According to Professor Clayton Christensen and drawn from his book “Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, by Clayton M. Christensen, Scott D. Anthony, and Erik A. Roth. Harvard Business School Press, the only way to look into the future is to use theories.
One set of theories I believe we simply cannot ignore even more today lies around the work of Everett. M. Rogers where he outlined his thinking in his book Diffusion of Innovations the first edition was published in 1962. The fifth edition (2003, with Nancy Singer Olaguera) addresses the spread of the Internet, and how it has transformed the way human beings communicate and adopt new ideas.
Three chapters on “diffusion and adoption”
The first part is to outline the different theories and establish their value in our thinking, when we are working through innovations going to market, as well as how we work through its adoption.
The second part looks at some examples and relates these theories into their use in everyday and practical application. All our work towards producing innovation is to achieve success in penetrations of our target markets and increase sales through growing adoption and increasing the number of people wanting to buy the product.
The third part will look at how Rogers' theories relate to us in today's connected world, and in particular with reference to Apple. Finally we'll look at the reasons why diffusion fails to occur.
---- Part 1 ----
Establishing a basic understanding
By developing our understanding of why some products seem easier to diffuse while others can take longer or often fail, innovators can improve their likelihood of understanding the differences through exploring these different diffusion and adoption theories.
Besides the classic “S-shaped curve” associated with diffusion it is useful to also reflect on this tougher curve to manage profit and loss, as, from its development costs into profit, it requires a greater focus on the commercialization stages.
Product and People determine diffusion and adoption
According to Rogers, the rate of diffusion can be attributed to a combination of “product differences” and “people differences”
Research suggests that up to 87 per cent of the variance in an innovation rate of diffusion can be attributed to the following five product characteristics. These are known as Rogers Five –characteristics of Innovation.
Relative advantage refers to the degree perceived to be better than the product (or service) it replaces.
Compatibility is the extent to which an innovation is perceived as being consistent with the values, past experiences and needs of potential adopters.
Complexity is the degree to which the new innovation is perceived as being difficult to understand or use.
Trialability is the degree to which the new innovation can be experimented with, piloted and used on a limited basis.
Observability is the degree to which the results of an innovation are visible, observed and communicated to others and where the rate of adoption can often be determined.
Once the product’s position in relationship to the Rogers Five Factors is known, the diffusion process is best managed by focusing on the people difference. The classic bell curve is broken down in the five categories of adopters.
It is from this initial work of Rogers we then got Geoffrey Moore’s classic on “Crossing the Chasm” which recently have been significantly updated in a recently released book around the Technology Adoption Lifecycle.
The five adopter categories are:
Innovators – venturesome, risk-taking, information seeking, early seeking status and very experimental, enjoy the degree of early challenge or even uncertainty involved.
Early adopters – Often respected opinion leaders within their social groups, seen often as role models for others.
Early majority – more deliberate before adopting new ideas; interact frequently with peers and trendsetters. They like to merely stay ahead within the curve from that more informed decision-making.
Late majority – Tend to be sceptical, cautious to adopt but ‘feel’ pressure of peers to adopt, tend to need intervention strategies to overcome barriers and see their ‘needs’ resolved by the innovation
Laggards – Traditional , last in the social system, often they pay little attention to opinions of others, they have more a clear point of reference in the past to overcome, are often suspicious of new innovations and their decision process is often lengthy.
Then we have the decision process or stages of adoption:
Awareness and Knowledge – refers to a customer’s acknowledgement of the presence or existence of the new innovation and where they form a general perception of what it might entail and is often driven by the intersection of need recognition through marketing communications. This is the point of being inspired to find out more.
Persuasion and Interest – this occurs when a consumer processes the available information associated with the innovation and considers the product or services appeal on this. This positive or negative attitude tends to be based on the five characteristics mentioned above. Here the consumer actively seeks out information and details.
Decision and Assessment – Having considered the persuasion factors the consumer will come to a decision about whether to adopt or reject the innovation. Their activity in seeking out advice, data gathering, comparing or making different assessments happen clearly here. They consider the switching costs and weighing the advantages up. This is the hardest stage to understand.
Implementation and Exploration – These are the series of activities to put the innovation to use. The consumer employs the innovation to a varying learning degree. The usefulness is determined and they may search for further information about it.
Confirmation and Adoption- is mostly concerned with post-adoption behaviour exhibited by the adopter, reinforced by the innovations actual delivery against the relative advantage ‘claims,’ its complexity and compatibility on their understandings. The individual finalizes their decision to continue using it or searches for extending its use to its full potential.
Summary part 1:
Diffusion is the manner in which innovation spreads. It is the degree of how we facilitate, accelerate, and sustain it.
There are constant difficulties of exploiting these different theories within organizations. The questions are where to place their emphasis and the means of communicating these. The process is contingent upon the structural, cultural and size and scope considerations. Constantly the implementation requirements and lack of sufficient resources or application constrain the innovation outcomes.
The execution or commercialization stage of any new innovation often fails to address the theories offered by Rogers adequately enough, then organizations often suffer poor diffusion and adoption rates, unaware of the considerable efforts this stage of understanding diffusion and adoption needs to address.
It is all about letting go but grabbing more
Technology has opened up the door to both scale and fragmentation and social business is the one pushing through this open door. We are increasingly facing the Collaborative Economy everywhere we turn. Social business is becoming the denominator of success or failure.
New rules are emerging - you could say new theories - and where are these fitting within the corporate mindset?
The shift of what our customer means to us, are we still competing with them, pushing them to accept a value proposition that forces them to begin to look elsewhere?
Are we still determined to hang onto control, in the (mistaken) belief we know what is best for our customers?
Are we really bothering to learn the power of networks, cultivating communities, fostering co-creation and optimizing shared-value, instead of just creating and selling things?
Are our structures and processes still stuck in the past or are you transitioning to managing a more social business that operates in more dynamic ways?
There are a huge number of new rules and ways to manage. It is the ones that master these that will succeed in diffusion and adoption at very different speeds than we can imagine today.
Social media is the new kid on the block
It is relentlessly chipping away at the fabric of how organizations have been organized. In less than half a decade societal and cultural shifts through technology, the transfer to global open digital networks have taken us way beyond “just the internet” for connecting.
We are in need to engage in totally different ways. It is really not good enough to sell just products and services anymore. These are basic value propositions. Customers are looking on how these are connected into different “bigger pictures”.
The questions of your sustainability approaches, environmentalism, corporate social good and responsibility and a growing interest in governance are shifting their thinking. Your customers are wanting to connect and establish a different level of trust than simply those invested in a brand name, that is becoming table stakes or even irrelevant. We are moving into a very different territory. Grasping the changes to your business are highly challenging.
Large organizations are being challenged by the sudden rise of self-organizing communities where people come together online and create shared value that often forms an immediate organization to challenge the existing. Traditional business models need to learn to adopt in different ways themselves.
In an era of high-velocity online start-ups, where the next generation of digital businesses are taking up the space as they focus increasingly on the dynamics of social business where does this leave our existing organizations?
Diffusion and adaption has been speeding up
There is an urgent need to “letting go and grabbing more”. Traditionally “we” provide products and services and many of our existing organizations are slowly coming to grips with providing on-line services. The belief is this is enough to satisfy customers, keep them buying and using the product or service. Is it?
The social connected economy has reversed the relationship. Consumers just want to use and have provided product and services on ‘their’ demand and seek increasingly the platforms where they can easily go to find out and then use the required products and services. Often they don’t want to buy these, they just want to rent them to do the appropriate job.
The whole movement of jobs-to-be-done, identifying customer needs is yet again a place of increased focus. The larger organization still struggles with this as it wants to fit this ‘seen’ need into their structure and system. They are spending growing time adapting while others are pivoting quickly to capture this fluidness in need.
In many ways diffusion and adoption lies more in the organizations inabilities than the customers. Perhaps the theories of Rogers have reversed. It is the power of people and how organizations react and determine differences that will determine diffusion and adoption, as explained by Everett Rogers. Dion Hinchcliffe, an expert on next-generation enterprises suggests an Engagement Fabric.
Are we in a reverse situation for diffusion and adoption?
Consumers race to diffuse and adopt, it seems our larger business organizations struggle. The organizations are the ‘laggards'.
We need to think about the organizations ability to engage at scale. Perhaps we need a further theory to add to Rogers ones. The interpretation of the Engagement Fabric goes like this for aiding diffusion and adoption:
The organization as one does need to engage to any, not many. It is the ability to allow information to flow; we learn to aggregate stories or decipher trends to engage back to new groups of audiences that see your diffusion as valuable to their adoption.
The organization continues to throw open its store. The ability to engage and promote self-organizing communities to exchange and extend around our product and services and keep them as engaged stakeholders who you work to keep involved in the evolution that triggers better innovations.
Simultaneous engagement that is constantly synchronised with the evolving story, built more on business and social value, less on your product or service. Constant insights and thinking get captured for its ongoing community value and ability to keep improving on the product or service offered.
Making the space highly visible and user friendly. By ensuring ‘ease of access to knowledge you are allowing conversations to build and become increasingly valuable to all involved in the community.
The ability to analyse, interpret and filter. Offer the place that captures the many good insights so as to set about the continued building of value into your products and services.
Change internal design to better diffuse and gain increasing adoption
To quote from Dion Hinchcliffe whose future thinking I have drawn heavily upon for this post makes this comment:
Why we need to rapidly move to an engagement platform
Diffusion and Adoption are even more of a business organization’s challenge to adapt to the most significant set of changes since the internet. It is the power of all the disruptive technologies, the power of social business and the incredible impact of all the connected networks are accelerating acceptance or rejection.
Diffusion and Adoption is so far more complex but the principles of Rogers theories, offered nearly fifty years ago, can help to understand a single innovation perhaps, but it is today the way you build your platform for engagement which will determine where you stand in any adoption race for the health of your business and its model in the future.
It is the business organization that is in its race for adoption.
One of my favourite books is “Dealing with Darwin- how great companies innovate at every phase of their evolution” written by Geoffrey Moore. When you work through his other books and connected thinking of “Crossing the Chasm” and "Inside the Tornado” you really appreciate the learning stories coming out of his study of the Technology Adoption Life-Cycle.
We all need to rethink a lot as the new challenges come rushing towards us. In his work Geoffrey Moore talks about ‘traction’ and I think this is a great word for thinking about how to gain diffusion and adoption in product, service or business models, to gain market and customer acceptance.
Marketing departments talk penetration, “message penetration, market penetration” and so often ‘force’ customers to become aware and then buy. Does this really work today? I doubt it. Also many organizations hang on to old media ways to get their message across when the use of technology, the internet and social engagement may seem harder but I believe is far more rewarding to engage with the customer on a more personalised basis. I regard this as 1 to 1 of many.
Today we are in an ever-faster world
Connectivity is driving the diffusion rates of nearly everything. Just take a look at the following table:
Even this table is already out of date on the speed to reach critical mass. Companies are not just setting hurdle rates on launch dates but demanding innovations that have critical mass in revenue and when they achieve critical mass. It is not unusual to set 18 months to achieve critical mass from the inception to settling on the critical factors that make a value proposition to drive penetration. This can only come through engagement and that comes through technology making the connection to the user.
Just study how Apple manages its diffusion and adoption cycle
There are lessons for us all to learn here. Apple have not been the first into markets, they are a classic fast learner and follower. Yet they master the convergence of ‘breaking’ technology, design, user experience, pushing materials used and providing ease of use within the make-up of the product, and deliver this ‘bundle’ through the sheer generation of excitement and buzz.
The huge difference is their deep understanding of what can be put together that achieves this diffusion and adoption. What can others learn from this integrated approach to product and people?
Take the iPod for example
The first digital music player entered the US market in 1998 and it was not until 2001 Apple released the iPod. The market had already shown signs of plateauing at the time of Apple’s launch, which must have been worrying but it was the unique factors of Steve Job’s clear vision of what a musical experience should have, Apple’s superb understanding of design and usage of materials, and its building upon the growing brand recognition and reputation as front edge. Yet it also benefited from previous product releases because the behaviours and expectances were being understood and were able to be articulated far more to validate and confirm Steve Jobs emerging view on what customers actually wanted.
Steve Job’s innate sense of driving a solution to a winning value proposition by demanding all the parts to be incorporated, often taking uncompromising positions, was the additional factor. For example, being determined to offer a progressively growing store of downloadable music provided that incredible ‘complete’ usage experience. It met an unarticulated need but saw the different signals in its convergence of a total package.
Apple gave everyone in the adoption curve something that set their imagination alight. Recommendations compounded so even late majorities and laggards felt compelled to buy, and the sales simply exploded. The basic criteria with the theories of Roger’s Diffusion and Adoption were met.
Then look at the Apple iMac
For the consumer, Apple took away complexity. The learning gap became dramatically reduced. It was quickly understood you took your computer out of the box and plugged it in. The complexity of most of our past experiences in complicated set ups, the need to download and fiddle with conflicting software, had been taken away. Apple set about integrating the system and providing a better user experience. It did away with proprietary connections, set USB and CD-Rom drives as their standard, dragging along most in the industry. It again focused on pushing to the maximum from Rogers characteristics of innovation.
The iMac proved to be phenomenally successful, with 800,000 units sold in 139 days. It’s translucent plastic case, originally Bondi blue and later various additional colors, is considered an industrial design landmark of the late 1990s.
Again design, attention to details, focusing on user needs to reduce complexity, offer relative advantage, make the way forward as compatible and integrated, allowing a fast set up to gain immediate experience and a great design or observability ticked all the boxes of Rogers Five Factors.
Then we get to the iPad
Where do you start? The iPad had built-in Wi-Fi and, on some models, cellular connectivity. An iPad can shoot video, take photos, play music, and perform Internet functions such as web-browsing and emailing. Other functions—games, reference, GPS navigation, social networking, etc.—can be enabled by downloading and installing apps. As of October 2013, the App Store has more than 475,000 native apps by Apple and third parties.
There have been five versions of the iPad. The first generation established design precedents, such as the 9.7-inch screen size and button placement, that have persisted through all models. The iPad 2 added a dual coreApple A5 processor and VGA front-facing and 720p rear-facing cameras designed for FaceTime video calling. The third generation added a Retina Display, the new Apple A5X processor with a quad-coregraphics processor, a 5-megapixel camera, HD 1080p video recording, voice dictation, and 4G (LTE). The fourth generation added the Apple A6X processor and replaces the 30-pin connector with an all-digital Lightning connector. The iPad Air added the Apple A7 processor, the Apple M7 motion coprocessor and reduced the form factor for the first time since the iPad 2. iOS 5.1 added Siri to the third and fourth generations and the iPad Mini. There have been two versions of the iPad Mini.
Apple were delivering wave upon wave of new technology in a rapidly accepted format. A story of design, combining technology, understanding the unmet needs of the market, combining revolutionary materials. It filled a need, and it ticked all the boxes again of Rogers Five Factors of Product.
Yet we had by this time the real effect of the People Difference. Apple have such a powerful body of innovators and early adopters creating such a pre-launch noise, it draws in early and late majorities. Apple has been a fashion ‘must have’ statement. Demonstration of products in Apple stores are ready to be put to any user test, the staff are providing you a ‘user experience’ and support structure that understands our needs and provide all your personal reasons to adopt.
The advocates of Apple products are phenomenal. They are nurtured, engaged with and pampered as they generate such chatter and noise it can’t be ignored. It delivers the powerful messages Apple want to get out there for accelerating sales at mind boggling speed.
Apple has institutionalised its product and people diffusion, and adoption process - can you?
We can all take away some powerful learning from this by aligning the theories of Rogers, articulated originally in 1962 and see how they seem highly relevant to Apple’s approach to its thinking. They have added triggering (conversations, user experiences) with contagion and have been working the different tipping points to gain market traction, penetration and constant appeal to stay up to date and in tune with the latest and greatest.
Lastly let’s remind ourselves of why diffusion fails to occur
1. Getting the price wrong and staying stubbornly rigid with it
2. The wrong identification of the target markets
3. The poor selection of channels often because they are known, and they're the sales forces' most comfortable point of contact
4. A really poor communication of the product or service benefits
5. The unique attributes are over-hyped and quickly not seen
6. The new product really does not give much benefit over existing products
7. It simply has no innovative advantage, it was more of a cost- reduction exercise
8. The ease of access to the relevant information about the product is complex, difficult, time-consuming and unclear. It becomes complex
9. The real needs and expectations of the consumer were actually ignored, never discovered or just not met
10. The product or service offers no really clear value proposition to switch and buy.
I’m sure you could add a few more but I leave those to you.
Working the diffusion and adoption theories and putting these into your practice is something that needs an integrated approach, it might develop over time, perhaps through serendipity but knowing its principles helps you begin to map out the pathway.