CST 20363 Session 3

CST-20363-Intro-to-CS
“I have not failed. I’ve just found
10,000 ways that won’t work.”
– Thomas Edison (1847-1931)
Assembly 3: “The future of
Technological innovation”

Technological innovation
Technological innovation is an extended concept
of innovation.
While innovation is a rather well-defined concept,
it has a broad meaning to many people, and
especially numerous understanding in the
academic and business world.

encompasses innovation characteristics

Divergence

innovation characteristics divergence
• Innovation actors talked about divergent thinking and processes from the first
moments when the term design thinking was coined.
• It’s easy and familiar for organizations to get caught in tunnel vision, see a
situation from the same angle, and use the same tools – pragmatic or mental.
Innovation seeks to challenge the status quo, diverging from the usual and
standard perspective.
• Divergence enables us to flip a problem or question to find different approaches
and solutions that we might not have considered before.
• It is a mental exercise and process that can be applied to various circumstances
in life, professional and personal alike. It requires us to take a step back, look at
the whole picture, and question our assumptions.

Curiosity

innovation characteristics curiosity
• Curious, investigative individuals find solutions and produce new ideas.
Innovation is founded on an almost child-like curiosity that enables us to look at
the world and its challenges with wonder and a thirst for development.
• In this journey, curiosity and its inherent desire to learn foster serendipitous
discoveries.
• When we stop questioning and accept everything as is, we miss out on the
chance to find new openings, and we ultimately become complacent.
• Curiosity in innovation means choosing to get lost in a new city and wander
unknown and hidden streets where you may find suddenly, a beautiful
unmapped landmark to explore.

Teamwork
Multidisciplin
ary

innovation characteristics Multidisciplinary Teamwork
• For innovative solutions to be found, a diverse and versatile team is best.
• Combining individuals with different profiles, perspectives, and technical expertise
fosters more comprehensive discussions and helps avoid tunnel vision.
• What design thinking actors have found is that though these individuals think
differently, what unites them is emotional intelligence.
– “empathy for people and disciplines beyond one’s own”.
• Multidisciplinary teams foster imagination; it is best to work with many ideas than
with only one.
• Multifunctional teamwork also presupposes that management takes a step back
to let ideas and experimentation flourish among the team, being guided
when necessary to re-focus discussions.

Resilience

innovation characteristics Resilience
• Testing may bring failure but should not be considered as a mistake, rather as an
opportunity.
• Resilience to continue ideating, experimenting, and failing is key to innovation.
• Iteration involves continuous field-testing of our prototypes onto our audience to
determine if our solution is effective in addressing the problem at hand.
• By testing, we might find out that tweaking is necessary or that the user has even
better solutions to offer.
• Resilience in testing inherently requires one to possess optimism – you test, you
fail, you bounce back, and you continue.
• This skill makes innovators creative, imaginative, and curious – there is no failure,
only learning.

Technology Characteristics of an Innovation
The innovation theory identifies imagination at the time to
determine people’s use for innovation.
• Create five TECHNOLOGY innovations?
• Write one sentence describing the
innovation.

Technology characteristics of innovation

Technology characteristics of innovation
Relative advantages
Compatibility
Complexity vs. Simplicity
Trialability
Observability

Relative advantages
• According to their current situation, the potential audience needs to see how
your innovation improves from previous generation products
• Improvements can be made in one or many of these areas
• alliance of multiple functions into one tool,
• better service,
• decreased need for equipment and supplies,
• improved interface,
• increased customizability, longevity,
• empowerment of users,
• reduced user effort, environmental impact,
• increased productivity,
• saving of time, money, space, and storage.

Relative advantages
• A simple example of innovation is
computer word-processing programs
replace typewriters. The relative advantage
was evident; these word programs didn't
require any extra physical other than a
personal computer; reduced the need for
ink; documents could be edited easily, and
files could be saved and transported to
other computers using PDs, disks. Soon,
typewriters were cleared out of offices,
replacing these computer word-
processing programs.

Compatibility
• Compatibility refers to the relationship that innovation has with potential
individuals as they absorb it mentally into their lives. It is essential to
know that the innovation you are providing will be agreeable to their
lifestyle to potential users. If your innovation requires a considerable
lifestyle change, or a user must acquire additional products to use your
innovation, then it is more apt to fail.
• Innovations are the most significant success when individuals can
smoothly adopt them; they could easily replace an existing product or
idea for the better with your innovation.

Compatibility
• Apple's iPad is a perfect example of innovation; it had a high level of
compatibility with users' lives when released. Many users were capable of
replacing their currently using products with the iPad, of checking email,
reading magazines, books, and blogs, viewing videos online, and many
more activities which they now were doing on their smartphones and
laptops.

Compatibility
• Designers must understand the infrastructure and what improvement will work on the
product they are designing and should have a deep understanding of conditions your
product will meet. A designer must answer the following question while thinking of his
innovation compatibility:
• How will your innovation fit into the lives of its users?
• Are there any additional products that your innovation will require to succeed?
• How will your innovation bring a shift in the behavior of its adopter?
• What are existing products that your innovation may replace?
• How does your innovation affect your potential adopters' mental beliefs and attitudes
regarding your innovation release?
• The questions are meant to highlight designers need to be aware of not being
comprehended. The success of your innovation lies in your design team, which
ensures that the innovation adjusts with the users' beliefs, values, attitudes, and
behaviors.

Complexity vs. Simplicity
How difficult is it for an adopter to learn and use your innovation?
• Complexity slows down your progress; the complex innovation is more
difficult for potential users to incorporate into their lives. Adopters do not
invest much time in learning to use an invention. The more intuitive your
innovation would be, the more surely it will be adopted.
• The design team should design keeping in mind the central focus,
simplicity. The team must address usability issues that users face and then
clarify them through FAQs, walkthrough videos, tooltips, other learning
materials.

Trialability
• How easily your potential adopters can
explore your innovative idea describes
trialability. Before committing to your
innovation, users want to briefly look at what
your invention can do and give it a test run.
This is the fundamental concept of trial sizes
for concrete goods and beta releases for
digital goods. Every adopter wants to see for
themselves what and how life might be they
adopt the product.

Trialability
• Every designer needs to make the product available to potential adopters for trials.
There are examples for the accomplishment of trialability of digital products; offers of
30-day free trial with limited functionality, hoping that users might have a good
experience during this period, and paying for the full subscription price is worth
being.
• Most importantly, your design team must ensure that the trial product provided
should be of high quality and represents the experience that your users want to have.
Don't overdo your free trial phenomenon; this is not your first opportunity for testing
or gathering user feedback.

Observability
• Observability is the benefits or results of using an innovation visible
to potential adopters. Observability stretches beyond having earlier
users use innovation because of later users; potential adopters
must figure out the benefits of adopting innovation and using it.
• There are some ways through which you can show benefits to
potential adopters:
• Side-by-side comparison. A side-by-side comparison with the currently using
product is good when your innovation has simple and easily noticeable
improvements.
• Before and after. Showing adopters the positive difference in their lives your
innovation will bring will have a considerable impact on the success of your
invention.
• Testimonials. Running an ad campaign is essential; people like to hear who they
perceive to be like them. Users who write reviews and testimonials make a
significant impact on influencing potential adopters.

Innovation
What current
innovation is set
to fail and why?

Diffusion of innovations Theory

35
Diffusion
Diffusion – a process by which an innovation is communicated through
certain channels over time among members of a social system
Innovation – an idea, practice, or object that is perceived as new by an
individual or other unit of adoption
• Hardware
• Software
Example – QWERTY vs.. Dvorak
• Home keys: 32% vs. 70%
• Left hand (57%) vs.. Right hand (56%)

36
elements in diffusion
1. Innovation
2. Social System
3. Time (Decision-making)
4. Communication Channels
5. Consequences

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Innovation
• These are people who want to be the first to try the innovation.
• They are venturesome and interested in new ideas.
• These people are very willing to take risks
• They are often the first to develop new ideas.
• Very little, if anything, needs to be done to appeal to this
population.

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• Simple innovations will diffuse faster than complex ones.
• Innovations that fit into the existing social and technological
context will diffuse faster than those that do not.
• Innovations that can demonstrate a relative advantage will
diffuse faster than those that do not.
• Innovations that can be tried on a small scale will diffuse
faster than those that require a substantial initial commitment.
• Complex innovations often change as they diffuse.
Characteristics of Diffusion

What Is Innovation?
Innovation is the “creation of substantial new value for customers and the
firm by creatively changing one or more dimensions of the business”
Key Aspects of Innovation
• Broader than product or technology innovation
• Must generate new value for customer and seller
• Involves change leading to differentiation and Sustainable Competitive Advantage
• How did Starbucks, Dell, and IPod create value and Sustainable Competitive Advantage?

Offering
Develop new
products or
services Platform
Use
interchangeable
designs
Solutions
Provide a total
solution
Value capture
Change how
customers pay
Experience
Change
customer
interactions
Customer
Change
customers to
target
Processes
Change
operating
processes
Organization
Change firm
structure
Supply chain
Change supply
chain
Presence
Change where
products are sold
Networking
Interconnections
as a strength
Brand
Leverage
the brand
into new
markets
Changing
what the firm
offers
Changing who
the customer
is
Changing
how to sell to
customers
Changing
where to sell
to customers
Adapted from Sawhney, M., Wolcott, R.C., & Arroniz, I. (2006), “The 12 Different Ways for Companies to Innovate,” MIT Sloan Management Review, Vol. 47 (3), p. 75.
Innovation Radar

Value Capture
Customer Experience
Solution
Platform
Brand
Networking
Supply Chain
Organization
Offering
(WHAT)
Process
(HOW)
Presence
(WHERE)
Customers
(WHO)
Starbucks

Value Capture
Customer Experience
Solution
Platform
Brand
Networking
Supply Chain
Organization
Offering
(WHAT)
Process
(HOW)
Presence
(WHERE)
Customers
(WHO)
Walmart

Example: TomTom (the Netherlands)
Netherlands-based electronics company TomTom launched its first navigation product in
2002 when there were relatively few firms focusing on this area
Through quick innovation and responding to customers’ needs, TomTom was able to stay
ahead of its competitors and build itself into a world-recognized brand that, by 2007,
had more than 50% of the market share in Europe for navigational devices
However, GPS-enabled smartphones have now
disrupted TomTom’s once strong position in this
application.

Innovation Radar Exercise: Take a Few Minutes
and Develop Innovation Ideas
Team exercise
Think of one way to innovate for the
assigned radar dimension
Use one of the companies below:
• Your firm
• T-Mobile
• Microsoft
• Alaska Airlines
• Nordstrom
46
1. Offering: Develop new products or new services (IPOD)
2. Platform: Design modular platforms and strategic control
points (Nissan)
3. Solution: Solve end-to-end customer problems (John
Deere)
4. Customer: Discover unmet customer needs or
underserved segments (DIY)
5. Experience: Rethink how customers interface with you
(IKEA)
6. Value Capture: Redefine how you get paid (Google)
7. Processes: Innovate in your core operating processes
(Progressive)
8. Organization: Change form, function or scope (IBM,
Arrow)
9. Supply chain: Rethink sources (Dell)
10. Presence: Innovative points of presences (Starbucks at
airport)
11. Networking: Integrated offering, leverage others (Otis
elevator)
12. Brand: Leverage the brand into new domains (Virgin)
• Google
• Microsoft
• Apple
• Uber
• Any Tech Company

Adopters are the minimal unit of analysis.
In most studies, adopters are individuals,
but can also be organizations (businesses,
schools, hospitals, etc.), clusters within
social networks, or countries
Adopters

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• Adopters must see the innovations as meeting their
needs or wants better than alternatives.
• Adopters must have the resources to adopt the diffusion
• Adoption is often linked with a previous positive
adoption by a friend or acquaintance.
• The adoption decision will be evaluated from the
perception of the adopter.
Characteristics of Diffusion

Adopter Categories
Category 1 -
Innovators
• First to buy
the mini
netbook
Category 2 – Early
adopters
• Will buy
mini
netbook
shortly after
its
introduction
Majority
• Members of
the 1st ½ of
the “mass
market”
who would
purchase
the mini
netbook
Category 4 – Late
Majority
• Second half
of the “mass
market”
who would
purchase
the mature
mini
netbook
Category 5 –
Laggards
• Very last to
purchase
the mini
netbook, if
at all

the earliest users 2.5%
early users 13.5%
early majority 34%
late majority 34%
late comers 16%
Possible users with different characteristics:
adventurers, cosmopolite, risk
takes, innovators
have knowledge, respected, opinion
leaders, localities
many contacts, frequent
interactions, willingness to adopt
innovations but late
cautious, need safety, observe
the social norms
laggards, many doubts, bad
experiences, small units

Diffusion Curves for Adopter Categories
52
52

1. Which adopter category are you?
2. Does it differ with different product categories?
3. How about your parents, what category are they?
4. Is age a factor in innovation behavior?
Adopter Categories
Category 1 -
Innovators
• First to buy
the mini
netbook
adopters
• Will buy
mini
netbook
shortly after
its
introduction
Majority
• Members of
the 1st ½ of
the “mass
market”
who would
purchase
the mini
netbook
Category 4 – Late
Majority
• Second half
of the “mass
market”
who would
purchase
the mature
mini
netbook
Category 5 –
Laggards
• Very last to
purchase
the mini
netbook, if
at all

• Diffusion, by definition, takes place among people or
organizations.
• Communication channels allow the transfer of
information from one unit to the other.
• Communication patterns or capabilities must be
established between parties as a minimum for diffusion
to occur.
Communication channels

Psychology, People, and Product Factors Determines
Product Diffusion

The passage of time is necessary for innovations to be
adopted; they are rarely adopted instantaneously.
In fact, in the Ryan and Gross (1943) study on hybrid
corn adoption, adoption occurred over more than ten
years, and most farmers only dedicated a fraction on
their fields to the new corn in the first years after
adoption
TIME

Time Stages (Decision-making process)
• Knowledge
• Persuasion
• Decision
• Implementation
• Confirmation

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Time Stages cont.
Knowledge stage
• Recall of information
• Comprehension of messages
• Knowledge or skill to make adoption
Persuasion stage
• Liking the innovation
• Discussing new behavior with others
• Accepting messages about innovation
• Forming positive opinions
• Supporting innovation

63
Time Stages cont.
Decision stage
• Form intention to seek more information
• Form intention to try innovation
Implementation stage
• Use the innovation on a regular
basis
• Acquire additional information
Confirmation stage
• Recognizing the benefits
• Integrating the innovation into routine
• Promote to others

The social system is the combination of external
influences (mass media, surfactants, organizational or
governmental mandates) and internal influences (strong
and weak social relationships, distance from opinion
leaders).
There are many roles in a social system, and their
combination represents the total influences on a potential
adopter.
Social System

Definition – a set of interrelated units
engaged in a joint problem-solving to
accomplish a common goal.
Social System
Key elements
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards

Adopter Categorization based on Innovativeness

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How do
Ideas spread?

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THE SPREAD OF

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THE SPREAD OF

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a cultural trait
THE SPREAD OF
an innovation

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THE SPREAD OF
an innovation
a cultural trait

The Innovation
Product Characteristics
• Degree to which consumers consider it superior to
existing substitutes
Relative Advantage
• Degree to which consumers feel it is consistent with
their present needs, values, and practices
Compatibility
• The degree to which it is difficult to understand or
use
Complexity
• The degree to which it can be tried on a limited
basis
Trialability
• The degree to which its benefits can be observed,
imagined, or described
Observability
75

Waiting for iPhones
https://commons.wikimedia.org/wiki/File:Waiting_for_iPhones_NY

Adoption
Process
The stages through which an
individual consumer passes in
arriving at a decision to try
(or not to try), to continue
using (or discontinue using) a
new product.
77

opinion leaders
members of the group
homophilic

Rate of Adoption
How long does it
take a new product
to be adopted by
the members of a
social system?
79
Product Number of years
Pager 41
Telephone 38
Cable television 25
Fax machine 22
VCR 9
Cell pone 9
PC 7
Time Required for Electronic Products to
Penetrate 10 percent of UK market

NAME OF STAGE WHAT HAPPENS DURING THIS STAGE EXAMPLE
Awareness Consumer is first exposed to the
product innovation.
Eric sees an ad for a 23-inch thin LCD HDTV in a
magazine he is reading.
Interest Consumer is interested in the product
and searches for additional
information.
Eric reads about the HDTV set on the
manufacturer’s Web site and then goes to an
electronics store near his apartment and has a
sales person show him the unit.
Evaluation Consumer decides whether or not to
believe that this product or service
will satisfy the need –a kind of
“mental trial.”
After talking to a knowledgeable friend, Eric
decides that his TV will fit nicely on top of the
chest in his bedroom. He also calls his cable
company and finds out that he can exchange
his “standard” cable box at no cost for an HDTV
cable box.
Stages in Adoption Process
80

NAME OF STAGE WHAT HAPPENS DURING THIS
STAGE
EXAMPLE
Trial Consumer uses the product on a
limited basis
Since the HDTV set cannot be “tried” like a
small tube of toothpaste, Eric buys the TV
at this local electronics store on his way
home from work. The store offers a 14-
day full refund policy.
Adoption
(Rejection)
If trial is favorable, consumer
decides to use the product on a
full, rather than a limited basis – if
unfavorable, the consumer
decides to reject it.
Eric loves his new HDTV set and expects
many year of service from it.
Stages in Adoption Process
(continued)
81

More about the innovation decision process…
knowledge – persuasion –
decision – implementation – confirmation
The mental activity at…
… knowledge is cognitive (knowing)
… persuasion is affective (feeling)

People do not move through the change process at the same rate
Do you know these people?
New stuff is cool!
• Innovators
Interesting idea, but I want to hear more.
• Early Adopters
What do other people think?
• Early Majority
If I have to…
• Late Majority
We’ve always done it this way…
• Laggards

Activity
Attendance
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GIVE THIS PDF to the
student:
Product Market
Forecasting using the
Bass Model . pdf

Product Market Forecasting using the Bass Model
The Bass product diffusion model is a classic one in the marketing literature.
It has been successfully used to predict the market shares of various newly
introduced products, as well as mature ones.
The main idea of the model is that the adoption rate of a product comes
from two sources:
1. The propensity of consumers to adopt the product independent of social
influences to do so.
2. The additional propensity to adopt the product because others have
adopted it.
Hence, at some point in the life cycle of a good product, social contagion, i.e. the influence of
the early adopters becomes sufficiently strong so as to drive many others to adopt the product
as well. It may be going too far to think of this as a network effect, because Frank Bass did this
work well before the concept of network effect was introduced, but essentially that is what it is.
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Historical Examples
There are some classic examples from the literature of
the Bass model providing a very good forecast of the
ramp up in product adoption as a function of the two
sources described above. See for example the actual
versus predicted market growth for VCRs in the 80s
and the adoption of answering machines shown in
the next Figures:
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The Basic Idea

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Main Differential Equation

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Solving the Model for F(t)

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Solving the Model for F(t) (1st Solution)

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Solving the Model for F(t) (2nd Solution)

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Solving the Model for F(t) (3rd Solution)

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Solving the Model for F(t) - Solution using Wolfram Alpha - (4th Solution)
Integrate[1/(p+(q-p)*F-q*Power[F,2]),F]
https://www.wolframalpha.com/

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Solving the Model for F(t) - Solution using ‘R’ (Programming Language)
https://replit.com/
EXAMPLE
For example, set m=100,000 , p=0.01 and q=0.2
Then the adoption rate is shown in the replit ‘R’
Rplots.pdf Figure
What is m=? p=? and q=?

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Solving the Model for F(t) - Solution using ‘R’ (Programming Language)
#Product Market Forecasting using the Bass Model
#Example 1.0
# Set m=100,000 , p=0.01 and q=0.2 . Then the adoption rate is shown in the
Figure below.
print("Look the PDF file below for Graph")
f = function(p,q,t) {
res = (exp((p+q)*t)*p*(p+q)^2)/(p*exp((p+q)*t)+q)^2
}
t = seq(1,20)
m = 100000
p = 0.01
q = 0.20
plot(t,m*f(p,q,t),type="l",col="blue",lwd=3,xlab="Time
(years)",ylab="Adoptions")
grid(lwd=2)

Use historical data
Use analogous products
Estimating the Parameters of the Bass Model
Innovation Imitation
Product/ parameter parameter
Technology (p) (q)
B&W TV 0.065 0.335
Color TV 0.021 0.583
Room Air conditioner 0.010 0.454
Clothes dryers 0.073 0.389
Ultrasound Imaging 0.003 0.506
CD Player 0.028 0.368
Cellular telephones 0.005 0.506
Microwave Oven 0.018 0.337
Hybrid corn 0.000 0.798
Home PC 0.003 0.253
Van den Bulte and Stremersch (2004) suggests an average value of 0.03
for p and an average value of 0.42 for q
Use ‘R’ to SOLVE these
products Technology
adoption by creating a
chart of each Adoption
over time & create a report

CST 20363 Session 3

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CST 20363 Session 3