Technology Adoption

Presented by:Mutua D. Munyao Technology Adoption

What is it? • Adoption of technology refers to the actual acquisition and eventual utilization of a technological product.

What it isn't • Technology is not simply adopted by acquisition of a technological product and no actual usage is put into it. • E.g. purchasing a mobile phone and not utilising all its available technological capabilities such as PIM, Internet, E-mail etc.

Factors influencing Technology Adoption The adoption of technology is greatly influenced by a number of factors dependent on the technology to be adopted. A new medical product would be adopted in a different manner to a telecommunication product for instance.

Factors influencing Technology Adoption The following factors influence the adoption of technology • Use and user: the decision of the individual to make use of a certain functionality or ICT service for a certain action at a certain moment. • The process of adoption: The decision of the individual to adopt and make use of a new technology or service, from the moment he or she perceives a need through the decision to acquire the technology or service to the actual use whenever the occasion to use it is there. • The process of diffusion: The process by which a technological innovation moves within society from the first adopters to the last adopter groups.

Factors influencing Technology Adoption • There are two types of diffusion effects: • Innovation: trial of product caused by advertising and promotions • Imitation: trial of product caused by word-of-mouth recommendations and reputation

Factors influencing Technology Adoption • These three ways of looking at the acceptance phenomenon are complementary and interact on different levels of aggregation: • 1. The micro individual level, looking at use in a specific situation. • 2. The personal level, in which use is integrated into a general arsenal of practices that form a part of the daily activities of the person through which needs are met and taken care of. • 3. The level of the social unit of which the individual is a member, which provides patterns of behaviour, norms and obligations. • 4. Society as a whole as the superstructure in which all individual life is embedded and which provides the context of general abilities and constraints.

The Technology Adoption Life Cycle Geoff Moore, in his books Crossing the Chasm (1991) and Inside the Tornado (1995), draws on marketing theory and high-tech experience to describe the elements of the product life cycle for technology innovations. His work examines how communities respond to discontinuous innovations - or any new products or services that require the end user in the marketplace to dramatically change their past behavior

The Technology Adoption Life Cycle The basis of the technology adoption life cycle is similar to the basis for diffusion models: different groups of potential customers react differently to innovations, and adoption proceeds from most enthusiastic to most conservative. Communities respond to discontinuous innovation - when confronted with the opportunity to switch to a new infrastructure paradigm, customers self-segregate along an axis of risk-aversion. Moore separates customers into five categories, along which the cycle of new technology adoption proceeds:

The Technology Adoption Life Cycle • Innovators - technology enthusiasts who are fundamentally committed to new technology on the grounds that sooner or later it will improve their lives. • Early Adopters - visionaries and entrepreneurs in business and government who want to use the innovation to make a break with the past and start an entirely new future • Early Majority - pragmatists who make up the bulk of all technology infrastructure purchases; their purchasing behavior is based on evolution rather than revolution, and they buy only when there is a proven track record of useful productivity improvement. • Later Majority - conservatives who are very price sensitive and pessimistic about the added value of the product; they buy only when technology has been simplified and commoditized. • Laggards - skeptics who are not really potential customers; goal is not to sell to them, but sell around their constant criticism.

The Technology Adoption Life Cycle The customer segments correspond to zones in the figure below. 3 4 5 2 1

The Technology Adoption Life Cycle • In addition, there is a sixth zone that Moore calls the "chasm," separating adoption by the early market customers (1,2) from adoption by the early majority (3). Moore describes the chasm as follows: • Whenever truly innovative high-tech products are first brought to market, they will initially enjoy a warm welcome in an early market made up of technology enthusiasts and visionaries but then will fall into a chasm, during which sales will falter and often plummet.

The Technology Adoption Life Cycle • Moore (1995, p.25) characterizes the zones as follows: • The Early MarketA time of great excitement when customers are technology enthusiasts and visionaries looking to be first to get on board with the new paradigm. Visionaries are willing to work through bugs and put in effort themselves to make the solution work. The product sells itself. • The ChasmA time of great despair, when the early market's interest wanes but the mainstream market is still not comfortable with the immaturity of the solutions available. The only safe way to cross the chasm is to put all your eggs in one basket - target a single beachhead of pragmatist customers in a mainstream market segment and accelerate the formation of 100 percent of their whole product.

The Technology Adoption Life Cycle • The Bowling AlleyA period of niche-based adoption in advance of the general marketplace, driven by compelling customer needs and the willingness of vendors to craft niche-specific whole products. A whole product is the minimum set of products and services necessary to ensure that the target customer will achieve his or her compelling reason to buy. Pragmatists want a whole product, with the necessary user infrastructure and customer support. At this stage, companies should resist the temptation to try to provide a general purpose whole product and simplify the whole product challenge. To get customers on board, service content is high, ROI to end user must be high, and partnerships with other companies may be called for. Success in the niche can then be leveraged elsewhere. The two keys to targeting the right niche customers here are (1) the segment has a compelling reason to buy, and (2) the segment is not currently well served by any competitor.

The Technology Adoption Life Cycle • The TornadoAn ugly and frenzied period of mass-market adoption, when the general marketplace (early majority customers) switches over to the new infrastructure paradigm. It's a herd mentality. Keys to success in this period are to ignore customer needs and product modifications and just ship, riding the wave. Market share is critical at this stage to lock out competitors, and partners should be eliminated. Companies entering the tornado should expand distribution channels, attack the competition, and price to maximize market share.

The Technology Adoption Life Cycle • Main StreetA period of aftermarket development, when the base infrastructure has been deployed and the goal is now to flesh out the potential. Another reversal of strategy is needed back to niche-based marketing. Before the product becomes obsolete, there is an opportunity to settle into a profitable period of differentiating the commoditized whole product with extensions focusing on the end user. • End of LifeWhich comes too soon in high-tech. Companies should find caretakers that can take over a fully commoditized product with low profit margin.

The macro perspective To be able to compare societies as a whole as regards the adoption of Technology it is necessary to take into account a number of macro variables that form the general context in which the use of technology is stimulated or discouraged. These include:

The macro perspective • 1. National and regional economical factors that influence net income and income differences, the market structure and the distribution of goods and also the available infrastructure. • 2. The educational system that influences the availability of the necessary knowledge within the population and the occupational structure. • 3. The political climate that is responsible for laws and regulations and policy towards ICT. • 4. The cultural climate which shapes the norms and values regulating individual and collective behaviour and the importance of certain social networks. • 5. Geography and, physical climate that influence the nearness of others and mobility patterns, enabling or hampering both face-to-face contacts between network members and certain types of activities. • 6. The general demographic structure (density of population, age structure, ethnic diversity).

The macro perspective Macro factors play a dual role in the adoption and diffusion of technology. Firstly the macro development is the integrated sum of developments and decisions that take place on the three other levels. Macro factors explain general statistics such as diffusion rates and are important when one wants to compare countries, regions, etc.

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Technology Adoption