Diffusion of Innovations

In the summer of 2000, I did my MBA internship with a management consultancy company based in Barcelona – level of 34 of this building, actually.

I was part of a multi-national team advising a major telecommunications company bidding for third-generation (3G) mobile-phone licenses across Europe. That year, several governments had been auctioning 3G licences and values reached fever pitch – for instance, the auction in the UK, raised the equivalent of 2.5% of the Gross National Product.

While a large proportion of the population was, by then, using a mobile phone, the trend was for small phones. Indeed, if our focus groups were anything to go by, no one would ever find any use for a camera on their mobile phone. Ever! Yet, recently published statistics reveal that nearly 9 in 10 children aged 12-15 year-olds, in the UK, now own a smartphone. And 1 in 5 mobile phone users in the US have bought something on their phones. I think we can call it a success!

Understanding the Diffusion of Innovations – Roger’s framework

There is a very simple framework that helps understand the diffusion of innovations, such as the smartphone. It is known as Roger’s Diffusion of Innovations framework, or Roger’s Five Factors, and the full text is available here.

Roger identifies 5 factors that influence whether an innovation is adopted, and how quickly. They are:

• Relative advantage: ‘the degree to which the innovation is perceived as better than the idea it replaces’
• Compatibility: ‘the degree to which the innovation is perceived as consistent with the values of the potential adopter’
• Complexity: ‘the degree to which the innovation is perceived as relatively difficult to understand and use’
• Trialability: ‘the degree to which the innovation may be experimented with, before making the decision to adopt’
• Observability: ‘degree to which the results of the innovation are visible to others’

A key characteristic of this framework is that it is focused on the users, not the innovation in itself. So, this framework reminds us that a) a product’s success is not determined by how good it is but, rather, by how customers perceive it and b) that perceptions (and, hence, successful diffusion) may vary by context. It also includes a social element – observability – reminding us that our consumption is influenced and influences the social group(s) that we belong to.

Further, Roger’s framework can be applied to tangible innovations such as, well, the smartphone (!). It can also be applied to intangible innovations, a new way of doing something, like distance learning.

Understanding the adoption of smartphones

To analyse the success of smartphones, it is useful to consider two other market developments occurring more or less at the same time:

• Digital photography became more ubiquitous, as digital cameras replaced film ones
• Digital music became increasingly popular, given the wide adoption of mp3 players and the launch of services like iTunes

With these factors in mind, this was the outlook for smartphones half-way down the first decade of this century:

• Relative advantage – The smartphone enables users to do everything that a normal phone does, plus browse the Internet, thus enabling users to be more productive. Moreover, you only had to use 1 device to perform the functions of 3 or more. One disadvantage was that devices had to be bigger than traditional phones and, at the time, there was a big emphasis on small phones, particularly the clam type.
• Compatibility – The functions performed by a smartphone were in line with the main use of phones – stay connected, be productive and be entertained.
• Complexity – All the functions performed by the smartphone were, by now, familiar to most users: communicate, browse the internet, take pictures, download music…
• Trialability – This was a weakness. Users had to sign up with a mobile phone operator before they could try the product. Product demonstrations were crucial in minimising this disadvantage.
• Observability – The distinctive handsets – and the equally distinctive behaviours of smartphone users – were highly visible. As I discussed in this blog post, observing what others do, is a major driver of consumer behaviour.

Beyond adoption

Recently, a colleague and I were musing over how the telecommunications world had changed since I did that internship in Barcelona. We also noticed how our behaviours had changed because of the technology.

I, for instance, rarely carried a camera with me and I took very few pictures. Nowadays, however, I take a picture on my phone most days. Nothing fancy – just really simple, mundane pictures. Alas, not food 😉

What about you? How did smartphone technology change the way you communicate or behave?