Business Analysis

Disrupting the disrupters — Tesla faces the challenge of the mini-fluorescent: Don Pittis

Long-term payoff is not guaranteed, many disrupting businesses have discovered

Don Pittis - CBC News

July 10, 2017

Tesla's Model 3 began rolling off the assembly line on Friday. Although the company has transformed the auto industry, it will have a hard time reaping the benefit of its disruption. (Tesla)

One of the bulbs in a pair of matching lights died last week and we were trying find a replacement.

It was one of those coiled mini-fluorescents, and all the spares in the assorted-light-bulb box were too long and protruded from the fixture.

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But a trip to the local grocery store offered a surprise. Despite a wall of shelves our bulb was not there. In fact, as far as we could see there were no compact fluorescents available at all.

Bright idea

The occurrence offered a reminder about disruptive technology that electric car maker Telsa must heed — that any disruptive bright idea is itself subject to disruption.

Having only recently sent the the traditional energy-sucking incandescent bulb to the museum beside the coal oil lamp and buggy whip, the coiled fluorescent is on the way to the museum itself.

The compact fluorescent bulb is a bright idea that will soon join coal oil lamps on the museum shelf.

The Tesla case is not a perfect parallel, but the rise and likely fall of the mercury-laden coiled fluorescent bulb is one more reminder that being the disrupter of an entire century-old technology is no guarantee of an endless meal ticket.

"Most people when they think of fluorescents, they think of CFLs, compact fluorescents, which are the curly light bulb and generally those ones are used in your home," says Jo-Anne St. Godard, who is leading a campaign to get fluorescent bulbs recycled safely.

For St. Godard, executive director of the Recycling Council of Ontario, the main problem is mercury, an essential component in all fluorescent lights, including those long tubes commonly used in offices and public buildings.

Tons of toxic mercury

Commercial users are learning how to dispose of the tubes properly but homeowners are still tossing compact fluorescents into the trash, leading to tons of toxic mercury being released into the environment. The campaign to solve the problem has been backed by Nova Scotia MP Darren Fisher. 

In the long term, the problem will be solved by the international Minamata Convention, though St. Godard says even after the CFL bulbs are banned the mercury problem will continue for decades as homeowners dispose of bulbs when they burn out.

Shuji Nakamura won the Nobel Prize in Physics in 2014 for helping to develop the LED bulb in 2014. The invention is pushing compact fluorescents off store shelves. (Lucy Nicholson/Reuters)

But the shelves of the nearby grocery store — part of the Loblaw chain — show that commercial and technological change does not always wait for regulation.

"In late 2016 we began reducing the amount of compact fluorescent bulbs we sell in all our stores, in favour of light-emitting diode bulbs, which are more energy efficient and safer to recycle," emailed Loblaw in response to my inquiry. "Customers have responded well to this change and we plan to stop restocking CFL bulbs on our shelves by the end of the year."

Premium price

When Tesla boss Elon Musk began marketing his cars a few years ago, like the first CFL producers, he was able to charge a premium. 

A sleek all-electric vehicle that went for hundreds of kilometres on a single charge was a status symbol for the few who could afford one. 

Like the makers of CFL bulbs, Musk and Tesla really did disrupt the established automobile industry.

Auto giant General Motors had tried and failed to establish a popular electric car with its EV1. Similarly General Electric created a CFL bulb in 1976, but found it too expensive to manufacture.

Incandescent light bulbs were big for a century but are now difficult to buy. (Robert Pratta/Reuters)

It was only in 1995, when Philips began making the Philips Tornado in China, that the electricity-saving design gradually began squeezing cheaper incandescent bulbs out of the marketplace. Soon everyone was making them and prices plummeted. Now little more than two decades later the usurper is being usurped as the LED bulb begins to fall in price. 

Tesla share prices took a hit last week as Volvo demonstrated the all-electric sector was not Tesla's exclusive preserve.

Now that Tesla has succeeded in disrupting the market, its business model is already being disrupted. BMW competes at the high end with its i8 sports car. GM's inexpensive all-electric Bolt challenges the Tesla with a range of nearly 400 kilometres. Everybody's doing it.

Endless disruption

While disruption can capsize an existing industry, it is difficult for the disrupter to hang on to the benefits of that disruption. Once Apple had wiped out the record and CD industries with its 99-cent iTunes tracks, it opened the fractured sector for new disruptions in the form of free-to-user streaming services.

The only way Apple could succeed was to keep on disrupting, desperately trying to ride a leading wave of technological change using its brand advantage, its cash pile and its reservoir of brainpower to keep ahead of the disruptive competition.

It is a lesson Tesla may have learned.

As Musk celebrated the first production Tesla 3 to roll off the assembly line on Friday he announced a little more disruption. 

Fossil fuel electricity producers have long scoffed at green power that only produces when the sun is shining or the wind is blowing. Tesla's latest disruptive move is to announce it is building the world's largest battery in Australia to make that problem go away. 

Follow Don on @don_pittis

More analysis by Don Pittis

ABOUT THE AUTHOR

Don Pittis
The Business Unit

Don Pittis was a forest firefighter and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

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