Managing A Disruptive Innovation: The Hybrid Air Case

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January 22, 2013 was the “innovation day” on which the Center for R&D of PSA Peugeot Citroën (PSA, hereafter) in France presented the major “PSA Innovations for Car of the Future". About a hundred journalists, policymakers, investors, economic and industrial partners of the carmaker gathered to find out about the new technologies to meet the challenges of tomorrow’s car: urbanization, climate change, evolution in consumer usage and their mobility patterns . Among the technologies unveiled, there was a breakthrough technology called "Hybrid Air." It combined petrol and compressed air to offer a key step toward the vehicle 2l/100km.
In March 2013, during the International Automobile Motor Show in Geneva, using a prototype vehicle, Citroën presented the first Hybrid Air application. At the manufacturer's stand, the French Minister of Productive Recovery, Arnaud Montebourg, welcomed this innovation and highlighted PSA’s ability to meet tomorrow's challenges, despite the economic difficulties that this manufacturer was facing. The next day, one could read in the press headlines, "PSA struck a blow with a revolutionary innovation". The commercialization of the vehicle was scheduled for 2016.
Two years after the announcement and a year before the commencement of car sales, the general and specialized press, as well as blogs of automotive industry experts, announced the end of Hybrid Air adventure: “Deflated: Peugeot Citroen Shelves Its Air Hybrid Technology” (January 26, 2015 at 4:51 pm by Mike Duff). The headline of the newspaper Les Echos read, "Hybrid Air put definitely on the shelf ." In response to these catchy press headlines, PSA communication services nuanced by saying “…its moment may still come”; “We have no plans to cancel the project,” as a PSA spokeswoman told Automotive News Europe . If Hybrid Air was a great invention, it has never been an innovation.
The hybrid Air case is a great source of knowledge about disruptive innovations and the way they can be managed. The disruptiveness appeared at both product and process levels. At the product level, Hybrid Air is a radical innovative hybridization technology combining a petrol engine, a compressed air energy storage unit, a hydraulic pump unit, and an automatic transmission. An intelligent electronic management system adapts the operating mode to the user’s driving style and optimizes energy efficiency. At the process level, Hybrid Air is a radical innovative mode of governance and management of innovation. PSA took the opportunity to test a new method for managing innovation aligned with the needs of a high-stake project. This innovative project was conducted in secret by a dedicated project team within an isolated skunkworks structure.

At a time where disruptive innovation is glorified as the only way to create value in a highly competitive world, our work contributes to framing the conditions of transformation of inventions into innovations. Our analysis pays a specific attention to the conditions for skunkworks structure in the innovation process.
Two data collection methods were used. First, we collected primary data from notes taken at conferences, seminars, and workshops in which PSA and Hybrid Air collaborators shared the content and history of the project. This data collection was enriched with formal semi-structured interviews, as well as recordings of two of the main project managers. We also conducted informal interviews with collaborators working for the Advanced R&D Department at PSA and people from partner companies. The second and main source of information was indirect. We analyzed secondary sources such as press articles, specialist automobile blogs, YouTube videos of the project, recordings of project members’ participation in courses taught in engineering schools or research seminars. All information was collected between January 23rd and September 2015.
The article will be structured in Three parts. The first part will present the case, described by practitioners as an "innovation revolution(AIR)”. The second part will present a literature review on skunkworks innovation projects. Finally, the third part will discuss the project’s organizational innovation and analyze its implementation limits regarding the skunkworks literature.