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Three Hidden Factors that Make Innovation Diffusion Hard | The Discipline of Innovation

Three Hidden Factors that Make Innovation Diffusion Hard

Andrew Gelman wrote a post today that includes a great graph that shows how the innovation diffusion curve has played out for a number of major inventions over the past century. His post includes a discussion of how the graphic developed, an interesting story in itself.

Here it is (click here to see it full-size):

The graph pretty much perfectly illustrates the innovation diffusion curve that all new ideas travel through as they are adopted. The original graphic is arguing that the speed of diffusion is increasing, though that is arguable. For example, the internet was not invented in 1991 – you can make a pretty strong argument that that curve should start in 1968, or at least the early 1980s.

The interesting thing is that there are three factors hidden in these diffusion curves that mask how hard it is to actually get your ideas to spread. After all, not all new ideas actually are adopted. I discuss some of the other possible trajectories they can follow in this post.

Here’s a diagram I made to help illustrate these three factors:

Invention Time is Longer Than You Expect

The first hidden factor in innovation diffusion is that the invention time takes longer than you expect. This is the time that I’ve shown as Y in the diagram – the time from when you first have an idea to the time when the idea is genuinely ready to spread.

Innovation is the process of idea management. To innovate successfully, you have to generate ideas, select the best ones, develop these into real products, services, ways of doing things, or business models, and then get the idea to spread.

People often believe that once they’ve had the idea, then the hard work is done. This is not true. Idea generation, selection and development all take time, and that is why the value for Y is often fairly large, even for a fairly simple idea.

New Ideas Spread Slowly

Time Y is longer than you expect, but once you’re through that, you’re in the clear, right?

Wrong.

The value for time X is also longer than you expect it to be – new ideas spread slowly. This is the second hidden factor that makes innovation diffusion hard.

There are two factors that contribute to the length of time X. The first is that for genuinely new products and services, you often have to build a new business model around them. This is the process that Steve Blank calls Customer Development – and it is a crucial part of idea diffusion.

This process first involves customer discovery – finding out who will benefit from your new idea and what value you are creating for them. Then you have to validate your assumptions about how to best provide this value – this is the process of testing all the parts of your business model.

One big challenge here is that customer discovery and validation usually require completely different skills than you needed to solve the technical problem during the invention phase.

The second big problem here is that you then need different skills again to make the transition to a business model that will scale with mainstream customers. This is the problem that Geoffrey Moore called Crossing the Chasm – illustrated nicely in this post by Peter Armstrong:

All of this experimenting, testing, and skill building takes time – more time than you expect. Working your way from the early adopters to the mainstream takes a lot of time, thought, and effort. That is why the value for time X is always larger than you expect.

All of This is Expensive

The third hidden problem in innovation diffusion is that all of this is expensive. If you combine the time and expense involved in inventing and developing something, and the time and expense of building the new business model and getting ready to scale, you end up with a whole lot of time and money that you need to invest.

This is true even if you are just trying to get an idea to spread. The timescale is shorter, but the steps in the process are still the same. And time still costs money.

People in the venture capital industry call all of this time before your idea takes off the Valley of Death:

Implementing new ideas is always a money loser until they start to take off. People often underestimate how much time and money it will take to get to this point.

Dealing with These Hidden Factors

In order to deal with these hidden factors that make innovation diffusion hard, you must first understand how the process works. Anyone that is trying to get an idea to spread needs to understand the innovation s-curve.

Once you have this understanding, you then need to have the patience to work through all of the steps. It doesn’t do any good to act like you’re working in a mature market when you are still early in the diffusion curve.

The right idea at the wrong time is actually an incorrect idea.

Ideas take longer to develop than you expect, then they take longer to spread than you expect. Consequently it takes more time and money than you expect to do this effectively. Those are the three hidden factors that make innovation diffusion hard.

If you understand them and plan for them, then you have a much better chance at building an idea big enough to make the next version of the product diffusion curve that we started with.

About Tim Kastelle

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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9 Responses to Three Hidden Factors that Make Innovation Diffusion Hard

  1. Steve Bryant 10 April 2012 at 12:13 pm #

    Tim,

    This is really interesting and resonates with the rationale underpinning QMI’s establishment as a technology diffusion agency. I know you’re primarily discussing the market penetration, invention and management of ideas as it leads to a business, but I’d like to add some context from our experience in technology diffusion.

    Diffusion (time) is different for every innovation – however if we can identify a benefit for business but there is no market uptake, we term it “market failure” ie the right idea at the wrong time. However, this time can be sped up through technology diffusion activities that increase uptake that would not have occurred as fast organically. This is where govt support is crucial in supporting technology (and best practice) diffusion as a key enabler for a competitive industry. The diffusion curve is certainly there but is malleable.

    Regards,
    - Steve

    • Tim 10 April 2012 at 8:34 pm #

      Thanks for the comment Steve. If it didn’t resonate with you, that would be a big sign that I was on the wrong track. I definitely agree about the opportunity to accelerate diffusion – it’s something that is well worth investing in.

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