Marshall McLuhan's theory of entrepreneurship

“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 suggest that careful analysis of the extensions, amputations, retrievals and reversals inherent in innovations help to reveal their effects.

At a time when critics railed against sex, violence, and blasphemy on vacuum tube televisions, McLuhan claimed that the content of television was irrelevant, as 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! He also suggested that the radio is the preferred of violent agitators--wonder what he would say today about social media.

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 legs.

To help us understand the difference between the medium and the message, he gave the example of the light bulb, which 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, increasing our productivity and possibly our enjoyment of evenings. The light-bulb retrieves the day during the night, it reverses into insomnia and a blurred sky. It extends our eyes, while it amputates the candle.

Marshal McLuhan is known for many things, but it is perhaps his concepts of “cold” and “hot” innovations that is 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) are for incumbents whereas cold innovations are for new entrants (new combinations). 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.

Let's examine McLuhan's concepts of hot and cold innovations in turn:

Hot innovations increase performance along an existing dimension. McLuhan relates hot innovations to the word "hot", which is 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. The large screen already offers more pixels than can be processed by the audience. 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--similar to what Christensen called over-serving with products that do more and cost more than wanted by niche customers and those at the bottom of the market. Innovations that get too hot are soon challenged by the emergence of cold innovations.

McLuhan's Cold innovations add some new dimension of performance for the senses, while compromising performance for senses along existing dimensions. This new combination of stimulus creates opportunities for newcomers to get positioned in a new but growing industry. This is very similar to Christensen's idea that disruptive innovations compensate for lower performance along traditional dimensions of performance by adding convenience, simplify, and affordability.

Cold innovations eventually get heated up giving rise to new cold innovations. McLuhan relates cold innovation to the word "cool" where a person or object is considered to be detached from the currents of popular thought. Unlike hypnotic hot innovation, cold innovations are more akin to hallucination--the user has to fill in the blanks. For example the comic book requires the reader to fill in the joke--today it's the meme.
For entrepreneurs, there is perhaps nothing more important than understanding media (technology) and its effects on people. It can help them to shape their ventures to take advantage of trends toward overheating and reversal.