One of my favorite cartoons shows a king on horseback with his arm raised, brandishing a sword, about to lead his troops into battle. A fellow is standing next to him with his foot on a machine gun. The caption has the king saying, “I can’t bother with a crazy salesman. I’ve got a battle to fight!”
That cartoon illustrates the problems that entrepreneurs encounter in introducing products to the marketplace. Although the fellow’s innovation could radically change the nature of the fight, either for the king or for his adversary, the king doesn’t realize it, and the salesman isn’t doing anything to change the king’s point of view. Worse, he’s trying to sell his innovation to the wrong customer.
This happens a lot in the business world. Entrepreneurs spend time and effort trying to market new products and never understand that they’re talking to the wrong customers. Rather than try to figure out who the right customers are, they usually approach any possible customer, and often meet people with the same attitude as the king on his horse.
The king has no interest in trying a new product. He loves his sword; he is comfortable with his sword. He was trained on that sword; his father and grandfather used a sword; even his adversary uses a sword. This sword has won him many battles in the past. So why should he change? Why should he try something that’s foreign to him, that will cost more money, that he’s not sure will perform as well and requires a whole new learning curve to implement? Besides, he doesn’t have time to try this innovation. He’s about to go into battle. Later is better, when he’s not so pressed for time. So, what’s an entrepreneur to do?
Diffusion of Innovation
In situations like this, go with theory, because the theory of the diffusion of innovation is powerful. It postulates that in any given social milieu, such as a country, state, city, community, church, school, company or market, people are spread across a bell-shaped curve in terms of their attitude toward innovation. They range from those who are wild for any innovation to those who have to be dragged, kicking and screaming, like the king, to anything new. The spread across the curve has the following distribution:
- Innovators. On the left of the curve, making up 2.5% of any given population, are the innovators. These are individuals who love the newest bells and whistles, and will try anything simply because it’s new. This is not the most important group for entrepreneurs to focus on, because they don’t relate their interest to any practical use or application.
- Early adopters. This is the critical group for entrepreneurs to identify and work with. They like trying new things because they want something that performs tasks better. More importantly, these people are opinion leaders. They are the consultants, industry luminaries, business experts, company groundbreakers, trade journal writers, and media and Wall Street analysts who are constantly looking for the new, new thing that will enhance performance. As opinion leaders, they can accelerate the introduction of a new product into a marketplace because they influence others to buy. Whom do they influence?
- Early/late majorities. The largest segment of a population, like a market, is the early and late majorities. Each comprises 34% of the people in that population. The early and late majorities look to the early adopters to help them determine whether or not to buy a new product or service.
- Laggards. These are people like the king on the horse. They simply want nothing to do with the latest-greatest, whatever it might be. These folks believe the computer is a passing fad and the typewriter is about to make a comeback.
Accelerating the Diffusion Process
Entrepreneurs should focus on identifying and working with the early adopters in their market, so as to speed the introduction of new products. To find early adopters, ask others in your industry to name who likes to try new things; find out which companies have a track record of serving as a beta site or test center for new products; keep your own list of customers who seem willing to experiment; make a list of luminaries, trade journal editors, consultants and media people who report on developments in your business area; monitor trade show attendance lists; and ask others who are knowledgeable about your industry to identify people and companies that have developed a reputation for being innovative.
Once you’ve identified early adopters, you can be more proactive than the machine-gun salesman. To help with the diffusion process and to bring your product to the attention of early adopters, do the following:
- Show product advantages/benefits. Once of the most effective ways to do this is to demonstrate the product. The machine-gunner, for example, could fire the gun! In other words, show how what you have will improve performance for the customer.
- Emphasize compatibility with lifestyles/workstyles. Every new product is a substitution for an older one, one that people may have become comfortable with because it has come to fit their lifestyles or workstyles. Thus, show how the new product can enhance lifestyle and workstyle, that is, how it might make things easier, faster or more effective.
- Reduce reluctance to change. Offer warranties, guarantees and money-back assurances to encourage people to try the product.
- Communicate adverse consequences. Let customers know what will happen if they don’t use the innovation. For example, the king would have to face the possibility that his enemy might use the advantage of the machine gun to defeat him.
The theory of the diffusion of innovation has a powerful and practical message for every entrepreneur who wants to introduce an innovative product or service into the marketplace. Don’t knock on just any customer’s door. Don’t get stuck with the laggards. Identify and seek out the early adopters—those opinion leaders who influence others to buy. If you do, you’re likely to win, not just the battle, but also the war.