Iterative Innovation

Seth Godin writes:

As marketers, we’re tempted […] to optimize for the peak performances

[…] It’s way more profitable to encourage each of your existing customers to spend $3 than it is to get a stranger to spend $300. It’s also more effective to get the 80% of your customer service people that are average to be a little better than it is to get the amazing ones to be better still.

Though Seth focuses on “the floor” (which reminds a bit of Clayton Christensen’s research), I have have had similar thoughts on how this concept of little steps helps us to understand diffusion and innovation. These small changes are often culturally defined. When John Gourville wrote on compatibility, the second of “Rogers’ Five Factors,” (see following paragraphs for Rogers citation) he noted, “compatibility is the degree to which ‘an innovation is perceived as consistent with existing values and experiences of the potential adopter’ […] with previously introduced ideas, with values and beliefs, or with one’s needs.”*

This factor has a greater impact on the likelihood of adoption than we may usually assume. Consumers bring their life experiences with them when it comes to the consuming and trading of goods and services, and this concept of compatibility helps innovations fit with how individuals culturally dictate how the world should work. Agreeing with this, Gourville continues, “An innovation that is compatible with existing concepts is less threatening, seems more familiar, and fits more closely with a person’s impression of the way things ought to be.”

We have understood for some time that product or service adoption has much to do with an individual’s place in society. Over 35 years ago Bass wrote, “Apart from innovators, adopters are influenced in the timing of adoption by the pressures of the social system.”** In addition, Rogers highlighted the reasons for this need when discussing weak ties in a paper during the mid 1970s. He mentioned, “An innovation is diffused to a larger number of individuals and traverses a greater social distance when passed through weak ties rather than strong.”***

More recently, strategy + business‘s Nicholas Carr has something say on this subject as well—“some of the greatest and most lucrative innovations are essentially conservative. They are brought to market by companies that are as adept at looking backward as looking forward, and that have the skill and patience to achieve the most commercially attractive balance between the old and the new.”^ In this article, he recommends facilitating adoption by pairing familiar technologies with innovations. I would expand on that concept and argue for a stepped strategic approach to help promote in adoption, a process which I call iterative innovation.^^

This can be seen in, for example, in the iPhone launch. Apple has appeared to take a calculated and iterative approach with their expansion from computers to music players to phones. In fact, a iPhone launch advertisement may reveal inside details about Apple’s strategy with this segment. The ad shows an iPhone, and the voice over announcer makes the following observations:

“There has never been an iPod that can do this…”
(Ad shows iPhone’s “cover flow” capabilities)
“…or this…”
(Ad shows a widescreen movie playing)
“…or this…”
(Ad displays user scrolling through photos)
“…or for that matter…”
(Ad shows iPhone ringing and call being received)
“…this.”

If there is any internal fear about cannibalization from the iPods to iPhones, the video showed quite the opposite; cannibalization was actually encouraged. I couldn’t help wondering if the previous years of the iPod were simply iterative steps as Apple helped prepare users for the iPhone—recognizing that the future of information technology centered on mobile use. When presenting at the launch of iPhone, Steve Jobs referenced the years of development around the phone, particularly with their partnership with Cingular/at&t, and when comparing the phone to the more recent editions of the iPod (flash memory, thinner units, video capabilities)—it appears that each edition acted as almost a testing ground for the in-pipeline development of the iPhone.^^^

It is often through little steps, these iterations, that market changers change the world. It only seems dramatic to those who missed seeing it coming; it’s just so much more tempting to try and create overnight successes. But, as we have often read, overnight successes never quite happen overnight.

*Gourville, John T.; “Note on Innovation Diffusion: Rogers’ Five Factors,” Harvard Business School, 9-505-075
**Bass, Frank M.; “A New Product Growth for Model Consumer Durables,” Management Science, Jan 1969, Vol. 15, No. 5, p 215 – 227
***Rogers, Everett M.; “New Product Adoption and Diffusion,” The Journal of Consumer Research, Mar 1976Vol. 2, No. 4, p 290 – 301. The research on weak ties is summarized in this paper as “The informational strength of dyadic communication relationships is inversely related to the degree of homophily (and the strength of attraction) between the source and the receiver.” Rogers also states that, “This homophily and close attraction facilitate effective communication, but they act as a barrier preventing new ideas from entering the network.”
^Carr, Nicholas G., “Bridging the Breakthrough Gap,” strategy + business, Issue 37, Winter 2004
^^I first defined this concept during my graduate studies at Oxford in June 2007
^^^See image and advertisement video available at http://www.apple.com/iphone/ads/ and http://www.apple.com/iphone/keynote/ as of June 2007

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