Hot and Cold Innovations and Entrepreneurship

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An image of an entrepreneur choosing the blue or red path.
🔮 Status: Pseudoscience
“The crossing or hybridizations of the media release great new force and energy as by fission or fusion…” (1964:48).

Marshall McLuhan was a Canadian academic and celebrity who famously coined the phrase “the medium is the message” back in the 1960s to express his thesis about the effect of new technologies (extensions of ourselves) on culture and society.

He and his son are known together for the McLuhan Tetrad, which suggests that careful analysis of the extensions, amputations, retrievals, and reversals inherent in innovations help to reveal their effects.

The Medium is the Message

At a time when critics railed against sex, violence, and blasphemy on vacuum tube televisions, McLuhan claimed that the content of television was irrelevant. He argued that it is the medium of television that really changes us by creating new audio/visual tribes and seating us passively in front of the tube. New environments!

The implication of McLuhan’s theory is that new technologies shape environments and perceptions by making accessible new dimensions of time and space. My shirt is an extension of my skin, my car is an extension of my legs, and my computer is an extension of my central nervous system.

To help us understand the difference between the medium and the message, he gave the example of the light bulb. It is a medium devoid of any content (or message), yet it creates an environment by its mere presence: illuminating the dark, extending our ability to make use of time and space, and increasing our productivity. The light-bulb retrieves the day during the night; it reverses into insomnia. It extends our eyes, while it amputates the candle.

Hot vs. Cold Innovations

Marshall McLuhan is known for many things, but it is perhaps his concepts of “cold” and “hot” innovations that are most relevant to entrepreneurship scholars.

Entrepreneurs exist in ecosystems with incumbent organizations and therefore should be selective about the innovations they pursue. The core idea here is that:

  • Hot Innovations: Improvements along existing dimensions (for incumbents).
  • Cold Innovations: New combinations (for new entrants).

This is very similar to Tushman and Anderson (1986), who argue that incumbents/entrants have the advantage with competence enhancing/destroying innovations. It is also similar to disruptive innovation theory's distinction between disruptive and sustaining innovation.

1. Hot Innovations (High Definition)

Hot innovations increase performance along an existing dimension. McLuhan relates hot innovations to the word "hot," used to express an attachment to local and popular cultures. By increasing stimulus over one sense, a deeper connection to the environment created by the technology is achieved.

The 3D movie is a great example of this: it adds more stimuli over the visual sense while not affecting any of the other senses. With the 3D movie, this idea is taken to the extreme, where the visuals are so dense that one must continually choose where to focus attention.

At the extreme, heating up a technology makes it hypnotic—it demands very little participation or "fill-in" from the audience because the data is so complete. For the entrepreneur, hot innovations are often competence-enhancing. They allow incumbents to lean into their existing infrastructure to provide a richer, more intense version of what already exists.

2. Cold Innovations (Low Definition)

In contrast, cold innovations are "low definition." They provide a meager amount of information, forcing the user to become an active participant to complete the experience. Think of a sketch versus a photograph; the sketch requires your mind to finish the lines and provide the detail. Because they provide less sensory data, they invite the audience to "engage" or "participate" in the creation of the message.

In the world of entrepreneurship, cold innovations are often the "scrappy" entry points for new ventures. They may lack the polish or the high-fidelity performance of incumbent products, but they demand a new kind of engagement. Because they are often competence-destroying for the incumbent, they create a vacuum that only a flexible entrant can fill. They don't just improve a sense; they reorganize the way we interact with the environment entirely.

The Entrepreneurial Synthesis

While the "Pseudoscience" tag often follows McLuhan due to his lack of empirical rigour and his use of "probes"—provocative statements intended to spark thought rather than prove a fact—the utility for strategy remains high. Whether we call it disruptive vs. sustaining or hot vs. cold, the lesson for the entrepreneur is clear: know the temperature of your innovation.

If you heat up a medium too far, it reaches its "reversal" point—where the benefits of the technology begin to mirror its drawbacks. By understanding the McLuhan Tetrad, an entrepreneur can predict not just what a technology does, but what it undoes, what it brings back, and what it eventually becomes.

References

Related Theories

  • Competence Destruction Theory: Explore how "cold" innovations often destroy the value of existing incumbent knowledge, paralleling McLuhan's idea of technological "amputation."
  • Architectural Innovation Theory: Learn how changing the way components are linked (low-definition shifts) can disrupt established "hot" industry standards.
  • Diffusion of Innovations Theory: Understand how the "temperature" of a medium affects the speed and social ritual of adoption across different populations.
  • McLuhan’s Theory of Entrepreneurship: A deeper dive into how the "Global Village" and electronic extensions of the nervous system create new entrepreneurial opportunities.
  • Disruptive Innovation Theory: The classic framework for understanding how simple, "low-definition" products eventually "heat up" to overtake market leaders.

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