Diffusion Of
Innovation
BNMIT MBA
What is diffusion of
innovation?
The diffusion of innovations is the process by
which an innovation is communicated through
certain channels over time among the
members of a social system.
To understand that definition you must first
understand some key terms. Innovation is
used more generally here to mean an item,
thought, or process that is new. Good
examples of innovation would be automobiles,
brain surgery, and a new kind of running shoe.
What is diffusion of
innovation?
It is important to realize that something can be an
innovation in one place and have already been
accepted in another.
The other key term in the definition is diffusion.
Diffusion is the process by which innovations
spread from one locale or one social group to
another. People do not just welcome into their
homes every innovation that is put in front of them.
Every person reacts differently in the ways that
they hear about, understand, and finally accept or
do not accept an innovation.
DIFFUSION
Elements of diffusion
There are four main elements to the diffusion of innovations:
(1) the innovation, (2) its communication, (3) in a social
system, (4) over a period of time.
Innovation any item, thought, or process that is viewed to
be new by the consumer
Communication the process of the new idea traveling from
one person to another or from one channel to the individual.
Social System the group of individuals that together
complete a specific goal (adoption)
Time how long it takes for the group to adopt an
innovation as well as the rate of adoption for individual
TYPES OF INNOVATION
When studying the diffusion of innovations it is important to understand that you
are not just looking at the spread of an innovation through a society but rather
the spread of different kinds of innovations through a society. As stated earlier,
an innovation is an item, thought, or process that is new to a certain area but not
necessarily to the world. There are three main types of innovations that are
diffused in different ways.
Continuous Innovation: This type of innovation is a simple changing or improving
of an already existing product where the adopter still uses the product in the
same fashion as they had before. An example of a continuous innovation is now
seen in the automobile industry as it continues to change and develop.
Dynamically Continuous Innovation: Here the innovation can either be a creation
of a new product or a radical change to an existing one. Here the consumption
patterns of people are altered some. An example of this type of innovation would
be compact discs.
Discontinuous Innovation: This is a totally new product in the market. This is the
big idea innovation. In this situation, because the product has never been seen
before, there are total changes to consumers buying and using patterns.
CHARACTERISTICS OF INNOVATION
Each characteristic effect the rate of adoption
of a innovation differently. Like a lot of things
in life, the innovation does not have to be
better or easier to use than the product it is
competing with but only be perceived to be
better or easier to use by the consumer. This
idea of perception is stronger than information
is seen throughout the advertising world.
CHARACTERISTICS OF INNOVATION
Relative Advantage: This characteristic expresses to what extent the new product is better than the
one it is replacing. Of course the first thought would be greater profit potential. Although profit does
fit into the equation, relative advantage can be judged on other factors like ease of use and storage
as well .
Compatibility: No matter how superior or efficient an innovation is it will not be successful if it does
not take into consideration local values and customs of the adopters. Compatibility is the level of
which an innovation fits into the specific society. The smoother the innovation fits into the culture,
the faster the rate of adoption. The diffusion of certain types of birth control pills in certain areas is
unattainable due to religious beliefs and cultural values.
Complexity: This type of innovation is the extent of how difficult it is for an adopter to understand
and use an innovation. It is very logical to think that the harder an innovation is to use, or at least
perceived to use, the less likely that an adopter would be to consume it. A contemporary example
would be the Internet. Although the Internet is easy to use, for someone who has never been on a
computer it is extremely intimidating.
Divisibility: This refers to the ability of the consumer to give the innovation a test run before deciding
whether to adopt it or not. Being able to try out a product before purchase helps increase the rate of
adoption drastically.
Communicability: This characteristic is simply stated as the idea that when an innovations benefit
does not directly or immediately solve or fix a consumers problem or need it will not diffuse through
a society as quickly compared to an innovation that is more of solution to a problem. A fictional
example that helps understand this principle would be a new drug on the market that you would take
everyday to ward off headaches before they come. Although the drug may work, because the results
do not fit into our first problem then solution ideal, it would take more time for it to be adopted.
DRAWBACK
It is important to note that these five
characteristics are not the only ones that
affect the rate of adoption. Also the adoption
of an innovation is not always a positive
occurrence. Over-adoption, where adopters
act irrationally without all the information or
without full comprehension of an innovation
can actually be harmful to the diffusion
process.
CASE STUDY-DELL
Business model innovation at Dell
Michael Dell did not devise the laptop computer, but he did invent a new business model
for the industry: Build computers to order and fill orders by operating a highly
automated and digitized supply chain. IT is the great enabler of these changes. Dell saw
the disorganization in the computer industry and found a new way of producing profits.
IT managers are well positioned to confront conventional ways of doing business. There
are ways to consolidate operations and reduce inventory to redeploy capital to growth
opportunities. It will help business processes and also customers be linked to reduce
errors and increase the speed at which orders are filled and problems solved. This is a
radical approach for Dell a new way of operating and dramatically lowering the costs
of doing business.
To deliver effective solutions that meet customer challenges, Dell concentrates on
pivotal standards that drive future technology innovation. Dells industry leadership
places it in a unique position to help set up the core building blocks for the future
innovation in the home, the office and the enterprise. With a long track record of
pioneering work and wide network of strong industry alliances, Dell can drive
implementation of open standards that give customers more choices, lower costs and
complexity, and interoperability.
CASE STUDY-DELL
Working collaboratively with foremost suppliers and standards organizations, Dell
has driven standards that not only benefit customers, but often result in industry-
changing developments such as:
Focus On the Best Solution, not the Best Technology: Dell really a superb
product integrator and also tremendously good sales-and-logistics company. As
Fortune magazine wrote: A Dell mantra is that todays technology is tomorrows
commodity. Dell waits until the cost of that technology falls low enough for it to be
stuffed into computers at state-of-the-art factories and then sold direct at a cheap
price, which allows the company to drive for share.
Teaching Innovative Thinking: Michael Dell says It is really dangerous if
everyone in a company starts thinking the same way. The danger comes when you
fall into the trap of approaching problems too similarly. You can encourage your
people to think about your business, your industry, and your customers
innovatively.By approaching a problem, a response or an opportunity from a
different outlook, you create an opportunity for new understanding and new
learning. By questioning all the aspects of our business, we continuously bring in
improvement and innovation into our culture. How can we teach people to be
more innovative? Ask them to approach a problem in a holistic sense.
CASE STUDY-DELL
Customer Driven Innovation at Dell
Dell has continued to provide distinctiveness to the industry, giving new products, pioneering critical
developments and innovations in home, small business and enterprise computing. Dells R&D efforts
now extend to all over other industries, driven by some of the industrys leading product designers
and engineers. The focus point of Dells innovation approach, however, remains an unwavering
commitment to delivering new and better solutions that directly address customer needs. Dell start
their innovation process with asking their customers, What would you really want this thing to do? Is
there a different way to accomplish that? Then they meet with their suppliers and ask, Can we do
this in a different way? Then they try to come up with a totally different approach that exceeds the
original objectives. To constantly bring information from the outside world into Dell, with an eye
towards staying as competitive as they can, Michael Dell employs a range of innovative approaches.
He says, I also enjoy roaming around outside the company to see what people think of us. On the
Web that is best platform to get feedback through communities at Facebook, Twitter etc, nobody
knows Im a CEO. Ill hang out in chartrooms where actual users commonly chat about Dell and our
competitors. He listens to their discussions as they talk about their purchases and their likes and
dislikes, this is a wonderful learning opportunity and also getting Feedback from Customers and
Suppliers
Listen: Dell understands the necessity directly through tens of thousands of customer interactions,
organized events, social media venues such as communities and customer panels. Partnerships with
a wide variety of key industry software, hardware and component suppliers give them a unique
viewpoint on Dell future products and Services.
Solve: Many innovations commence in-house, led by a global team of top engineers, product
designers and technical experts. Others begin as a team effort with Dells strategic partners. The
mission is to deliver innovative and cost-effective solutions that meet todays real-life customer
challenges and work seamlessly in existing environments and with other products.
