One of the greatest pains to human nature

One of the greatest pains to human nature is the pain of a new idea. It. . . makes you think that after all, your favorite notions may be wrong, your firmest beliefs illfounded. . . Naturally, therefore, common men hate a new idea, and are disposed more or less to ill-treat the original man who brings it. -Walter Bagehot Physics and Politics 2020/9/30 2

Clips concerning new ideas NTT Do. Co. Mo Vision 2010 1. http: //www. youtube. com/watch? v=e. Xu. XBROy. V-g (03: 48) 2. http: //www. youtube. com/watch? v=z. QZDh. Oo. Pfe. I (04: 45) 3. http: //www. youtube. com/watch? v=Cq. Fk. Qsw. Oo. TE (04: 21) 2020/9/30 3

Examples of concurrent new stuffs • • You. Tube Facebook Skype Flash Google “whatever” (map, earth, …) Tablets (i…. Pad!!!) and many more…. 2020/9/30 4

聯合新聞網 (2011. 03. 24) http: //udn. com/NEWS/FINANCE/FIN 3/6230929. shtml 2020/9/30 5

Symptom of tablets’ popularity: diffusion • Origin of diffusion: imitation • The laws of imitation: Tarde, Gabriel de, 1843 -1904 • Why tablets, especially i. Pad and i. Pad 2, are so popular after their emergence? 2020/9/30 6

Listen what people said about… The reason why Taiwan has become the leader in so many fields is because of its unyielding commitments to innovation. Bill Gates in the film - It's Very Well Made in Taiwan 2020/9/30 7

"… innovation does not need to be new in terms of being recently developed, it only needs to be new to the person or organization that is adopting and implementing it. " - Rogers, 1995 2020/9/30 8

• Everett Rogers father of this field of study of the diffusion of innovations • Chairman of the Department of Communication and Journalism at the University of New Mexico • First edition published in 1962 • Now in its fifth edition - reviews more than 5, 000 publications in this field of “diffusion research” • Covers about 20 different disciplines such as anthropology, communication, industrial engineering, psychology Free Press, 2003

Diffusion of Innovation Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system. 1. Innovation 2. Communication Channels 3. Time 4. Social System Everett Rogers (1962) 2020/9/30 10

The characteristics of an innovation determine its rate of adoption • Relative Advantage – The degree to which the innovation is perceived to be superior to current practice • Compatibility – The degree to which the innovation is perceived to be consistent with socio-cultural values, previous ideas, and/or perceived needs • Complexity – The degree to which an innovation is difficult to use or understand. • Trialability – The degree to which the innovation can be experienced on a limited basis • Observability – The degree to which the results of an innovation are visible to potential adopters 2020/9/30 11

Management of Technology the key to competitiveness and wealth creation Technology: all the knowledge, products, processes, tools, methods, and systems employed in the creation of goods or in providing services. (the way we do things. ) Tarek Khalil, 2000 (Univ. of Miami) 2020/9/30 12

Example: • iomega (zip disk): a parallel port zip driver (suck product!) • ultra-sound in India (misused product!) • Mc. Donald: parallel production for competition (process innovation with latest cooking technologies) 2020/9/30 13

Making Hamburgers at Mc. Donald’s, Burger King, and Wendy’s 2020/9/30 14

Communication Channels: the 2 nd main element in the diffusion of innovation • Mass media channels • Interpersonal channels • Degree of heterophily a. Heterogineous b. Homogineous 2020/9/30 15

Time: the 3 rd main element in the diffusion of innovation • The innovation-decision process • Innovativeness • An innovation’s rate of adoption 2020/9/30 16

The Innovation Decision Process Stages of adoption: Awareness - the individual is exposed to the innovation but lacks complete information about it Interest - the individual becomes interested in the new idea and seeks additional information about it Evaluation - individual mentally applies the innovation to his present and anticipated future situation, and then decides whether or not to try it Trial - the individual makes full use of the innovation Adoption - the individual decides to continue the full use of the innovation 2020/9/30 17

Innovativeness – Originally defined by Rogers: the degree to which an individual is relatively earlier in adopting an innovation than other members of his social system – Modified & extended by Hirschman (1980): • Inherent / actualized novelty seeking • Creative consumer • Adoptive / vicarious innovativeness 2020/9/30 18

Adopter Categories People fall into one of five categories of adopters or non-adopters. Innovators – Venturesome, eager to try new ideas. The innovator must be able to cope with the high degree of uncertainty about an innovation at the time they make the decision to adopt. They are risk takers and are willing to accept an occasional setback. Early Adopters – Respectable and are more integrated into the social system than are innovators. This group includes the largest number of opinion leaders. These are the “people to check with” before using a new idea. Early Majority – Deliberate but adopt new ideas just before the average member of a social system. They seldom are viewed as opinion leaders. Late Majority – Skeptical and often make a decision or adopt a new idea as an economic necessity or in response to pressure from peers or others. Laggards – Traditional and offer almost no option to leadership. Their focus is mostly on the past. 2020/9/30 19

Number of New Adopters Successful Diffusion depends on – understanding how the needs of adopters will change over time, and – how adopters influence each other Innovators Early adopters 2. 5% 13. 5% Late majority 34% Early majority 34% Laggards and nonadopters 16% Time • Risk taking • Visionaries • Pragmatists • Conservatives • Very suspicious visionaries • Progressive • Cautious • Suspicious of • Hard to reach (beta testers) • Opinion leaders • Attentive to new ideas • Super-Informed • Curious early adopters • Look to • Mobile • Visible • Require much preceding • Sophisticated • Informed information groups for • Little influence • Mobile before adopting information on market • Patient with • Must work first time • Can negatively influence other users testing phase if brought in too early 2020/9/30 20

Cumulative Adoption Curve – The “S Curve” 2020/9/30 21

Bass Curve Three parameters : Market potential [m] - the total number of people who will eventually use the product External influence [p] - mass media coverage Internal influence [q] - "word-ofmouth" Bass formula: Bass, Frank M. (1969) “A New Product Growth Model for Consumer Durables” Management Science 13 (5): 215 -227 Frank Bass is a marketing professor currently at Univ of Texas - Dallas

Examples of S-curves in earning per share: Microsoft & Xerox 2020/9/30 23

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Number of Years to Reach 50 Percent Penetration of U. S. Households • • • Technology Newspapers Telephone Phonograph Cable Television Personal Computer Color Television VCR Radio Black & White Television 2020/9/30 Years 100+ 70 55 39 17 17 10 9 8 25 Industry Association; U. S. Dept of Commerce Source: Electronic

Social System: the 4 th element of innovation • Structure • Norms 1. Opinion leadership 2. Change agent a. Optional innovation-decisions b. Collective innovation-decisions c. Authority innovation-decisions 2020/9/30 26

Other individual characteristics • Reliance on others as source of information (Midgley & Dowling) • Adopter threshold (e. g. Valente) • Need-for-change / Need-for-cognition (Wood & Swait, 2002) 2020/9/30 27

The Bass Diffusion Model designed to answer the question: When will customers adopt a new product or technology? 2020/9/30 28

Common Scope of Diffusion Research • Characteristics of an innovation which may influence its adoption • Decision-making process that occurs when individuals consider adopting a new innovation • The characteristics of individuals that make them likely to adopt the innovation • The consequences for individuals and society of adopting the innovation • Communication channels used in the adoption process 2020/9/30 29

Diffusion of technology-driven products may be even more challenging - Moore’s Chasm Differences in needs make mainstream adopters (buyers) a completely Different Market from the Early Market 2020/9/30 30

Some lessons from the Steel Industry. 2020/9/30 INTEGRATED MILLS 31 MINI MILLS

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Sustaining Innovations Incumbents nearly always win the battles of sustaining innovation. Performance Measure Digital to Optical MOST DEMANDING CUSTOMERS Caller ID MAIN STREAM CUSTOMERS Analog to Digital LEAST DEMANDING CUSTOMERS Time 2020/9/30 33 Source: Christensen

Disruptive innovations Entrants nearly always win the battles of disruptive innovations. Performance Measure Digital to Optical MOST DEMANDING CUSTOMERS Caller ID MAIN STREAM CUSTOMERS Analog to Digital LEAST DEMANDING CUSTOMERS VOIP Time 2020/9/30 34 Source: Christensen

How to counter the forces of DISRUPTION? Disrupt yourself; before others do.

Some firms have constantly innovated to creatively disrupt themselves. • IBM Electric Typewriter Mainframes PCs • Intel Memory chips Microprocessors Wi-Fi imbedded • EMC Mainframe storage Open systems software • Schwab Discount brokerage On-line brokerage ? 2020/9/30 36

Is your firm ready to move? High Hierarchical Innovative Culture of Discipline Bureaucratic Low Source: Collins, Good to Great 2020/9/30 Start-Up Entrepreneurial Behavior 37 High

Consequences of Innovations consequences, the changes that occur to an individual or to a social system as a result of the adoption or rejection of an innovation. CHAPTER 11

The Snowmobile Revolution in the Arctic The Skolt Lapps Text taken from Rogers, E. M. , 1995, Diffusion of Innovations (New York: Free Press), p. 406 -8. 2020/9/30 39

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In the United States the snowmobile is a means of winter recreation. Since the invention of the "Ski-Doo, " a one-person snow vehicle, in 1958, the adoption of snowmobiles spread dramatically, and within a dozen years over a million were in use in North America. 2020/9/30 41

But among the Skolt Lapps, a reindeerherding people of Northern Finland who live above the Arctic Circle, the rapid introduction of snowmobiles caused far-reaching consequences that were termed "disastrous” … 2020/9/30 42

Prior to the introduction of snowmobiles, the Skolt Lapps herded semi-domesticated reindeer for their livelihood. Reindeer meat was the main food. Reindeer sleds were the principal means of transportation, reindeer hides were used for making clothing and shoes. Surplus meat was sold at trading stores for cash to buy flour, sugar, tea, and other staples. 2020/9/30 43

The Lapps saw themselves mainly as reindeerherders, and prestige was accorded to men who had a good string of draught reindeer. Lapp society was an egalitarian system in which each family had approximately equal number of animals. 2020/9/30 44

Skolt children received a "first-tooth reindeer, " a "nameday reindeer, " and gifts on various other occasions, including wedding gifts of reindeer, so that a new household began with a small herd of the beloved animals. The Lapps felt a special relationship with their reindeer, and treated them with much care. The reindeer was the central object in Lapp culture. 2020/9/30 45

Ski-doo K 61 In 1961 a Bombardier Ski-Doo from Canada was displayed in Rovaniemi, the capital city of Finnish Lapland. A schoolteacher purchased this snowmobile for recreational travel, but soon found that it was useful for hauling wood and storebought supplies. The Lapps began using snowmobiles for reindeer herding. Within the following year, two ski-doos were purchased for herding reindeer in an area where the land was forested and rocky. 46 2020/9/30

Dr. Pertti Pelto of the University of Connecticut had lived among the Skolt Lapps in the Sevettijärvi region of Northern Finland for several years, beginning in 1958, prior to the introduction of snowmobiles in 1962 -1963. Pelto returned to this community repeatedly over the next decade to assess the impact of the snowmobile revolution … 2020/9/30 47

… the rate of adoption of snowmobiles was very rapid among the Lapps. Three snowmobiles were adopted in the second year of diffusion, five more the next year, then eight more, and sixteen in 1966 and 1967. By 1971, almost every one of the seventy -two households in Sevettijärvi (the village studied by Pelto) had at least one snowmobile. 2020/9/30 48

An improved model, the Motoski, was introduced from Sweden. It had a more powerful motor and was better suited to driving in rough terrain. 2020/9/30 49

The main advantage of the snowmobile was much faster travel. The round trip from Sevettijärvi to buy staple supplies in Norwegian stores was reduced from three days by reindeer sled, to five hours by snowmobile. Within a few years of their initial introduction, snowmobiles completely replaced skis and reindeer sleds as a means of herding reindeer. 2020/9/30 50

Unfortunately, the noise and the smell of the machines drove the reindeer into a near-wild state. The friendly relationships between the Lapps and their animals was disrupted by the high-speed machines. Frightened running by the reindeer decreased the number of reindeer calves born each year. 2020/9/30 51

The average number of reindeer per household in Sevettigärvi dropped from fifty-two in pre-snowmobile days, to only twelve in 1971, a decade later. This average is misleading because about two -thirds of the Lapp households completely dropped out of reindeerraising as a result of the snowmobile. Most could not find other work and were unemployed. On the other hand, one family in Sevettigärvi, who were relatively early in purchasing a snowmobile, built up a large herd, and by 1971 owned one-third of all reindeer in the community. 2020/9/30 52

Not only did the frightened reindeer have fewer calves, but the precipitous drop in the number of reindeer also occurred because many of the animals had to be slaughtered for their meat, so the Lapps could purchase the snowmobiles, gasoline for their operations, and spare parts and repairs. A new machine cost about $1000, and gas and repairs typically cost about $425 per year. 2020/9/30 53

Despite this relatively high cost (for the Skolt Lapps, who lived on a subsistence income), snowmobiles were considered a household necessity, and the motorized herding of reindeer was considered much more prestigious than herding by skis or with reindeer sleds. The snowmobile revolution pushed the Skolt Lapps into a tailspin of cash dependency, debt, and 54 unemployment. 2020/9/30

Further, Lapp society is very individualistic, and given the technology's advantages for the first adopters (who were wealthier and younger than the average), initial adoption was impossible to prevent. Thereafter, the diffusion process quickly ran its course. 2020/9/30 55

As a result, the reindeer-centred culture of the Skolt Lapps was severely disrupted. Most families today are unemployed and depend upon the Finnish government for subsistence payments. The snowmobile revolution in the arctic led to disastrous consequences for the reindeer, and for the Lapps who depended on the animals for their livelihood. 2020/9/30 56

Since the anthropological study of the snowmobile revolution by Pertti Pelto, further technological developments have occurred in Lapland. During the summer months, the Lapps began using motorcycles to herd their reindeer. Certain affluent Lapps even began using helicopters. 2020/9/30 57

An increasing number of reindeer slaughtered for meat were found to have stomach ulcers. Certainly technological innovation has not been kind to the Skolt Lapps. 2020/9/30 58

Technological Innovation? Q & A 2020/9/30 59