Transcription
Innovation is such a fascinating topic, but how does it actually get adopted? Believe it or not, but in order to answer this question, we look back at a theory that was developed more than 50 years ago, and it's called the Diffusion of Innovation Theory.
A.I.D. Rogers, the author of this theory, proposed five stakeholder groups that explain how innovation gets adopted over time and by different cohorts. The first group he called the innovators. These are the 2.5% who are out there literally sleeping in front of the shop to buy the innovation the date comes out without being rout-tested.
The second cohort is made up of early adopters, roughly 13.5%. The early adopters are the immediate second wave. The first pass is over, the product is maturing in its abilities, and the early adopters get pleasure and satisfaction out of early usage.
The early majority represent the third group, that is the next 34%. The product becomes widely known and mainstream, and the early majority group are those guys who write this mainstream adoption.
The fourth group, or the so-called late majority, is far more cautious. They represent roughly 34% and will wait typically for decline in pricing until first hiccups are ired out, and only then will adopt the innovation.
At the very tail end, the fifth and final group consists of so-called leg-outs. Leg-outs are the most reluctant, but finally, they will get over the line and make up roughly 16%. Think about legs and those guys who only now sign up for e-banking or maybe the internet.
If you map these five cohorts of the Diffusion of Innovation Theory over time and according to these percentages, it will form a bell curve. If you now sum up this information across the bell curve, you reach the well-known S-curve.
The S-curve, in four stages, describes how innovation is adopted in terms of the speed of adoption. At the very first stage, where there's a very low growth, we see almost every startup entrepreneur on this planet, a lot of tri-error, a lot of prototyping, and many of these innovations will never see the light.
If an innovation takes off, it ideally takes off in an exponential fashion. Exponential growth is what we see right now in many solutions, for example, Uber and Airbnb. Rapid growth rates, and typically then, we call them disruptive innovations.
Once exponential growth is over, we enter the stage of slowing growth, and after that, we see a plateauing. Examples for plateauing over the last 5 years were analog photography or DVD players.
So, you can see how the Diffusion of Innovation Theory, the five cohorts, can be mapped to the S-curve and allows us to understand who, in what sequence, and at what speed adopts innovation.