In 1962 Everett Rogers famously described the journey innovations go on as they travel from obscurity to mass market success and through to obsolescence. It’s a process that remains largely observed to this day and being able to spot where an innovation is on the lifecycle is pretty valuable.
New research from INSEAD aims to provide just such insights. They analyze around 20 years of research into diffusion theory to understand how innovations diffuse, how they’re copied by rival firms, and what implications this has for notions of competitiveness.
Spreading change
Ordinarily, we think that once an innovation begins to pick up, it’s copied by other companies until it becomes dominant in its respective field. This in turn results in a lack of differentiation between suppliers and the commoditization of the product.
At least that’s the logic. When it was tested, however, that wasn’t really what emerged. Instead, as innovations began to grow, rather than resulting in imitations, it actually resulted in mutations.
For instance, the authors cite the example of reverse mergers, which grew in popularity during the 2000s. The rise of the innovation, which allows companies to enter public markets without an IPO, attracted attention from regulators as well as those in the industry, as it was perceived as a way to avoid the kind of scrutiny that comes with an IPO, which led to the practice becoming increasingly rare as the years went on.
Uncertain spread
The early adoption of any innovation comes with inevitable risks that can complicate its diffusion. For instance, the paper cites the example of the L-1011 and DC-10 aircraft. Barely months after the release of the DC-10, design flaws were noticed in the cargo door of the plane that resulted in a number of incidents, including the death of 346 people in a Turkish Airlines crash. One might imagine that would be the end of the DC-10, but delays in the production of the rival L-1011 model gave McDonnell Douglas time to fix the flaws in the DC-10, which has since gone on to be a success.
The examples highlight the various risks that can befall any new innovation, whether it’s societal backlash, faults in the technology, or simply misalignment with the needs of the market. If organizations neglect these issues it could result in significant losses, whether financially or reputationally.
By contrast, if innovations are able to overcome these bars, the researchers believe they are likely to have significant advantages in the market. The paper reminds us that innovation doesn’t tend to flow according to fixed and predetermined rules, with adoption instead depending on the unique characteristics of the technology or practice.
