Diffusion of Innovation-Rohan

8/12/2019 Diffusion of Innovation-Rohan

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Sri Sharada Institute Of Indian Management - Research

Approved by AICTE

Plot No. 7, Phase-II, Institutional Area, Behind the Grand Hotel, asant !un",

Ne# $elhi % &&''7' (ebsite) ###.srisii*.or+

Management of Technology & Change

Project Report

N

Diffusion of Innoation

Su!mitted To"- Su!mitted #y"-

Prof$ %$ en'atesan Rohan (r Singh

)*+)*+*,

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http://www.srisiim.org/http://www.srisiim.org/


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Declaration

I hereby delare that the ollo#in+ pro"et report titled Diffusion Of

Innoation. is an authenti #or/ done by us. This is to delare that all #or/

indul+ed in the o*pletion o this #or/ suh as researh, analysis o ativities o

an or+ani0ation is a proound and honest #or/ o *ine.

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/C(%O012D32M2%T

I #ould li/e to e1press hearty +ratitude to our aulty +uide, Prof$ %$ en'atesan

or +ivin+ *e the opportunity to prepare a pro"et report on 2Diffusion Of

Innoation. and or his valuable +uidane and sinere ooperation, #hih helped

*e in o*pletin+ this pro"et.

3ohan !r 4in+h

PG$5 Bath 6'&-'&894ri 4II5

Table of ContentsDeclaration...................................................................................................................................2

ACKNOWLEDGEMENT..............................................................................................................3

Table of Content........................................................................................................................ 3

!ntro"#ction.................................................................................................................................. $

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W%at alitie 'a(e inno)ation *rea"+.................................................................................... ,

T%e i'*ortance of *eer-*eer con)eration an" *eer netor(................................................../

0n"ertan"ing t%e nee" of "ifferent #er eg'ent...................................................................

#''ar of Diff#ion of !nno)ation...........................................................................................14

Diff#ion of !nno)ation- Mobile P%one E5a'*le......................................................................... 1,

6ai*#r 7oot................................................................................................................................. 1/

TATA Nano Diff#ion.................................................................................................................1

T*e of !nno)ation....................................................................................................................18

Pro"#ct )er# Proce !nno)ation............................................................................................18

Co'*etence-En%ancing )er# Co'*etence-Detroing !nno)ation........................................24

Arc%itect#ral )er# Co'*onent !nno)ation...............................................................................24

Tec%nolog - C#r)e................................................................................................................. 21

Diff#ion of !nno)ation an" A"o*ter Categorie......................................................................... 2,

T%eor in Action.........................................................................................................................2,

Tec%nolog Ccle.....................................................................................................................2/

7actor Affecting Diff#ion of !nno)ation.................................................................................... 2

Trigger to Diff#ion of !nno)ation............................................................................................. 28

9arrier To Diff#ion of !nno)ation............................................................................................. 33

:eference................................................................................................................................3/

Introduction

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$iusion o Innovations see/s to e1plain ho# innovations are ta/en up in a

population. An innovation is an idea, behavior, or ob"et that is pereived as ne#

by its audiene.

$iusion o Innovations oers three valuable insi+hts into the proess o soial

han+e)

(hat :ualities *a/e an innovation spread.

The i*portane o peer-peer onversations and peer net#or/s.

;nderstandin+ the needs o dierent user se+*ents.

These insi+hts have been tested in *ore than


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adoption is li/ely to be. There are no absolute rules or #hat onstitutes 2relative

advanta+e=. It depends on the partiular pereptions and needs o the user +roup.

)4 Compati!ility 5ith e6isting alues and practices

This is the de+ree to #hih an innovation is pereived as bein+ onsistent #ith the

values, past e1perienes, and needs o potential adopters. An idea that is

ino*patible #ith their values, nor*s or praties #ill not be adopted as rapidly as

an innovation that is o*patible.

74 Simplicity and ease of use

This is the de+ree to #hih an innovation is pereived as diiult to understand

and use. Ne# ideas that are si*pler to understand are adopted *ore rapidly than

innovations that re:uire the adopter to develop ne# s/ills and understandin+s.

84 Triala!ility

This is the de+ree to #hih an innovation an be e1peri*ented #ith on a li*ited

basis. An innovation that is trialable represents less unertainty to the individual

#ho is onsiderin+ it.

94 O!sera!le results

The easier it is or individuals to see the results o an innovation, the *ore li/ely

they are to adopt it. isible results lo#er unertainty and also sti*ulate peer

disussion o a ne# idea, as riends and nei+hbours o an adopter oten re:uest

inor*ation about it.

Aordin+ to Everett 3o+ers, these ive :ualities deter*ine bet#een 8? and @7

perent o the variation in the adoption o ne# produts. & These ive :ualities

*a/e a valuable he/list to ra*e ous +roup disussions or pro"et evaluations.

They an help identiy #ea/nesses to be addressed #hen i*provin+ produts or

behaviours.

Reinention is a /ey priniple in $iusion o Innovations. The suess o an

innovation depends on ho# #ell it evolves to *eet the needs o *ore and *ore; | P a g e


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de*andin+ and ris/averse individuals in a population 6the history o the *obile

phone is a peret e1a*ple9.

A +ood #ay to ahieve this is to *a/e users into partners in a ontinuous proess

o redevelop*ent. Co*puter +a*es o*panies, phar*aeutial orporations and

rural researh institutes are e1a*ples o or+anisations that see/ to *a/e users

ative partners in i*provin+ innovations by supportin+ user o**unities or by

applyin+ partiipative ation researh tehni:ues. 5any o*puter +a*es are no#

built #ith the intention that they #ill be *odiied by enthusiasti users. 4ays

onsu*er behavior e1pert, ranine Gardin. 2Theyre atually partiipatin+ in the

desi+n o the +a*e. These onsu*ers are really passionate about the +a*e % its

al*ost li/e a ult. They have an inredible sense o loyalty and o#nership o that

brand. Instead o o*plainin+, they i1 the produt.= The onept o reinvention is

i*portant beause it tells us that no produt or proess an rest on its laurels)

ontinuous i*prove*ent is the /ey to spreadin+ an innovation.

The importance of peer-peer conversations and peer networks

The seond i*portant insi+ht is that i*personal *ar/etin+ *ethods li/e

advertisin+ and *edia stories *ay spread inor*ation about ne# innovations, but

its onversations that spread adoption. Its Beause the adoption o ne# produts

or behaviors involves the *ana+e*ent o ris/ and unertainty. Its usually only

people #e personally /no# and trust % and #ho #e /no# have suessully

adopted the innovation the*selves % #ho an +ive us redible reassuranes thatour atte*pts to han+e #ont result in e*barrass*ent, hu*iliation, inanial loss

or #asted ti*e.

Early adopters are the e1eption to this rule. They are on the loo/out or

advanta+es and tend to see the ris/s as lo# beause they are inanially *ore

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seure, *ore personally onident, and better inor*ed about the partiular produt

or behavior. ten they #ill +rasp at innovations on the basis o no *ore than a

#ell #orded ne#s artile. The rest o the population, ho#ever, see hi+her ris/s in

han+e, and thereore re:uire assurane ro* trusted peers that a innovation is do-

able and provides +enuine beneits. As an innovation spreads ro* early adopters

to *a"ority audienes, ae-to ae o**uniation thereore beo*e *ore

essential to the deision to adopt. This priniple is e*bodied in the Bass

oreastin+ 5odel 6belo#9, #hih illustrates ho# ae-to ae o**uniation

beo*es *ore inluential over ti*e, and *ass *edia less inluential.

The e*phasis on peer-peer o**uniation has led diusion sholars to be

interested in peer net#or/s. 5any diusion-style a*pai+ns no# onsiously

atte*pt to utili0e peer net#or/s, or instane by usin+ Popular pinion eader

tehni:ues or various 2viral *ar/etin+= *ethods. These *ethods % #hih are

beo*in+ inreasin+ly popular % ai* to reruit #ell-onneted individuals to

spread ne# ideas throu+h their o#n soial net#or/s.

pinion leader tatis have been suessul in raisin+ the standards o pratie by

*edial dotors, pro*otin+ #eatheri0ation o ho*es,8 and enoura+in+ sae se1 in

+ay o**unities. 3o+ers notes that by ''D there had been ei+ht rando*ised

ontrolled trials % the +old standard in evaluation % all o #hih de*onstrated the

suess o opinion leader tatis in produin+ behavioral han+es.

Understanding the needs of different user segments$iusion researhers believe that a population an be bro/en do#n into ive

dierent se+*ents, based on their propensity to adopt a speii innovation)

innovators, early adopters, early *a"orities, late *a"orities and la++ards.

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Eah +roup has its o#n 2personality=, at least as ar as its attitude to a partiular

innovation

+oes. (hen thin/in+ about these +roups, dont i*a+ine its your "ob to shit people

ro* one se+*ent to another. It doesnt #or/ that #ay. Its best to thin/ o the

*e*bership o eah se+*ent as stati. Innovations spread #hen they evolve to

*eet the needs o suessive se+*ents.

Innoators" The adoption proess be+ins #ith a tiny nu*ber o visionary,

i*a+inative innovators. They oten lavish +reat ti*e, ener+y and reativity on

developin+ ne# ideas and +ad+ets. And they love to tal/ about the*. 3i+ht no#,

theyre the ones busily buildin+ stills to onvert oo/in+ oil into diesel uel and

*a/in+ #ebsites to tell the #orld about it. ;nortunately their one eyed i1ation on

a ne# behavior or +ad+et an *a/e the* see* dan+erously idealisti to the

pra+*ati *a"ority. et no han+e pro+ra* an thrive #ithout their ener+y and

o**it*ent.

How to work with innovators:

F Tra/ the* do#n and beo*e their 2irst ollo#ers=7, providin+ support and

publiity or their ideas.

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Summar of !iffusion of Innovation

$iusion sholars believe any population or soial net#or/ an be bro/en do#n

into ive se+*ents, or any +iven innovation.

Invite /een innovators to be partners in

desi+nin+ your pro"et.

2arly adopters" ne the beneits start to beo*e apparent, early adopters leap in.

They are on the loo/out or a strate+i leap or#ard in their lives or businesses and

are :ui/ to *a/e onnetions bet#een lever innovations and their personal

needs.

They love +ettin+ an advanta+e over their peers and they have ti*e and *oney to

invest. Theyre oten ashion onsious and love to be seen as leaders) soial

presti+e is one o their bi++est drivers. Their natural desire to be trend setters

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auses the 2ta/e-o= o an innovation. Early adopters tend to be *ore

eono*ially suessul, #ell onneted and #ell inor*ed and hene *ore

soially respeted. Their see*in+ly ris/y plun+e into a ne# ativity sets ton+ues

#a++in+. thers #ath to see #hether they prosper o ail, and people start tal/in+

about the results. And early adopters li/e to tal/ about their suesses. 4o the bu00

intensiies. (hat early adopters say about an innovation deter*ines its suess.

The *ore they ro# and preen, the *ore li/ely the ne# behavior or produt #ill be

pereived positively by the *a"ority o a population. Early adopters are vital or

another reason. They beo*e an independent test bed, ironin+ out the hin/s and

reinventin+ the innovation to suit *ainstrea* needs.

ortunately early adopters are an easy audiene. They dont need *uh persuadin+

beause they are on the loo/out or anythin+ that ould +ive the* a soial or

eono*i ed+e. (hen you all a publi *eetin+ to disuss ener+y-savin+ devies

or ne# ar*in+ *ethods, theyre the ones #ho o*e alon+. Theyre the irst

people in your blo/ to install a #ater tan/, *ulh their +arden, buy laptops or

their /ids, or install solar panels.

4o*e authorities tal/ about a 2has*= bet#een visionary early adopters and

pra+*ati *a"orities.@ They thin/ the has* e1plains #hy *any produts are

initially popular #ith early adopters but rash and burn beore they reah *ass

*ar/ets. Everett 3o+ers disa+reed #ith the idea o a has*. He thou+ht early

adopters and *a"orities or*ed a ontinuu*. Ho#ever *ost early adopters still

have radially dierent interests and needs ro* *ost *a"orities, so even i theres

no real has* its a useul *ental onstrut that #arns us a+ainst the easy

assu*ption that one si0e its all. ne a+ain, #hat *a/es produts or praties

spread is not persuasion. Its the #hether the produt or behavior is bein+

reinvented to beo*e easier, si*pler, :ui/er, heaper, and *ore advanta+eous.

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How to work with early adopters:

er stron+ ae-to-ae support or a li*ited nu*ber o early adopters to

trial the ne# idea.

4tudy the trials areully to disover ho# to *a/e the idea *ore onvenient,

lo# ost and *ar/etable.

F 3e#ard their e+os e.+. #ith *edia overa+e.

F Pro*ote the* as ashion leaders 6be+innin+ #ith the ultish end o the *edia

*ar/et9.

F 3eruit and train so*e as peer eduators.

F 5aintain relationships #ith re+ular eedba/.

Early majority: Assu*in+ the produt or behaviour leaps the has*, it *ay

eventually reah *a"ority audienes. Early *a"orities

are pra+*atists, o*ortable #ith *oderately pro+ressive ideas, but #ont at

#ithout solid proo o beneits. They are ollo#ers #ho are inluened by

*ainstrea* ashions and

#ary o ads. They #ant to hear 2industry standard= and 2endorsed by nor*al,

respetable ol/s=. 5a"orities are ost sensitive and ris/ averse. They are loo/in+

or si*ple, proven, better #ays o doin+ #hat they already do. They re:uire

+uaranteed o-the-shel peror*ane, *ini*u* disruption, *ini*u* o**it*ent

o ti*e, *ini*u* learnin+, and either ost neutrality or rapid payba/ periods.

And they hate o*ple1ity. They havent +ot ti*e to thin/ about your produt or

pro"et. Theyre too busy +ettin+ the /ids to ootball and runnin+ their businesses.

I they do have spare ti*e theyre not +oin+ to spend it ussin+ around #ith

o*pliated, e1pensive, inonvenient produts or behaviours. They #ant to hear

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2plu+-and-play=, 2no s#eat= or 2user-riendly= and 2value or *oney=. Ho# to

#or/ #ith the early *a"ority)

F er +ive-a#ays or o*petitions to sti*ulate bu00.

;se *ainstrea* advertisin+ and *edia stories eaturin+ endorse*ents ro*

redible, respeted, si*ilar ol/s.

o#er the entry ost and +uarantee peror*ane.

3edesi+n to *a1i*ise ease and si*pliity.

F Cut the red tape) si*pliy appliation or*s and instrutions.F Provide stron+ usto*er servie and support.

Late majority: They are onservative pra+*atists #ho hate ris/ and are

uno*ortable your ne# idea. Pratially their only driver is the ear o not ittin+

in, hene they #ill ollo# *ainstrea* ashions and established standards. They are

oten inluened by the ears and opinions o la++ards.

How to work with the late majority:

F ous on pro*otin+ soial nor*s rather than "ust produt beneits) theyll #ant to

hear that plenty o other onservative ol/s li/e the*selves thin/ its nor*al or

indispensable.

F !eep reinin+ the produt to inrease onveniene and redue osts.

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ount= syste* or everyone else. Ho# bi+ is eah se+*ent> 3o+ers #ent as ar as

assi+nin+ preise notional perenta+es or eah se+*ent)

Innovators) .

Early Adopters) &D.

Early *a"ority) D8

ate *a"ority D8

a++ards &


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5oreover, in several developed nations, the *obile phone has reahed a

penetration level that no# e1eeds &'', #ith onsu*ers adoptin+ *ore than one

handset, *ore than one phone nu*ber, and possibly *ore than one provider. The

*assive penetration o *obile telephony is not e1eptional L *any o**only

used produts and servies, suh as $$s, personal o*puters, di+ital a*eras,

online ban/in+, and the Internet, #ere un/no#n to onsu*ers three deades a+o.

As ir*s invest ontinually in innovation, this inlu1 o ne# produts and servies

is e1peted to ontinue into the uture. The spread o an innovation in a *ar/et is

ter*ed 2diusion=. $iusion researh see/s to understand the spread o

innovations by *odelin+ their entire lie yle ro* the perspetive o

o**uniations and onsu*er interations. Traditionally, the *ain thread o

diusion *odels has been based on the ra*e#or/ developed by Bass 6&?


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desi+n and *anuaturin+ proess earlier. In addition to India, B544 also holds

a*ps in ' ountries aross Asia, Aria, and atin A*eria to it people #ith

artiiial li*bs. 4ine its ineption in &?7 over &. *illion a*putees and polio

patients have been itted inor* o artiiial li*bs, alipers and other aids and

applianes, +ivin+ the* *obility and di+nity. The nu*ber o beneiiaries in ''?-

&' is


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been observed in tehnolo+y tra"etories, helpin+ us understand ho# tehnolo+ies

i*prove and are diused.

Tpe of Innovations

#roduct versus #rocess Innovation

Product innovations are e*bodied in the outputso an or+ani0ation % its

+oods or servies. Process innovationsare innovations in the #ay an or+ani0ation onduts its

business, suh as in tehni:ues o produin+ or *ar/etin+ +oods or servies.

Product innovationsan enableprocess innovationsand vie versa.

(hat is a product innovation or one or+ani0ation *i+ht be a process

innovationor another.

E.+., ;P4 reates a ne# distribution servie 6product innovation9 that

enables its usto*ers to distribute their +oods *ore #idely or *ore easily

6process innovation9

*adical versus Incremental Innovation- The radicalnesso an innovation

is the degree to which it is new and different ro* previously e1istin+

produts and proesses.

Incremental innovations *ay involve only a *inor han+e ro* 6or

ad"ust*ent to9 e1istin+ praties.

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The radialness o an innovation is relative it *ay han+e over ti*e or #ith

respet to dierent observers. E.+., di+ital photo+raphy a *ore radial

innovation or !oda/ than or 4ony.

Competence-$nhancing versus Competence-!estroing Innovation

Competence-enhancing innovations build on the ir*s e1istin+ /no#led+e

base, E.+., Intels Pentiu* 8 built on the tehnolo+y or Pentiu* III.

Competence-destroyinginnovation renders a ir*s e1istin+ o*petenies

obsolete. E.+., eletroni alulators rendered !euel O Essers slide rule

e1pertise obsolete. (hether an innovation is o*petene enhanin+ or

o*petene destroyin+ depends on the perspetive o a partiular ir*.

(rchitectural versus Component Innovation

A component innoation6or *odular innovation9 entails han+es to one or *ore

o*ponents o a produt syste* #ithout si+niiantly aetin+ the overall desi+n.

E.+., addin+ +el-illed *aterial to a biyle seat

An architectural innoationentails han+in+ the overall desi+n o the syste* or

the #ay o*ponents interat. E.+., transition ro* hi+h-#heel biyle to saetybiyle. 5ost arhitetural innovations re:uire han+es in the underlyin+

o*ponents also.

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ir*s *ay be relutant to adopt ne# tehnolo+y beause peror*ane

i*prove*ent is initially slo# and ostly, and they *ay have si+niiant invest*ent

in inu*bent tehnolo+y

S-Cures in Technology Diffusion

Adoption is initially slo# beause the tehnolo+y is una*iliar. It aelerates as

tehnolo+y beo*es better understood. Eventually *ar/et is saturated and rate o

ne# adoptions delines. Tehnolo+y diusion tends to ta/e ar lon+er than

inor*ation diusion. Tehnolo+y *ay re:uire a:uirin+ o*ple1 /no#led+e or

e1periene. Tehnolo+y *ay re:uire o*ple*entary resoures to *a/e it valuable

6e.+., a*eras not valuable #ithout il*9.

F S-Cures as a Prescriptie Tool

5ana+ers an use data on invest*ent and peror*ane o their o#n tehnolo+ies

or data on overall industry invest*ent and tehnolo+y peror*ane to *ap s-urve.

(hile *appin+ the tehnolo+ys s-urve is useul or +ainin+ a deeper

understandin+ o its rate o i*prove*ent or li*its, its use as a presriptive tool is

li*ited. True li*its o tehnolo+y *ay be un/no#n, 4hape o s-urve an be

inluened by han+es in the *ar/et, o*ponent tehnolo+ies, or o*ple*entary

tehnolo+ies. ir*s that ollo# s-urve *odel too losely ould end up s#ithin+

tehnolo+ies too soon or too late. 4-urves o diusion are in part a untion o s-

urves in tehnolo+y i*prove*ent. earnin+ urve leads to prie drops, #hih

aelerate diusion

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Average Sales Prices of Consum er Electronics

$0

$200

$400

$600

$800

$1,000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

VCR CD Player Cell Phone

Penetration of Consum er Electronics

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Percen

tofU.S.

Households

VCR CD Player Cell Phone

$iusion o Innovation

Diffusion of Innoation and /dopter Categories

F Everett 5. 3o+ers reated a typolo+y o adopters)

Innoators are the irst . o individuals to adopt an innovation. They are

adventurous, o*ortable #ith a hi+h de+ree o o*ple1ity and unertainty, and

typially have aess to substantial inanial resoures.

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2arly /dopters are the ne1t &D. to adopt the innovation. They are #ell

inte+rated into their soial syste*, and have +reat potential or opinion leadership.

ther potential adopters loo/ to early adopters or inor*ation and advie, thus

early adopters *a/e e1ellent *issionaries or ne# produts or proesses.

2arly Majority are the ne1t D8. They adopt innovations sli+htly beore the

avera+e *e*ber o a soial syste*. They are typially not opinion leaders, but

they interat re:uently #ith their peers.

1ate Majority are the ne1t D8.They approah innovation #ith a s/eptial air,

and *ay not adopt the innovation until they eel pressure ro* their peers. They

*ay have sare resoures.

1aggards are the last &


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!iffusion of Innovation and (dopter Categories

Theor in (ction

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Segment :ero. ; / serious threat to Microsoft

Diffusion of Innovation-Rohan

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