Why good ideas get trapped in the valley of death and how to rescue them
They’ve passed every test, cleared every
hurdle, jumped through every hoop.
Now, all that remains is to unleash
them on the world.
But wait— what’s this?
Ah, yes, there’s one more challenge.
They must now across the valley of death.
All new products must pass through
here before they reach the market.
Many never make it out,
and sometimes that’s OK—
if they don’t work, don’t fill a need,
or for any number of other reasons.
But inventions that could help address
massive global issues also face this risk.
That’s because a technology’s potential
isn’t the only factor
that determines whether it will succeed.
The valley of death is especially risky
for innovations
involving complex physical objects
as opposed to software,
and for those in highly regulated
industries,
like medicine, building materials,
and transportation.
Regulations and other obstacles
aren’t inherently bad—
they’re often designed
to keep people safe—
but they do tend to scare off investors,
and that’s what traps good ideas
in the valley of death:
their funding dries up before
they can become profitable.
One of the fields where this problem
is most pressing today
is zero-carbon technologies.
They’re essential to our future
because they will help us eliminate
greenhouse gas emissions
and stabilize our climate.
But they also have features that make
them particularly vulnerable
in the valley of death.
Let’s look at why that is,
and how we can change it.
All new technologies must go
through a development phase
before they can become profitable.
For zero-carbon technologies,
the costs of this phase are high,
the timelines are long,
and, in spite of the good they can do,
demand is often low because they can
require big changes
in both infrastructure
and consumer behavior.
For example, electric heat pumps
don’t burn fossil fuels and,
when you factor in savings on energy use,
are cost-competitive with gas furnaces,
but homeowners only change their heating
and cooling systems every few decades.
Direct air capture technologies,
meanwhile,
remove CO2 directly from the atmosphere.
We need these technologies
to reach our emissions goals,
and several of them have already
been proven to work,
but they’re at risk of getting trapped
in the valley of death
because they’re expensive.
This creates a vicious cycle because
the best way to lower costs
is by, well, practicing:
making more of a product and refining it.
But high initial costs
scare off investors,
and without their money,
companies can’t continue to develop
their technologies—
and can’t ultimately decrease costs.
Fortunately, there’s a way
to break this cycle:
governments can help close the gap,
when private investors won’t fund
technologies
with such a high potential
for social benefit.
This isn’t just theoretical:
in the 1990s,
functioning solar panels existed,
but weren’t widely adopted
because of their cost.
To change this, Germany offered government
loans to companies creating solar panels,
and legally obligated utility companies
to buy electricity produced
using renewable energy.
The U.S. and China followed suit
by financing major solar panel projects.
The cost of solar has dropped
almost 90% since 2009,
making it much easier to adopt.
A similar thing happened for wind energy:
during the oil crisis of the 1970s,
Denmark invested in wind power
and started taxing winds’
fossil fuel-based competitors.
Other countries took similar steps,
and as more wind power was
generated worldwide,
the costs of this technology
dropped dramatically.
These success stories tell us
that government initiatives work—
initiatives like boosting spending
on research and development,
offering tax and loan incentives
to startups
that want to develop
zero-carbon technologies
and consumers who want to buy them,
and putting a price on carbon emissions.
We need governments
to do what they did for solar and wind
for many more innovations.
At the end of the day,
ideas and inventions alone
can’t solve our most daunting problems—
policies and markets have to be shaped
so the most promising technologies
can succeed.