Technology Adoption Cycle

 

The Technology Adoption Cycle is based on the diffusion process which was originally developed for agricultural means but adapted and found to work just as well to identify how a new technology crosses the chasm from being unknown to being widely adopted. It was found that individuals could be put into groups as to when they might adopt a new process or technology and the results were published in the Book of Diffusions by Everett Rogers. The first adopters are tech lovers who just have to have anything new and cool and will try it out without regard to whether it’s proven. These are the original people who forked out $1500 to try out Google Glass before anyone even had a chance to prove the hype. After this group the visionaries come along, these are people who can see the value of something before others can and have little issue taking a risk on something new. For many even breaking out of this stage will be hard and it represents such a small market that only the smallest startups could consider such returns meaningful.

Technology Adoption Cycle

 

At this point the technology reaches the chasm (a term coined by author Geoffrey Moore) which refers to a state between the people who like cool new things and those that are more pragmatic and need to see others like them adopting it and benefiting from its use. There are many technologies that did well at first but never could cross the chasm, QR codes seemed like they would cross the chasm as they were being widely adopted by businesses but consumers did not feel like they solved a real problem so mass adoption ultimately failed. The key here is that the interest of the early adopters is not the same as the need of the early majority and so what may initially seem exciting fails to generate true interest among a large enough group of people to sustain it. As the early tech folks and visionaries move on this almost always results in the technology failing (3D-TV still remains in the chasm). Some companies can remain in the chasm for decades and some breakout only after many years when the technology advances to a point that makes it appealing to pragmatists (3d printing, computers, even microwaves fall into this category).

Next are more pragmatic people who see the value in it but like to see it adopted by others first. By this point the market has started to expand, they hear more about it and some begin to buy-in as a safe bet. Once the pragmatists have been convinced of the utility of a technology it enters the “tornado” where it gains mass adoption as folks rush to join in and benefit as others have demonstrated its usefulness and value. This is a fast growth stage that can see a company grow at several hundred percent per year (see Netflix graph below). At a certain point any new item reaches a zenith where it can go up no further and competitive advantage by this stage is usually diminished by other upstarts or larger corporations working to get a piece of the new market. After the final holdouts see everyone else using a technology they adopt it and it becomes fully assimilated (like when your grandparents finally got on Facebook). This group is generally slow to move, risk averse and sensitive to price considerations.

Netflix Sales Growth Revenues

Spread of Technology Years since invention

 

You can see that Televisions, Radio, Electricity, Telephones and Automobiles have largely been assimilated and are no longer part of the technology adoption cycle (except in very isolated parts of the world). Nowadays items like the Cell Phone are so widely assimilated that they are mostly out of the adoption cycle while services like Uber, AirBnb, Netflix, Spotify and others have clearly crossed the chasm and are reaping impressive growth. Virtual reality has been professed to be the next big thing since the ‘80s and yet still has not crossed the chasm but Mark Zuckerberg believes it will and has invested billions to make it a reality. Driverless cars is another innovation that seemingly is expected to cross the chasm but has not yet done so, not only because the technology is new but because it will need to be proved to pragmatists that it’s solving a real need that it going to make their lives easier.

If a product simply is “new” and technologically interesting it may generate buzz and early sales but it will not cross the chasm. That was the problem with LaserDisc which was both more expensive, and more inconvenient (couldn’t record to it). In order for a new technology to take off it should meet most of the criteria below:

  1. Saves people money.
  2. Saves people time.
  3. Can accomplish something that was previously not possible.
  4. Brings their life more pleasure.

Any innovation either as a product or service falls into several of these success categories. Back to our example of Netflix, it definitely saves people money as going to the video store a single time could easily amount to $8 not to mention late fees. It saves time since you don’t need to drive all the way there and all the way back several times per month. It accomplishes something not previously possible by allowing you to watch almost any movie instantaneously in a moments notice. The combination of the first three here certainly makes the case for bringing more pleasure into your life in the form of instant unlimited cinema without the stress or trouble of going to a movie rental chain.

What technologies can you think of that still are around but have never received the widespread adoption that was expected?


< back to blog