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Marketing Systems:
When Innovation Stops

  Column published in DMReview.com
November 1, 2003
 
  By David M. Raab

The adoption cycle for new technology is well-known. As described in Geoffrey Moore's Crossing the Chasm, a handful of innovators and early adopters prove the technology's value, followed by pragmatists and, eventually, traditionalists. New technologies fail if the successes of early adopters do not convince a critical mass of pragmatists to follow.

However, what if pragmatists go on strike? That is, what if pragmatists fail to adopt any new technologies at all? Over the past few years, several important marketing technologies have demonstrated their value, yet remain limited to a few early adopters. The list includes statistical optimization, automated pattern detection and interactive dialogues. In fact, it's difficult to think of a significant new marketing technology that has achieved broad adoption during this period. Most firms have been avoiding significant new initiatives, instead spending their limited resources on refining the application of older technologies.

Such conservatism is perfectly understandable given the pressures of a persistently weak economy. However, if the pattern continues, the long-term consequence will be an ever-widening gap between the handful of firms that continue to try new things and the majority that do not. This is quite different from the traditional expectation that the gap between leaders and followers will remain roughly the same, as followers adopt new technologies a year or two after the leaders.

The implications are significant.

  • Consumers will slowly discover that they can no longer assume all firms offer roughly similar levels of quality and service. This will likely lead to a reshuffling of loyalties as buyers who place a premium on sophisticated offerings - or simply appreciate the superior service made possible by advanced technology - gravitate toward the handful of leading-edge firms. At the same time, consumers who value stability may find they are more comfortable moving to companies where the pace of change is slower.
  • Marketers must help guide this customer realignment by positioning their firms in ways that are attractive to profitable customers and consistent with the company's technology strategy. Since a competent marketer can come up with a positive spin on just about anything, the greatest challenge may well be getting the firm's managers to articulate a technology policy that they themselves may not acknowledge having adopted.
  • Managers at leading-edge companies will find that their advanced technologies give them a greater competitive advantage than ever because it takes longer for everyone else to catch up. Yet, for exactly the same reason, they may feel less need to press ahead with technologies beyond the current generation. The net effect will likely be to reinforce managers' existing predispositions. That is, true innovators - who, by Moore's definition, experiment with technology because they like to - will find new arguments to continue their progress. Early adopters - who prefer technologies with concrete benefits - will be more likely to slow down a bit. Therefore, in the market as a whole, the differences among companies will grow wider still.
  • Managers at conservative firms will find themselves at an increasing technical disadvantage and, therefore, be forced to compensate by competing on other grounds: most likely, price and efficiency. This can be a viable strategy in some, if not all, industries. However, it can also be a dead end if more innovative firms can ultimately use technology to become low- cost providers. Organizations taking the conservative approach may ultimately find themselves reduced to serving niche markets or, if things get bad enough, attempting to upgrade their technology by several generations at once. Of course, a technology staff that has been limited to maintaining old technology will likely have lost the skills needed to manage such a transformation. Therefore, conservative organizations trying to play catch-up will probably need to rely heavily on external consultants or outsourcers to have any hope of success.
  • Vendors selling new technologies will suffer most of all. If only a handful of innovators will try the newest ideas, then sales will quickly dry up after the first few installations. Traditional chasm-bridging marketing strategies, such as developing a few referencable pilot implementations to prove the technology's value, will be less relevant. Alternate approaches, such as hosted offerings to lower deployment barriers and ensure a stable revenue stream to the vendor, may be more effective at growing the market and keeping the business alive.

Perhaps none of this will happen. If the economy finally picks up, lagging companies may resume their purchases of new-but-proven technologies and the old patterns will reemerge. Yet it seems quite possible that investment rates will remain depressed even in the face of a modest recovery. Technology managers should at least consider this possibility and begin contingency planning for strategies appropriate to this unfamiliar environment.

...............................................................................

For more information on related topics visit the following related portals...
Database Marketing and Strategic Intelligence.

David M. Raab is President of Client X Client, a consulting and software firm specializing in customer value management.  He may be reached at info@raabassociates.com.

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