Disruptive start-ups operate at the front-end of the market, i.e. where the business opportunity is still so fuzzy, you’re not even sure it really exists. Many discussions have been around defining the real need in the market, the definition of the first customer and how to segment your market when the definition of the market is not clear yet. Recently, as an advisor to Shapeways and Ultimaker, I was involved in the issue of who our customers really are, what our core target is and in which segments can we possibly tap into for growth.
Having been part of the Lifestyle Incubator at Philips – a corporate venturing programme that alas no longer exists – and after setting up my own independent consultancy, I have been at the very front-end of start-ups. And one of the most used models re. innovation is that of the Innovation Adoption Curve of Rogers. Most, if not all marketers, are fully aware of the Rogers Adoption / Innovation Curve.
The innovation adoption curve of Rogers is a model that classifies adopters of innovations into various categories, based on the idea that certain individuals are inevitably more open to adaptation than others. It is also referred to as Multi-Step Flow Theory or Diffusion of Innovations Theory.
Just a brief recap on the model:
| InnovatorsBrave people, pulling the change. Innovators are very important communication. | Early Adopters Respectable people, opinion leaders, try out new ideas, but in a careful way. | Early Majority Thoughtful people, careful but accepting change more quickly than the average. | Late Majority Sceptic people will use new ideas or products only when the majority is using it. | LaggardsTraditional people, caring for the “old ways,” critical towards new ideas and will only accept once mainstream or even tradition. |
Geoffrey Moore proposes in Crossing the Chasm, a variation of the original curve:
This adaption was created from the perspective of disruptive innovation. According to Moore, the most difficult step is making the transition between early adopters (visionaries) and early majority (pragmatists). This is the chasm that he refers to.
Underlying the adoption of innovation, people go through several steps before actually adopting a new technology. These steps are described in the pioneering work of Beal and Bohen.
Beal and Bohen identified a five-step process that individuals progress through as they make a decision to adopt an innovation. Each of these steps requires a conversion of tacit or explicit information. This information either comes through influences from outside the community or through influential members of the community. Individuals progress through these steps at different rates. The five steps are:
- Awareness. The individual is simply aware the innovation exists. Details are lacking and it is a very passive stage. This awareness is usually driven by sources outside the community and tacit sources of information.
- Interest. The individual wants more information. They begin to wonder if the innovation can help them and are actively seek out new information, both explicit and tacit. Their quest is informed by sources both outside and inside the community.
- Evaluation. The individual mentally examines the innovation using the information gathered, trying to determine whether it will really impact their work and how it will make their effort easier or better. This is a critical stage and the first one where the voices of the community, i.e. key opinion leaders, colleagues, friends, family or neighbours, are often the largest influence on an individual.
- Trial. The individual actually tests the innovation to see if reality matches expectations, usually with small-scale, experimental efforts. Often at this stage, any source of information that is determined to be helpful will be used, although close community ties are still the most important. Individuals are looking for specific help for their specific need.
- Adoption. The individual likes the innovation and adopts it wholeheartedly. It is applied to all areas of relevant use and the individual often becomes a strong advocate for the innovation in the community. Community voices are very important at this stage. The essence here is that your true adopter starts recommending your product / service.
The speed with which each individual passes through these 5 stages will vary depending on the particular innovation, its overall complexity, its costs, and just how disruptive it is to current workflows.
What one has to realize is that each segment in the innovation adoption curve goes through these same stages. The variance in speed and uptake defines in which group people fall into. And even in one segment there are variances to be found.
In the first segment of innovators, all the above may move at an exceptional speed. Awareness and interest might run ahead of the actual prototyping of a new disruptive technology. The mere idea that something is theoretically possible will drive the innovator to seek out where she can obtain a prototype or a product in beta. So basically innovators (and to an extent early adopters) might be running ahead of the game. They seek to trial as quickly as possible. This is one of the fundamental pillars for growing the company: finding a beachhead of innovators willing to try out your new product. And here lies a caveat.
For a start-up this beachhead can be a double-edged sword. What do you actually know of this innovator group? What drives these people to adopt a new technology or solution so early? And now with the omnipresence of social media and, thus, of a multitude of people influencing other people’s perceptions, who will succumb to the traction of being one of the first adopting a new technology (that will be successful)?
With my work as coach of several start-ups, I have found that the group of innovators can consist of two groups: true innovators and innophiles. Let me expand on this.
Innovators adopt the functionalities and seek the benefits. They seek to solve their specific problem whereas Innophiles are hooked on getting their hands on everything new and different. Both adopt new technology very early on. However, from a growth and continuity perspective, a start-up wants to understand it’s first true customer and not in the ‘cuckoo’ in the nest. This is the difficult task for start-up marketers. Start-up marketers need to get up close with this initial group and identify the true innovator, the ambassador, and the loyalist. The only way identifying these people is by pro-actively reaching out frequently and to listen to the personal experiences with your product or service. Listening and probing are the two main skills here and not pushing your solution. Improving your product might be a better bet than just securing sales. And the community of true innovators will be your source of information to improve the experience with your disruptive technology.
Do Innophiles have value for a start-up? Absolutely! The key value they provide is cash. Innophiles will pay substantial prices to belong to the group that adopted a new technology first. Just as an example, look at the Internet retailer Dynamism. As one of the lines on their website states, “Since 1997, Dynamism has provided next-generation technology and luxury service to customers worldwide”. This and many other sites offer the latest in technology to people who can afford the premium prices. And the mere fact of their presence indicates that this is a profitable niche market.
As a start-up, cash flow is of course important. The valley of death is well known to all in start-up or venturing ecosystem. So the risk of following the money in this context is perhaps understandable, but also a risk for the continuity and sustainability of the business.
