Managing Innovation: Application of Diffusion Innovation Theory in Historical Development Context

This article explores the application of diffusion innovation theory in the historical development context. It discusses the benefits and limitations of the theory and provides a case study of WeWork company.

Managing Innovation

Contents
INTRODUCTION.................................................................................................................................3
Diffusion Innovation theory..............................................................................................................3
Application of the Diffusion Innovation theory in the historical development context.....................7
Application of the Innovation theory in future development context...............................................10
CONCLUSION...................................................................................................................................11
REFERENCES....................................................................................................................................12

INTRODUCTION
Innovation is one the crucial part of business and it is very helpful for company to
conduct its products and services in better and effective manner (Tidd and Bessant, 2018).
Innovation can be describe as completely new or different thing that is implemented by
organisation. It consist of new idea, method, products, design and so on. It is important for
organisation to manage its innovative products and ideas in order to conduct its business
activities and task in required manner. There are various ways through which company can
manage innovation in required and effective manner. Diffusion innovation theory is one of
the effective theory that can be used by company in order to successful management its
innovative process and activities in organisation. This theory of innovation can be describe as
the process in through which organisation can easy spread in desired market. Diffusion of
innovation theory which will support organisation to make new product adopted by targeted
audience. With the help of this theory organisation will be able to determined the main reason
why some products or services are more successful as compare to other products. This theory
includes different steps in its process which is helpful in determining the complete decision
making process in managing innovation.
Diffusion Innovation theory
Definitions, Principals and Processes of the theory
Diffusion of innovation theory is considered as one of the oldest theory of social
science and this was developed in 1962 by E.M Rogers. The motive of developing this theory
is to identify and analyse how an idea as well as product is spread through a specific social
system or population. This is very effective theory in order to determine the impact of
diffusion on organisation. It will also help in determine the people as a social system, adopter
of new idea, behaviour or products. Diffusion theory is very effective in examine different
ways though which a company can spread its idea of innovation among various group of
people. It is essential for organisation to determine the different types of adopter in market.
Diffusion theory of innovation includes different steps helpful in gaining information or
taking better decision as well as implementing its is successful manner. In this adoption can
be describe as the person who is some in different manner which in never done before
(Biemans, 2018). For example a person is considered to be adopter when they use
completely new product as well as acquire new behaviour. In order to manage innovation, it

is crucial for organisation to understand and determine the characteristics of individual or
targeted customers. Categorise of adopter classified into five different parts which is explain
below in detail.
 Innovators – This type of person can be describe as those individual who are first to
try something new. Innovators are very interest in experiencing new ideas of
innovation. They are ready or willing to take risk of innovation in order to implement
new and creative idea. Person with innovator categories are considered as first person
to try innovation. It include very little appealing for this population to adopt
innovation.
 Early adopters – This category of adopter can considered to be larders who easily
adopt new and innovative technology or products. early adopters can be represented a
the opinion leaders as well as they enjoy the role of leadership (Tidd. and Bessant,
2014). They are very well aware about new idea and innovation along with it benefits.
Early adaptors understand the needs or requirement of changes as well as importance
of adopting innovation. They are responsible for developing and creating strategies so
that population can easily adopt changes.
 Early majority – Population of this category are not considered as leaders but they do
adopt new ideas and innovation faster as compare to other average population size. In
order to adopt innovation, early majority needs to see evidences which will help in
analysing the innovation work in better manner. As per the evidences early majority
will take their decision. It is crucial that strategies are very appealing as well as
effective in order to adopt innovation.
 Late majority – This type of population category are considered to be sceptical of
changes and they will only adopt changes when it is adopted by majority of
population. It is important for them that innovation and new idea in well tried and
tested by other population size (Wang and Tsai, 2014). So that they can adopt changes
accordingly. Strategies for late majority needs to be very appealing as well as
informative. It is crucial for them to understand and evaluate the information that will
includes how many other has successful adopted the changes along with its impact.
 Laggards – These are the person who are bounded with their tradition and they are
very conservative. Laggards are considered as the most hardest group of people to
adopt changes. They are not ready to adopt new ideas and innovation and it is very

difficult for them to adopt changes. Strategies that is needed in this require statistical
data, pressure from other people who are adopter of innovation.
Process of theory
Diffusion theory of innovation includes five different steps that is essential for implementing
innovation as well as taking correct decision.
 Knowledge - This is the first step as in this person will focus on developing
knowledge and information about the innovation. At this point customer do not have
any idea or knowledge about innovation (Waters, 2014). It is essential for customers
to gain complete information about innovation as this will help in taking decision It is
responsibility of marketers to increase the awareness and information about new ideas
and innovation in market so that they can attract more customers.
 Persuasion – At this stage, customers will be more open towards the ideas of purchase
and they will look for more information about new idea and innovation in order to
take better decision. Customers are actively seeking for information as well as
evidences that will support in taking correct and appropirte decisions. At the same
time marketers will provide more information about innovation as well as convey
benefits of adopting innovation. This is essential for influencing customers decision
making process.
 Decision – In this stage customer will take their decision. Customers will analyse and
evaluate each and every point along with its pros and cons. If the knowledge and
information about innovation is in favour they will continuous for accepting
innovation. But if knowledge or information does not meet with the requirements that
will reject it. It is crucial for marketers to enhance the knowledge and information
about innovation as well as consider the preferences in order to increase the purchase.
 Implementation – When a customer has taken decision to adopt innovation and new
idea now at this step they will implement the purchasing process. This is considered
as interesting stage it suggested regarding marketers as well as designer alike needs to
consider the ownership process. In implementing stage adopter will be able to analyse
different other details such as how important the innovation is for them as well as its
impact on customer
 Confirmation – This is the last stage of process and in this step customer will evaluate
the effectiveness of their decision. In this step they will determine about the decision

whether they will keep using the products or abandon the use of product. This step is
very important in order to analyse and evaluate the whole process.
Evaluation of the theory
It is very important for organisation to analyse as well as evaluate the effectiveness and
efficiency of diffusion theory of innovation. In order to evaluate theory its benefits as well as
limitations are determined properly.
Benefits of diffusion theory of innovation are -
 The benefits of diffusion theory is that it helps in determining the rate at which
customers are willing to adopt new changes. This theory has classified larger number
of population into several parts according to their needs and requirements.
 This will help in understanding characteristics of targeted customers on the basis of
innovators, early adopter, early majority, late majority and laggards. Marketer will be
able to develop and create batter strategy on the basis of characteristics of customers.
 Process of diffusion theory is very helpful in determining and evaluating the overall
all aspects that is related to customers as well as decisions (Prange and Schlegelmilch,
2018). This theory is helpful in guiding marketers in each step of innovation process.
Through this marketer will be able to influence customers as well as help in
purchasing innovative products.
 Diffusion theory is beneficial for marketers as this will assist in determining how new
trends occur as well as warn organisation about likelihood of failure of new ideas or
introduction of innovation.
 This theory is very effective in understanding or predicting which type of customers
will buy the new and innovative products and services offered by company. Through
this theory organisation will be able to develop and create better strategy for
organisation as well as its growth.
Limitation of diffusion theory of innovation are –
 There are too many adopter categories which make the theory more complicated.
There are evidence of this theory is not originated in public health. This theory is not
able to explain the behaviour of customers in adaptation as well as health innovation.

Due to too many adopter it is very difficult for marketer to create and develop strategy
for various category of population.
 It is important for organisation to consider the culture factors while developing and
implementing innovation. This theory has not consider cultural factor and this is the
limitation of diffusion theory. Ignorance of culture will lead to have direct impact on
purchase decision of customers as well a sales of organisation.
 Economic difference in society is one of the major issues in successful
implementation of innovation. Customers belong to different society with different
economic capabilities. Customers who are from low economic condition are not able
to adopt new products and innovation. Therefore, it will be very difficult for marketer
to attract and influence this type of customers.
Application of the Diffusion Innovation theory in the historical development context.
Company background
WeWork is an American company that was developed in 2010. This organisation is
dealing in commercial real estate sector with the innovative idea of providing shared
workspaces to different organisation. This company was developed by Marcelo Claure,
Miguel McKelvey and Sandeep Mathrani. Products and services of WeWork company is
workplace spaces with high quality infrastructure and other facilities for conducting business
operations. There are various brands of WeWork organisation such as WeLive, WeWork
labs.WeGrow etc. This organisation is providing its products and services to different areas
of world and its headquarter is located in New York city of U.S.
In order to understand different activities and process of WeWork company business
canvas model is used. This is effective model in order to determine various elements of
business. Business canvas model is mention below in context of WeWork company.
 Customer segments – WeWork is targeting individual and business of small,
medium and larger size companies (Zeyen Beckmann and Akhavan, 2014).
Customers of WeWork company is Pinterest, Microsoft, IBM, Dell, Spotify and many
more. It is also providing work space to freelancers, independent professionals.
 Value propositions – This company is providing high value to its customers by
providing flexible pricing model. WeWork is offering high quality services and
facilities to other companies. This organisation has international reach as well as it is
fostering the community atmospheres.

 Channels – There are various ways thorguh which WeWork is offering its products
and services. Channels of WeWork are it official website that provide right and
accurate information to customers. This organisation also has mobile application and
WeWork portal that is effective for communication.
 Customer relationship – This company is offer new and innovative services that is
helpful in meeting with the needs of its customers (Barlow, 2016). WeWork is
offering different types of services to its customer such as online payment, direct
interaction etc.
 Key activities – WeWork key activities are developing real estate facilities, managing
properties, checking facilities, consulting with clients and many more.
 Key partners – There are different partners of WeWork that are supporting in
effective function of business. Key partners are brokers, real estate partners, suppliers,
alliance supporters.
 Key resources – WeWork require different resources to conduct business activities
which includes information technology and communication infrastructure Human
resources is also key element in order to conduct business activities.
 Cost structure – The major cost that is occurred by business in maintaining
information technology, communication infrastructure, management of partners and
payment fees of services
 Revenue streams – There are different revenues streams of business such as rents of
providing office space. Long term lease contract and membership cost are the
revenues streams.
Business canvas model
Key Partnerships
 Brokers
 Real Estate
partners
 Suppliers
 Service
partners
 Strategic
and
Key Activities
 Real
estate
develope
r
 Property
manager
 Consultin
g
Value
Propositions
 Flexible
pricing
model
 High
quality
facilities
 Internatio
Customer
Relationships
 Direct
communic
ation with
online
portal and
other
social
Customer
Segments
 Individual
workers
 Business
 Enterprise
s

Alliance
partners
nal reach
 Communit
y
atmospher
e
network
sites.
Key Resources
 Technolo
gy
 Office
related
equipme
nts
 Infrastruc
ture
 Human
resource
Channels
Official website
Online portal
Mobile
application
Cost Structure
 Information technology and
communication cost
 Management cost
 Payments of services fees
Revenue Streams
 Rents of office space
 Membership
 Long term lease contracts
Historical development -
WeWork company is developed to shape the boring office space to interest areas. This
organisation was developed 10 years ago and it has developed strong image in market by
providing high quality services. Its innovative idea and concept of providing work space and
other facilities can be consider as main reason for its success (Bowers and Khorakian,
2014). This company has meet with the needs and requirement of its customers by offering
well structure workplace. This has been helpful for company to operate its business activities
in different part of the world. WeWork is offering work space to all types of company and its
high profile company includes JP Morgan, Microsoft, Goldman Sachs and many more. Now

this organisation is operating its business activities in North America, Europe and Asia
Pacific.
Application of the Innovation theory in future development context.
Future development
Innovation is essential component of business that will lead to its future development
and growth. This will lead to bring new and creative ideas that is very important for
company. There are several factors that is developed with the support of innovation in
organisation. Through this business task and activities can be conducted in require manner.
An organisation will be able too growth its business activities as well as perform
organisational task in creative manner with the support of innovation. Innovation in business
practices will lead to improve the productivity and performance of business in respected
market area. this will have direct impact over economic condition of organisation as well as
increase the profits of business.
WeWork company needs to use innovation in its business practices in order to
accomplish its mission and vision. Innovation will help in providing better ways and
faciclites to business so that it can meet with the future needs of customers. WeWork
company is focusing in booming its business in “Smart Cities” in order to accomplish the
needs or requirements of all type of companies. This innovation practices will support in
attracting large number of customer base towards WeWork company. This organisation needs
to focus in gaining trust of customers as well as increase number of loyal customers.
WeWork organisation should us new and innovative method of promoting its business
in market area. effective marketing practices will help respective company to create
awareness about its innovate services in market (Poblete and Spulber, 2017). This company
should directly target potential and capable customers in order to sale its innovative services.
This will help in enhancing sales as well as profits of WeWork company. Innovation in
business practices will lead to conduct organisation operations in more better and effective
manner. Through this business issues and challenges can be faced and WeWork company
will be able to grab more opportunities of market area. It is essesntial for respective company
to consider innovation in its business strategy as this will have direct impact on performance
of business. Innovation will lead to have significant impact on gaining competitive edge over
other rival companies in market area.

CONCLUSION
From the above report it has been determined that innovation is essential part of
organisation that will help in gaining success over other rival companies. It is important for
company to manage its innovation in correct manner. This is crucial element in attract larger
number of customers towards new idea of company as well as its products and services.
There are different theories of innovation that is developed in order to support marketer and
along with this its provide guideline to perform task in better manner. Company needs to
constantly innovative its business process as this will lead to resolve business issues as well
as perform organisational task in required manner. Innovation is business and its products in
essential for overall growth and development of business. There are various factors that affect
successful implementation of innovation in market area. Business needs to consider these
steps as well as develop better strategies so that customers are attractive towards innovation
of company. Innovation will lead to have significant impact in successful performance of
business as well as meeting with the needs and requirements of customers. Innovation is
considered to be crucial for future development of business as well as implementation of
organisation activities in better manner.

REFERENCES
Books and Journals
Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Routledge.
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
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bioeconomy: An open innovation perspective. Biomass and Bioenergy, 90, pp.60-69.
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empirical study of service industries in Taiwan. Service Business, 8(2), pp.313-335.
Chen, J., Jiao, H. and Zhao, X., 2016. A knowledge-based theory of the firm: managing
innovation in biotechnology. Chinese Management Studies.
Waters, A., 2014. Managing innovation in English language education: A research
agenda. Language Teaching, 47(1), pp.92-110.
Prange, C. and Schlegelmilch, B.B., 2018. Managing innovation dilemmas: The cube
solution. Business Horizons, 61(2), pp.309-322.
Mendi, P. and Costamagna, R., 2017. Managing innovation under competitive pressure from
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Brunswicker, S. and Vanhaverbeke, W., 2015. Open innovation in small and medium‐sized
enterprises (SMEs): External knowledge sourcing strategies and internal organizational
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Zeyen, A., Beckmann, M. and Akhavan, R., 2014. Social entrepreneurship business models:
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die Zivilgesellschaft des 21. Jahrhunderts (pp. 107-132). Springer Gabler, Wiesbaden.
Barlow, J., 2016. Managing Innovation in Healthcare. World Scientific Publishing Company.

Bowers, J. and Khorakian, A., 2014. Integrating risk management in the innovation
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Poblete, J. and Spulber, D., 2017. Managing innovation: Optimal incentive contracts for
delegated R&D with double moral hazard. European Economic Review, 95, pp.38-61.