What Rogers did was to do some statistical analysis and
was able to show that these five intrinsic factors of the product or
service explain the rate at which that product or
service diffuses in society, if and when it eventually diffuses.
Now, those five factors are not quantitative variables,
they're hard to quantify,
they would be hard to parametrize in a mathematical expression, but we
can make some subjective estimates of the relative strength of those five factors.
Shown here is a table in which I've taken four innovations,
the EZPass Automated Toll System, the Web browser,
the mobile phone, and the Segway personal transporter.
I've simply estimated with one to five bullets how those innovations stack up,
relative to the five factors that Rogers identified.
Relative advantage, visibility, trialability, simplicity and
compatibility.
You as you think about the diffusion rate for your product or
service, can do a subjective judgment relative to some of these examples,
and to say, okay, just on a 1 to 5 scale, how does my product or
service stack up relative to these alternatives?
That then will let you make a judgment,
which you expect your product or service to diffuse
more rapidly than average relative to other similar kinds of innovations.
Now, again, these five factors don't predict whether the product or
service will eventually diffuse.
Rather, they predict the rate at which you'll get there, and so
it's quite useful in planning your business, in thinking about your demand
forecast, to do an honest assessment of, how much relative advantage do I have?
How visible is my product in use?
How easy is it for a customer to try this product?
How simple is it to understand?
And how compatible is this product or
service with the lives of my target customers?
That then can allow you to predict will this be relatively fast or
will it be relatively slow, in terms of the time to take off and
the rate of which the innovation diffuses.
In sum, the time to take off for new category innovation, so
that's major new products or services, is typically much longer than you expect.
Very rarely do you see it take off in quicker than two years, more typically
we see four, five years before a major new category innovation will take off.
Now, if your product is somewhat derivative,
it's a better version of something that is already in the market, then you can see
take off happen much quicker than that, much shorter than two years.
But, more typically, in a major new type of innovation,
you're going to see the takeoff take two, three, or
longer years, and that's longer than most entrepreneurs expect.
The second key insight is that there's some intrinsic
attributes of the innovation, of your product or
service, that underlie the rate at which that product or service will diffuse.
Most of those attributes are not things you can change.
The relative advantage, for instance,
is something that's quite intrinsic, quite fundamental to your product or
service, but a few of those attributes you can modify somewhat.
So, for instance, trialability is an attribute that you,
through the design of your business model and
possibly your distribution channel, can directly influence.
Fourth, be realistic in assessing the time to take off.
Remember, these attributes don't predict whether you will eventually be successful,
they inform how long it's going to take.
As you think about your business plan, as you construct your financials,
as you make your forecast out over time,
be realistic in assessing whether your innovation is likely to be slower or
faster than similar kinds of innovations that have developed historically.
By being realistic,
you can then make financial forecasts that are realistic, and that makes it
less likely that you're going to run out of cash just when you need it most.
And then, lastly,
to be clear, our discussion has focused on innovations that do eventually take off,
some innovations never take off, and that isn't a problem of diffusion rate.
That is typically a problem of not having sufficient fundamental advantage, relative
to the alternatives, relative to the competitors, that are in the marketplace.