The innovation lifecycle impacts innovation diffusion. As innovations move from introduction to growth to decline, the spread of innovation is changed and influenced by the dynamic forces of the market. In this article, I highlight the innovation lifecycle and categories and explain how diffusion changes over the evolution of the lifecycle courses. 

Innovation life cycle

Moore’s book “Crossing the Chasm” discusses the technology adoption life cycle, explaining the innovation curve, buyer categories, chasms, diffusion, and influence of innovation adoption. In turn, this reference was superseded by Everett Rogers’s theory ‘Diffusion of innovations’, 2003, describing the innovation adoption theory. The central discussion of these theories was the technology life cycle, categories, and factors influencing innovation diffusion. The lifecycle innovation is a bell curve equivalent to the probability distribution and standard deviation models, where the early majority and the late majority (market mainstreams) fall within one standard deviation around the mean (70% of the market segment); whilst the early adopters (visionaries) and laggards (skeptics) fall outside the significance of acceptance (Moore, 2013)¹. In this regard, the scientific findings of the Moore’s Crossing the Chasm are:

• Innovation lifecycle categories comprise techies for the introduction, early adopters in the growing stage, early and late majorities for the growing and market streams, and laggards for the decline stage.
• Each of these buying categories has different drivers, attitudes, and sets of behaviours.
• Identification of chasms that separate each group of buyers, and the largest one is between the early adopters and the early majority.
• The marketing strategy to go over those chasms and increase the adoption rate comprises activities: target a specific niche market as your point of start and focus on it; segment the target market and choose the most suitable segment; and research and validate information on the beachhead market, customer segment, competition and others. 

Innovation Lifecycle categories

In Geoffrey Moore’s book ‘Dealing with Darwin’ 2005, he identified four different zones of innovation distributed over the product lifecycle phases (Moore, 2005)²: 

• Product Leadership zone: occurs in the introduction and growth phases of the technology lifecycle and comprises innovations like technology breakthroughs, technological products, applications, and platforms. 
• Customer intimacy zone: occurs in the maturity phase of the technology lifecycle and comprises activities to increase customer experience and sustain innovations. The customer zone includes (1) product extension (e.g., adding new production lines), (2) product enhancement (e.g., adding or eliminating features to a product), (3) marketing (incl. product, price, promotion and channels) and (4) customer experience (e.g., service, brand, channels, values).
• Operational excellence zone: takes place in the maturing phase of the technology lifecycle and aims to re-engineer the enterprise operations to reduce cost, cut the time-lead to the market, and eliminate waste. 
• Category renewal zone: takes place in the late maturity and decline phases of the technology lifecycle, where innovators intend to sustain their market shares by focusing on increasing organic and external growth.  

In Shane’s book “Handbook of Technology and Innovation Management” of 2009, the author had another viewing explained the technology life cycle comprising three distinctive phases (Shane, 2009)³: 

• Initial stage– emergency/ growth: is when the underlying market suffers from uncertainty, many technologies, unmet needs, being small, and manufacturing facilities are inefficient. Industries in the initial stage will experience rapid growth as the new technology diffuses across consumers. The characteristics of the growth stage include increasing sales, an increasing number of firms, and declining prices, followed by diffusion of technology resulting in the entrance of start-ups and entrepreneurs, diversifying from related industries. Yet, high levels of product innovation characterise this stage. 
• The transition to the shakeout stage: occurs when the market is engaged in improving the production efficiency to reduce cost and standardisation of product design, and the dominant design leads the market. In the shakeout stage, users are more familiar with innovative products and their limited variety. An increasing emphasis on process innovation relative to product innovation characterises this stage, increasing the market share of large firms focusing on efficient mass production. The competitive pressures of increasing efficiency and falling sales and prices resulted in lower quality of products and a declining number of firms. 
• The maturity phase: is when the growth rate slows down, and technological and competitive environments are stable. The underlying market here is (1) full of similar firms; (2) the dominant innovations are incremental; (3) prices are stabilised; (4) growth is slow; and (5) the society is equipped with well-established infrastructure. As a result, matured businesses either transition into decline or spiral back into emergency because of discontinuous technological change.

Innovation lifecycle and diffusion

The theory of the technology lifecycle provides details on innovation diffusion and categories. The technology life cycle comprises an introduction, growth, maturity and declining stages. Here is a brief description of the relationship between the lifecycle and diffusion:

• Introduction stage: technology innovators, such as universities, labs, or start-ups, create a breakthrough technology and introduce it to the market. Because of the broadened scope of these new technologies, it will be difficult for such technologies to diffuse and penetrate the market streams. Characteristics of this stage include primitive and not yet transformed products requiring massive investment, higher risks, and resulting low diffusion. For example, automobile technology late nineteenth century and personal computer technology in the early seventies were newly discovered technologies at their times.  
• Early growth stage: entrepreneurs or early adopters will work on making this technology more suitable for specific market segments by reproducing technology products and applications, yet they will face significant hurdles to overcome and reach the market streams. In this stage, new products and applications are introduced to the market by entrepreneurs, but these products lack strong demand or diffusion to take them to the market streams due to their newness, higher costs, unknown significantly to the public, and value perception of the buyers. Entrepreneurs need to sell their new products to the market stream companies (or so-called) early majorities who will further improve these products and make platform products (i.e., a product produced by many chain suppliers, like digital mobiles) to dominate the market. The computer mainframe during the seventies and early eighties was an example of a technological product at that time.
• Growing stage: early majorities will buy the technology products invested by entrepreneurs as per the previous stage and transform them into platform products, which are made by a group of value chain suppliers. For example, Andriod mobiles are a platform product made by many value-chain suppliers. Innovative products of this stage will lead to a growth of diffusion, followed by market stabilisation and standardisation of innovation, forcing innovation businesses to focus on the customer and operational innovations to sustain their businesses. 
• Late growth and maturity stage: late majorities are early majorities reaching the end of the growing stage where their platform innovations will start to slow down diffusion to the market due to the competition. These technological products will become widely known and distributed, leading to fierce competition and price reduction. As a result, players will reach the declining phase, and their innovative products will discontinue and be replaced by new technology innovations. In this stage, late majorities will involve sustaining programs to save the market share, such as customer intimacy and operational excellence schemes. Customer intimacy activities include product extension, enhancement, marketing, and customer experience. While, the operational excellence activities aim at increasing efficiency, improving values, and reducing product costs.  For example, the current competition in the mobile and personal computer industries reflects the stage of lifecycle maturity. The diffusion of innovation, as a result, will start to slow down due to the competition.
• Decline stage: in the maturity and decline stage, laggards try to sustain their businesses by involving in renewal schemes like organic and external growth. However, innovation diffusion is getting more deteriorated and heading to discontinuance and replacement by discoveries of fresh innovation. For example, when digital mobile replaced the landline telephone system during the seventies and eighties, the landline telephone, as a result, was gradually discontinued and lost most of the market.    

Author: Munther Al Dawood

www.growenterprise.co.uk

maldawood@growenterprise.co.uk 

For further reading: https://growenterprise.co.uk/your-guide-to-reach-innovation/

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References:

1. Moore, G., 2013. Crossing the chasm. 
2. Moore, G., 2005. Dealing with Darwin, Penguin Group, New York.
3. Shane, S. 2009. Handbook of technology and innovation management, Wiley, USA.