1. Management of Technology (OM476) Innovation Diffusion February 1, 2006 S. Fisher

2. Agenda User adoption of new technology Factors promoting or inhibiting adoption Technology innovation cycles Make a better mousetrap and the world will beat a path to your door. ---Ralph Waldo Emerson

3. In-class writing Using Rogers’ categories of technology diffusion, which adopter category would you fall in for high definition television? Why?

4. Adoption takes time

5. S Curves in Technology Diffusion Plotting cumulative number of users against time Distribution of number of adopters per year generally results in a normal curve Adequately describes only successful innovations – diffusion often stops early on Can be other reasons for diffusion rates to violate the normal curve – this is the typical pattern for successful innovations

6. Rogers – Categories of Users Innovators - Venturesome (2.5%) Early adopters - Respect (13.5%) Early majority- Deliberate (34%) Late majority - Skeptical (34%) Laggards - Traditional (16%)

7. HDTV Market Penetration Currently 11 million households have an HDTV (10% of total TV-owning households) Estimated to be 55-80% by 2010 Projected 2006 sales are 9.1 million Source: Reynolds, M. (2005 November). HDTV Penetration by the Numbers. Retrieved from www.multichannel.com on January 25, 2006.www.multichannel.com

8. S-curve with Rogers’ categories

9. Factors Promoting Diffusion Obvious advantages relative to existing options Observability Trialability Incentives (e.g., tax credits) Effective communication channels  Interpersonal  Mass media

10. Factors Inhibiting Diffusion High cost  Learning required  Necessary complementary resources Inconsistent with values Complexity Risk Long time to benefits Innovation negativism Confusing name

11. Broadband Internet Diffusion Source: Horrigan, J. B. (2005). Broadband adoption at home in the United States: Growing but slowing. Pew Internet Research.

12. Diffusion Exercise Describe the type of innovation represented by the Nintendo Entertainment System What factors promoted diffusion of the technology? What factors inhibited the diffusion?

13. Comparing the S-curves What are the implications of having a technology improvement S-curve that is steeper than the corresponding diffusion S- curve?

14. Technology Cycles  A discontinuity creates a period of turbulence and uncertainty (era of ferment) until a dominant design is selected, resulting an era of incremental change.

15. For Monday Prepare deliverables for Performance Indicator case Presentation: Team 2 Review/questions: Team 6 Executive summary: All other teams