In the last 30 years, technological advances gave birth to a variety of consumer products that boasted they would change the world. The Segway was going to revolutionize pedestrian transportation. Blackberries and Palm Pilots were the ultimate portable communication tool, allowing people to stay connected via telephone, text message, and email no matter where they were. These products arrived in the market and found some initial interest. Everyone knew at least one person who took the plunge and purchased one of these innovative products. With the gift of hindsight, we know that for the most part, these technologies never grew in to the mainstream market. In some cases, they were completely eclipsed by competitors, such as how iPhones and Android phones trounced Blackberies and Palm Pilots. Despite being ‘first to market’ and providing clear benefit to customers, products developed around cutting-edge technology often wither away from the market.
Diffusion of Innovation
When products built using new designs and technology are introduced to the market, they are not purchased by every customer. Instead, these products are slowly adopted over time by distinct customer segments. This concept is called Diffiusion of Innovation. It was invented in the early 1960s and documented in the book Diffusion of Innovation by Everett Rogers. Rogers claims that all participants in a marketplace – both individuals and corporations – can be divided into categories based on their preferences for adopting new technology. Those categories are Innovators, Early Adopters, Early Majority, Late Majority, and Laggards.
These categories are aligned sequentially in the order stated above. The Innovators and Early Adopters represent a small fraction of the population, around 16%. They are higher in social status, more affluent, and are eager to experiment with new technology. The Early and Late majority are where the bulk of the population exists – around 68% of the population. This group is less wealthy and are typically only interested in new technology once its benefits and reliability has been proven in the market. The last group, the Laggards, account for the market’s final 16% and will only purchase new technology if they have no alternative.
In order for a new product or technology to penetrate from one segment to a subsequent one, it must first capture most or all of the previous segments. For example, a robot vacuum cleaner be adopted by the Late Majority segment, it must win the Innovator, Early Adopter, and Early Majority segments.
Crossing the Chasm
Diffusing technology through the curve appears to be a fairly-straightforward exercise involving getting more and more people to adopt the invention. Yet not all new technologies are embraced by the general population. Companies launch new products all the time, but despite their enhanced attributes, many do not gain wide acceptance by customers. Even products that gain traction among the Innovator and Early Adopter customers seem to fizzle out before they gain mass market acceptance.
What Geoffrey Moore explains in his book Crossing the Chasm, is that there is a gap between the Early Adopters and Early Majority. This chasm represents a fundamental difference between expectations of Innovators and Early Adopters (the ‘visionaries’) and the Early Majority and later segments (the ‘pragmatists’). The presence of this gap, Moore argues, creates a major hurdle to companies pushing new products in the market. Only companies that are able to adapt their new product to make it appeal to Pragmatist consumers will have a chance of gaining acceptance by the mass market.
Moore explains that there are many reasons why pragmatists lack interest in products that are popular amongst visionaries. Pragmatists are not interested in technology for technology-sake, as visionaries are. Pragmatists have much higher expectations of products. They require products to be reliable and integrate easily into their lives. Visionaries are more comfortable with unproven products that are more challenging to use. Moore suggests the key is building enough energy in the visionary market that pragmatists cannot resist its lure. The challenge for companies is then how to build sufficient momentum among visionaries.
Starting with Why
Consumers are not always rational decision makers. When confronted with a decision between two products with similar features, they will not always choose the least expensive option. There is a reason why people to choose to buy Apple computers and BMW automobiles when a Dell or a Chevrolet can provide internet access or personal transportation for much less.
It turns out that customers look at other factors than price. How a product makes a customer look and feel is often equally or more important than how its price. It can even be more important than how well a product performs.
Simon Sinek explains that there is a connection between the reason a customer chooses a product and the values held by the company that manufactures or sell the product. In his book, Start with Why, Sinek states, “People don’t buy what you do, they buy why you do it.” The values, beliefs, culture, and mission of a company can be equally important as the performance and attributes of the products it produces.
Customers identify the company that shares their same worldview and latch onto them. Customer see a piece of themselves, either real or idealistic, in the company. Therefore, customers are drawn to seek out companies that share their values and avoid those that do not.
Once that attachment happens, these customers become loyal. They will continue to buy products and services from their chosen company. As long as the company maintains the worldview that resonates with the customers, there is no reason for them to leave. Competition becomes extremely challenging. Customers cannot be convinced to choose a different company unless that company also shares the same worldview, or better still, has a worldview that even more closely matches that of these customers.
Leaping the Chasm
Early Adopter and Early Majority segments differ in their level of risk tolerance and price sensitivity. Because having the latest technology is a part of their character, Early Adopters are much more willing to take chances with companies building more unreliable products and paying a premium to access it. Members of the Early Majority want more assurance new technology is stable before committing to it. They also need to justify the price they pay. Fundamentally, these two customer segments are quite different in their motivations.
But a relationship does exist between both segments. Early Majority customers are influenced by the Early Adopters. They read the blogs and magazine articles, listen to the podcasts, and watch they video produced by Early Adopters. Their opinion is important to the Early Majority because they seek guidance on new technology and value the opinions shared by Early Adopters.
Early Adopters evangelize and criticize the technology and products they purchase. The excitement or disappointment is part of the message they share. They become a critical (or harmful) extension of the marketing work performed by a company. As they are consumers themselves, consumers trust credible and critical Early Adopters.
To cross that chasm, and to motivate Early Adopters and beyond to purchase products, a company must inspire the visionaries. Deep motivation comes from more than just creating and promoting leading-edge technology. As soon as something new and better comes along, customers will flee. Customer evangelism and loyalty requires a deeper connection.
To build that connection, companies must develop their mission and values. These values must resonate within the operation and products of the company. Visionaries then make purchases not only based on exciting technology but also on the companies that produce them. Their decisions are influenced by how the product makes them feel, and how much it matches how they see themselves.
Build a Movement, Not a Product
Companies that are successful in doing this realize they are not just creating innovative goods. They are creating movements, which can be quite powerful. Movements have the ability to attract new members, and retain them for long periods. As long as the company leading the movement adheres to its values, and themovement resonates with its members, they will continue to support it. The leading company benefits from incredible customer loyalty and a fervent base for launching new products.
For companies that want to succeed in the innovation sectors, the focus must shift from technical research to corporate values. Companies need to build movements, not just products. It can be frustrating because defining a corporate mission and values in a unique and genuine way is difficult. The struggle is likely why so many companies either do not bother or create a half-hearted one. But it is a challenge that must be endured for a business to succeed in generating a return on their new products.