Unlike software, silicon or recombinant DNA, toast makes an unlikely symbol of sustainable innovation. Heated bread lacks the high-tech cachet of multicore microprocessors or polymerase chain reactions . But the technological history of toast, in fact, persuasively undermines one of the truisms that profoundly distort innovation investment worldwide.
That flawed conventional wisdom is crisply described in a recent Financial Times column bearish on technology:
“Bruce Greenwald, the Columbia Business School professor whose course on value investing is recommended even by Warren Buffett, nails this phenomenon memorably. ‘In the long run,’ he says, ‘everything is a toaster.’ In other words, all great innovations eventually become commodities, bought on the basis of price and nothing else. …Sooner or later, Microsoft software programs, Intel microprocessors, Dell computers and Cisco routers will all be toasters.”
Clever, glib and memorable — but is it true? History says no. While toasters will never be icons of postindustrial innovation, even a cursory review of their ongoing reinvention reveals that they’re not commodities by any meaningful definition of the word. Moreover, they still make good money, as well as better toast. The toaster’s technical evolution is a case study in profitable innovation, not just price competition. Commodity isn’t destiny.
England’s Crompton & Company offered an electric toaster as early as 1893. The technical breakthrough that made modern toasters possible, however, was the 1905 invention of Nichrome... To read the complete article, login or sign-up using the form below.
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