diffusion of innovation-rohan
TRANSCRIPT
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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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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