hydrogen vehicles; analysis of adoption dynamics Jeroen Struben*) MIT...
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The transition challenge for hydrogen vehicles; analysis of adoption dynamics Jeroen Struben*) MIT Sloan School of Management April 30 2004 *) Many thanks to John Sterman for support and discussions throughout
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Transcript of The transition challenge for hydrogen vehicles; analysis of adoption dynamics Jeroen Struben*) MIT...
The transition challenge for hydrogen
vehicles; analysis of adoption dynamics
Jeroen Struben*)
MIT Sloan School of Management
April 30 2004
*) Many thanks to John Sterman for support and discussions throughout
Hydrogen vehicles: a certain trajectory?
Agenda
● Context: the Hydrogen transition challenge
● Adoption structure for the vehicle
propulsion platform
● Reduced/partial models analysis
● Insights and future work
Modeling the hydrogen transition challenge - motivation
● Formal model literature on technology adoption
– diffusion (Bass ’69, Rogers ‘62)
– industry evolution
(Abernathy/Utterback ’78,…)
– learning/scale/spillover (…)
– increasing returns and lock-in
(Arthur ’89)
– energy modeling (Farrell ’03)time
hydr
ogen
sal
es
successful
limited
failed
Installed Base and Consumer Choice
Infrastructure
Automotive Industry
Other Organizational Fields
- price- performance- operating cost- safety- driving range- ecological impact
- price- performance- operating cost- safety- driving range- ecological impact
ConsumerChoice
Fleet i
SalesDiscards
Familiarityi
+
Attractiveness
R&D2
LBD2
.
Fuel Cost andOther Factors
R&D C1R&D i
R&D C1 0Learning
By Doing i
Spillovers
.. .+
+
..
... .
. .
.
.
.
.. ..
+
. . . .
+
.....
+
+
+
+
R&D2 0
LBD2 0
R&D C1 1
Fuel Distribution
Developments
R&D C1 0 0Service &
Maintenance
. .. ..
+
+
+
+
B1
B1
. . .
R2
.
.
.
.
R4+
R1
+
R3a
R3b
WOM
IncreasingReturns
ComplementaryAssets
Scope of the hydrogen challenge
The adoption structure for vehicle propulsion technologies
● Extensions to Basic Bass Model– Multiple platforms/vehicle types– Familiarity – Forgetting– Valence with attractiveness (experience, WOM,..)
time
hyd
rog
en s
ales
successful
limited
failedDrivers
PotentialDrivers
Adoption
WOM+ +
+
Attractiveness
+
Basic Bass Structure
Dynamic Hypothesis
time
hyd
rog
en s
ales
successful
limited
failed
Familiarity withplatform i of
non-drivers of i
Drivers ofPlatform i
exposure toplatform i
+
+
attractiveness i
sales i
+
+
+
R1
WOMAdoption
willingness toconsider Platform i
+
Marketing i
+
Dynamic Hypothesis
time
hyd
rog
en s
ales
successful
limited
failed
Familiarity withplatform i of
non-drivers of i
Drivers ofPlatform i
exposure toplatform i
+
+
+
attractiveness i
sales i
+
+
+
R2R1
Talk of theTown
WOMAdoption
willingness toconsider Platform i
+
Marketing i
+
Dynamic Hypothesis
time
hyd
rog
en s
ales
successful
limited
failed
Familiarity withplatform i of
non-drivers of i
Drivers ofPlatform i
exposure toplatform i
+
+
+
forgetting i
+-
attractiveness i
sales i
+
+
+
R2
B1
R1
Talk of theTown
Forgetting
WOMAdoption
willingness toconsider Platform i
+
Marketing i
+
Dynamic Hypothesis
time
hyd
rog
en s
ales
successful
limited
failed
Familiarity withplatform i of
non-drivers of i
Drivers ofPlatform i
exposure toplatform i
+
+
+
forgetting i
+-
-
attractiveness i
sales i
+
+
+
R2
B1
R1
R3
Internalization
Talk of theTown
Forgetting
WOMAdoption
willingness toconsider Platform i
+
Marketing i
+
Case 1: first order model
● Assumptions– 1 platform– drivers held constant– Familiarity dynamics are independent
Familiarityfamiliarity
gain fgfamiliarity
loss fl
1st order model - stock and flow structure
Familiarityfamiliarity
gain fgfamiliarity
loss fl
+-
contactrate c
effectivenessexposures ee
persuasivenessof drivers pd
persuasiveness ofnon drivers pnd
non-drivers1-d
marketingeffectiveness me
+
+
exposureeffectiveness through
non-drivers
exposureeffectiveness
through drivers+
+
+ +
+
effect of exposureson forgetting h(ee)
-
drivers d
-
+
+
+
+
+
R2
Forgetting
R3
Talk of the Town
B2
Internalization
B1
The effect of exposures on familiarity loss
1
1*0f
0 familiarity fafa
mili
arity
loss
rat
e fl
fl= 0
f fa
fl= 0f*s(ηs)*fa
0 socialization effectiveness ηs (=*fa+)
effe
ct o
f soc
ializ
atio
n on
fam
iliar
ity lo
ss r
ate s
(ηs )
1
2
3
4
1
1
42 3
exposure
expo
sure
s on
Analysis: dynamics of familiarity
Familiarityfamiliarity
gain fgfamiliarity
loss fl
+-
contactrate c
effectivenessexposures ee
persuasivenessof drivers pd
persuasiveness ofnon drivers pnd
non-drivers1-d
marketingeffectiveness me
+
+
exposureeffectiveness through
non-drivers
exposureeffectiveness
through drivers+
+
+ +
+
effect of exposureson forgetting h(ee)
-
drivers d
-
+
+
+
+
+
R2
Forgetting
R3
Talk of the Town
B2
Internalization
B1
Analysis: dynamics of familiarityC
han
ge
rate
of
fam
ilia
rity
(d
fa/d
t)
Familiarity of non-drivers of platform (fa)
Familiarity loss fl
Familiarity gain fg
Net change rate of familiarity
Familiarityfamiliarity
gain fgfamiliarity
loss fl
+-
contactrate c
effectivenessexposures ee
persuasivenessof drivers pd
persuasiveness ofnon drivers pnd
non-drivers1-d
marketingeffectiveness me
+
+
exposureeffectiveness through
non-drivers
exposureeffectiveness
through drivers+
+
+ +
+
effect of exposureson forgetting h(ee)
-
drivers d
-
+
+
+
+
+
R2
Forgetting
R3
Talk of the Town
B2
Internalization
B1
Analysis: dynamics of familiarityC
han
ge
rate
of
fam
ilia
rity
(d
fa/d
t)
Familiarity of non-drivers of platform (fa)
Familiarity loss fl
Familiarity gain fg
Net change rate of familiarity
Familiarityfamiliarity
gain fgfamiliarity
loss fl
+-
contactrate c
effectivenessexposures ee
persuasivenessof drivers pd
persuasiveness ofnon drivers pnd
non-drivers1-d
marketingeffectiveness me
+
+
exposureeffectiveness through
non-drivers
exposureeffectiveness
through drivers+
+
+ +
+
effect of exposureson forgetting h(ee)
-
drivers d
-
+
+
+
+
+
R2
Forgetting
R3
Talk of the Town
B2
Internalization
B1
Time trajectory of familiatiy and drivers
1
0.5
00 15 30 45 60 75 90
Time (Month)
familiarity i : base1drivers i : base1
Analysis: dynamics of familiarityC
ha
ng
e r
ate
of
fam
ilia
rity
(dfa
/dt)
Ch
ang
e ra
te o
f fa
mil
iari
ty (
dfa
/dt)
Familiarity of non-drivers of platform (fa)
Familiarity loss fl
Familiarity gain fg
Net change rate of familiarity
Case 2: drivers and familiarity
● Endogenous adoption
● 4th order model
● Competition between entrant (e.g. hydrogen) and incumbent (e.g. ICE)
● Introduce “relative attractiveness”
2nd order model
familiarity i
familiaritygain familiarity
loss
+-
effectiveexposures
+
exposureeffectiveness
through drivers
B1 B2
effect ofexposures on
forgetting
+
R3
Internalization
Talk of theTown
Drivers i
DiscardRate i
Salesi
DiscardTime-
+
totalreplacements
+
+
+
+
exposure effectivessthrough non-drivers
+
+
+
R2
2nd order model
familiarity i
familiaritygain familiarity
loss
+-
effectiveexposures
+
exposureeffectiveness
through drivers
B1 B2
effect ofexposures on
forgetting
+
R3R1
Internalization
Talk of theTown
Drivers i
DiscardRate i
Salesi
MarketShare i
RelativeAttractiveness i
+
DiscardTime-
+
totalreplacements
+
+
++
+
+
exposure effectivessthrough non-drivers
+
+
+
R2
WOM throughdrivers
Marketing effectiveness
+
Time trajectory 2nd order model of entrantTime trajectory of familiatiy and drivers
1
0.75
0.5
0.25
00 10 20 30 40 50 60 70 80 90 100
Time (Month)
familiarity i : base2drivers i : base2
● Reduce to 2nd order through:
1 2
1
1
_ _ 1
drivers drivers
familiarity non drivers
Phase a dadt
0.2 dmnl/month1 dmnl
0.1 dmnl/month0.75 dmnl
0 dmnl/month0.5 dmnl
-0.1 dmnl/month0.25 dmnl
-0.2 dmnl/month0 dmnl
0 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1familiarity i
familiarity gain : base2 dmnl/monthNet familiarity gain : base2 dmnl/monthfamiliarity loss : base2 dmnl/montheffect of socialization on forgetting : base2 dmnl
dfa2/dt=0
dd2/dt=0
Fam
ilia
rity
of
no
n-d
rive
rs o
f p
latf
orm
2 (
fa2)
Drivers of platform 2 (d2 =1-d1)
Analysis of 2nd order model: phase-plane
Modes of behavior for entrant – equilibrium search
Time trajectory of familiatiy and drivers
1
0.75
0.5
0.25
00 10 20 30 40 50 60 70 80 90 100
Time (Month)
familiarity i : base2drivers i : base2
Time trajectory of familiatiy and drivers
1
0.75
0.5
0.25
00 10 20 30 40 50 60 70 80 90 100
Time (Month)
familiarity i : base2drivers i : base2
Phase a dadt
0.2 dmnl/month1 dmnl
0.1 dmnl/month0.75 dmnl
0 dmnl/month0.5 dmnl
-0.1 dmnl/month0.25 dmnl
-0.2 dmnl/month0 dmnl
0 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1familiarity i
familiarity gain : base2 dmnl/monthfamiliarity loss : base2 dmnl/monthNet familiarity gain : base2 dmnl/montheffect of socialization on forgetting : base2 dmnl
Phase a dadt
0.2 dmnl/month1 dmnl
0.1 dmnl/month0.75 dmnl
0 dmnl/month0.5 dmnl
-0.1 dmnl/month0.25 dmnl
-0.2 dmnl/month0 dmnl
0 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1familiarity i
familiarity gain : base2 dmnl/monthfamiliarity loss : base2 dmnl/monthNet familiarity gain : base2 dmnl/montheffect of socialization on forgetting : base2 dmnl
Fa
mil
iari
ty o
f n
on
-dri
ve
rs o
f p
latf
orm
2 (
fa2
)
0.4
Drivers of platform 2 (d2 =1-d1)
0.01m
Trajectories in phase plane view with low marketing effectiveness
familiarity i
familiaritygain familiarity
loss
+-
effectiveexposures
+
exposureeffectiveness
through drivers
B1 B2
effect ofexposures on
forgetting
+
R3R1
Internalization
Talk of theTown
Drivers i
DiscardRate i
Salesi
MarketShare i
RelativeAttractiveness i
+
DiscardTime-
+
totalreplacements
+
+
++
+
+
exposure effectivessthrough non-drivers
+
+
+
R2
WOM throughdrivers
Marketing effectiveness
+
Fa
mil
iari
ty o
f n
on
-dri
ve
rs o
f p
latf
orm
2 (
fa2
)
0.4
Drivers of platform 2 (d2 =1-d1)
0.01m 0.02m
Drivers of platform 2 (d2 =1-d1)
Trajectories in phase plane view with low vs high marketing effectiveness
How long to sponsor the hydrogen platform!?
base
Market Share i[FC]0.4
0.3
0.2
0.1
00 25 50 75 100
Time (Year)
Sh
are
Installed Base Share Hydrogenbase
Market Share i[FC]0.4
0.3
0.2
0.1
00 25 50 75 100
Time (Year)
Sh
are
Installed Base Share Hydrogen
Conclusions / Insights
● Innovation systems require attention beyond mere acknowledgement of lock-in/dominance/…
● Identify role of particular loops/structures – Here we have modeled and analyzed the more interpretive side
adoption
● Can already identify policies on what prevents/ promotes diffusion– word-of-mouth through non-drivers
– less efficient hybrids could grow faster and takeover (as no infrastructure, spillover issues)
Future Steps
● Extend study in similar fashion– developments in infrastructure
– spillovers
– organizational/institutional increasing returns
● Historical analysis of the 19th century transition towards the horseless age
● Formulating research questions…
