This report explores innovation theory, specifically the diffusion of innovation theory, and its application in historical development. It also discusses the benefits and limitations of the theory and provides recommendations for future pathways in managing innovation.
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MANAGING INNOVATION
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Table of Contents INTRODUCTION..........................................................................................................................3 MAIN BODY...................................................................................................................................3 Innovation theory.........................................................................................................................3 Application of the theory in historical development...................................................................6 Recommending possible development future pathways.............................................................8 CONCLUSION.............................................................................................................................10 REFERENCES..............................................................................................................................11
INTRODUCTION Innovation refers to any new idea, thought, product, processes or introducing something new. It gives stress over the differences between invention and innovation. Innovation is always one step forward with invention. Innovation acts in a such a way to give positive outcome (Cirus and Simonova, 2020). Diffusion of innovation theory is one of the oldest theory suggested by E.M. Rogers. It focuses on how to spread or communicate ideas among group of peoples. Individual does not adopt the new ideas or innovations at the same time instead it takes time to start using the new idea. Individuals will adopt new idea or innovation only when human interaction will take place through interpersonal networks. The diffusion of innovation theory focuses on centring the conditions that increase or decrease the adoption of new idea, innovation or product. This report is in context of what innovation theories are used by Spotify, that can be adopted by potential adopters. It contains process, principles, benefits, limitations along with historical and future development of the diffusion of innovation theory. MAIN BODY Innovation theory Diffusion of Innovation theory The diffusion of innovation theory suggests or aims to spread the new idea, thought, product or process among group of people or population or social system. The word diffusion in theory depicts how the innovation is communicated via different channels among the population. Innovation is any new idea, product, or practice adopted by the company. This theory is suggested for the communication of details related to the product that how any product get its momentum and then suddenly diffuses through specific channels to population or social system (Farmer and et.al., 2018). The result of this is that people start adopting new idea, product, process rather than focusing on the old one or previously used. Generally individuals does not
adopt the new ideas or innovation easily and the individuals who adopt idea at early stage have different characteristics. While spreading the information related to the innovation or idea, it is necessary to know the characteristics of the target population. The five adopter categories of the theory are as follows: Innovators-Innovators are the individuals who use or tries the innovation for the first time, or they are the people who want to be the first for trying the innovation. These people are adventurous and always willing to take risk, they try new ideas and from them develops new ideas or thoughts. The innovators have features like they are adventurous, venturesome, willing to take risks, daring (Kahn, 2018). Very little strategy is required to appeal this category of people. They play an important role in the introduction of innovation and are very quick to accept the ideas, thoughts and innovations. Early adopters-The early adopters are represented as a leader. They always know that there is need to change the idea and are very much comfortable in adopting the new ideas. The early adopters do not require any information or convincing factor which convinces them to change. The strategies used to appeal this population is done by providing them manuals and information sheets. They are the most respected individual in the whole system which advices information about the innovation to others. Early Majority-This category includes individuals who adopt new idea before the average person adopts. They require various evidences in relation with the innovation, if it is working or not before adopting the new idea.The strategies to appeal this group of individual is to provide them with success stories and evidences.They act as a link between very early adopters and late adopters. Late Majority-This category involves individuals who are doubtful in adopting the new idea. They adopt the new idea only when the majority of people have used or started working on it. Strategies to appeal this group of individual is to provide information of the people who have used the idea or innovation and adopted it successfully (QaziRaza and Shah, 2018). They adopt innovation just in peer pressure and not by motivation of adoption. Laggards-This category involves people who are conservative and follows tradition strictly. They are very doubtful and fearful of change. They are hard to convince to adopt the innovation. The strategies to convince or appeal these type of individuals is to give fear appeals and pressure
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from people. These are the five adopter categories in which major of the population generally lied in the middle category. Application of diffusion for innovation theory: When applying the diffusion for innovation theory, the most important part is to understand the adopters and their final decisions in relation with the products to purchase. There are basically three types of innovation decisions namely optional innovation decisions, collective innovation decisions, authority innovation decisions. Optional innovation decisions- In this type of decisions, individuals make their own decisions regarding the innovation. Collective innovation decisions- in this type of decisions, majority of individuals make collective decision in relation with innovation. Authority innovation decisions- in this type of decisions, very few individuals take decisions for the entire population or social system. Process of diffusion for innovation theory: Knowledge-It is the first step in diffusion for innovation theory. It is the step in the which the future adopters are exposed to the innovation. These adopters don't have much knowledge in relation with innovation to make purchase decisions. This is the stage where marketer increases awareness for the product and information is to be provided to the prospective adopter. Persuasion- It is the step in which adopter has some idea to purchase the product. They find the information which help in taking eventual decision for the purchase of product. At this step, the marketers convey the benefits and details of the product. Marketer must be in the position to market their products and put some conscious efforts for the diffusion of innovation. Decision-In this step the adopters are at the stage of taking decisions, they will evaluate the pros and cons in relation with innovation and will either accept or reject the innovation. Most of the people does not make rational decisions, and there decisions are based on feelings and emotions. This is the most challenging system in the whole process. Implementation-This is the step where the decision related to adopt the product has been made. In this stage, the adopter will make a decision that if product is useful for them or not. Individuals will try to understand about the product and will get more and more details. This is
the most interesting step of the process, as marketer will get an environment before its products is sell. Confirmation-This is the final step where adopters decide to keep using the product or will change it or abandon the use. This step has only two essential points that whether the adopter will abandon the product or continue using it. This phase is generally based on personal and social examination of the product. The adopters will take information from their friends, colleagues, peers, etc. Evaluation of the diffusion for innovation theory. Benefits of the theory: Explains the rate: The theory helps in finding the rate at which adopter or consumers will purchase a product or service, which is one of the most important thing for the marketer. By knowing the rate, the marketer will able to evaluate about their sales and margins. With the help of this the occurring trends in the market can be understood (Lien and Jang, 2017). It also helps in explaining the rate at which the products, services, processes are spread to the population. Help in predicting the customers- This theory helps in understanding the customers or adopters, what they will prefer or what they are planning to purchase and then the marketer can make effective marketing strategies. Limitations of the theory: The major limitation is that the consumers are not risk takers, so it is a disadvantage for the companies who are in the mood to launch innovations or ideas. There are high chances of failures for the companies bringing new ideas to the market. There is no guarantee of success. The companies launching innovations, most of the time does not take culture into consideration, which is also one the limitation. The data suggest that there are more number of early and late majorities and much more laggards. Consumers are not risk takers, they fear from the change. Mainly the diffusion for innovation theory works much better when adoption of behaviours system is followed and not when the prevention of behaviours takes place. There is an implementation in the theory that the innovating products or services is a positive aspect and if the innovation receives failure, then it is the negative aspect. This is one of the limitation of innovation bias.
This theory blames the individuals who did not adopt the innovation is because of their lack of responses and not accept their fault in the innovation or new idea. Application of the theory in historical development There are various things which accounts with historical development of services of the company which is being in consideration with diffusion theory Spotify is the theSwedish audio streaming and media service provider which is being launched in the year 2008 and which is being operated as company which is being publicly traded all across. The company accounts tofreemium business modelwhich accounts with the basic services of the company are being free where the additional features are being offered via subscriptions that are being paid where bySpotify generates revenues by selling streaming subscription that are premium to users and advertising placement to third parties. Thebusinesscanvasmodelisthestrategicmanagementandleantemplatefor developing documenting and existing business models, which highlights the segments of the customers that provides with highest revenues, value proposition of the services of the company, it accounts to highlighting top revenue streams for Spotify, channels of communicating with the customers, accounting with maintaining relationship with the customers, various key activities of the company which is being run day to day by company, key resources such as people, means and knowledge and money which is being needed by the company to run its business. Key partners without which business can not be able to run which does not include suppliers and lastly identifying the cost structure by looking at resources and activities of company (Joyce, Paquin, 2016) Thehistorical developmentof the products and services accounted with earlier the songs were being listen on radio and various traditional methods but now it is being developed that services of the company are just away from the one click where the historical development of the product accounts withdevelopment stage which is the first part and which is not accounting build the services and product but accounts with researching and testing whether it will work or not which leads to diffusion of innovation or not in social system of the economy or not which accounts with market research and competitors analysis which accounts to get ideas for the growth of the services of the company
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it accounts with introduction where the services were initially promoted where the awareness about the services were being spread where if audience not knowing will not account to use the same and buy the services whereby effective promotion can account with spreading of innovation in marketplace whereby it can account to use of skimming strategy where prices are being set high and then gradually lower down which accounts if there are few competitors and also accounted with penetration strategy which accounts that company in its initial stage charged low prices to attract large customer for Spotify (Lartey,2019). The historical development also accounts with market growth where the market share of the services starts to grow where the company has accounted to spend large amount of money in advertising campaign to various target audiences which is being through promotion on various media platforms which helps the business of the company to grow and people adopting to new things to listen to music where by the diffusion of innovation accounts at various stages. The next relates with the maturity where by the company accounts to have boost up of salesandmarketsharestartstogetstabilise.Itaccountsthatcompanywasoffering differentiating services as compared to its competitors where the company accounts with innovating and adding to new features in services which helps the company to stay competitive in the marketplace (Woo,2016). The last accounts with if the company not focuses on its strategies than its historical development may lead to decline stage where the sales of the company starts to get decline where the innovative products are being created by the competitorswhich can serve as the means of loosing the market share. Where lastly it suggest that ideally between decline and maturity stage it accounts restarting the service development cycle to accounts to success of the company and diffusing of innovation in the company Recommending possible development future pathways There are various things which can be accounted on the end of various improvement in technologywhich could relates with the continuous updating of technology which would account to getting valuable insights on the end of company that helps in catering and serving the needs and wants of its target customers in a manner which is being highly beneficial for the company in terms of getting high profit margin in the company and boosting up of sales revenue. This will helps the company with the company with reduction in wastage of time and helps in effective and efficient allocation of resource of its product and services and accounts with the
company to creative ideas which helps in diffusion of innovation in the manner which is being highly suitable for the society at the large. With the continuous innovation in the technology it will account the company to get the edge over its competition (Mull, 2020). The company can also accounts with the diffusion of innovation through bringing and generatingawarenessthroughsocialmediaplatformswhichaccountswithcompany promotional and marketing efforts to make the services of the company reach towards the end customers more prominently. This will helps the company with the mass reach which is being highly cost effective and time saving which helps the company innovation to get spread and diffuse in the social system of the company. It helps in getting information that how many customers are being responding and in what manner where the company can account to take corrective actions which helps the company to account to its innovation and fostering the growth of the company (Leitner, Warnke, Rhomberg, 2016). The company can do this by not hiding information from the public and accounting to providecorrective informationon various platforms which will assist the spread of innovation among the society and adapting to the same ina manner which is being beneficial for all as it accounts with leading with the understanding that company operations are not on the grounds to cheat and disregards the public as a result helps the company to build and account to positive brand image and goodwill in the marketplace. It needs to account with hiring and selectingqualified professionalswho know how the businesses are being run which accounts to understanding various things in the marketplace and accounts meeting the same in order to achieve the business target which accounts with the application of diffusion theory and which helps in assisting business with minimum flaws and errors and it also accounts with training the existing ones which help in bringing more efficiency and accounts with effective leadership and team work which helps in ideas which invites and spread of ideas of innovation that accounts with the diffusion (Daim,2016). For the application of future development it is being recommended that company should account with strategic partnershipwith various companies that account with handling and with the ease of operation which will helps the company to undertake various challenging tasks and activities that support business dynamics as a result helps in effective merging, distribution and utilisation of resources which will help the company to achieve the targets as a result leads with the formulation of strategy that accelerate and foster the growth of the company and helps with
coming up with the innovative solutions to support decision making and problems which comes in its way. It could also be by the ways where the company can opt out for offering free premium services in order to capture large customer base which as a result will account to diffusion of innovation in the company and will account to customers building more loyalty and trust towards the company as a result helps the company to retain its potential customer and accounts to make and experiencing the innovation which the company is in regards with the diffusion and serve as the techniques for the same as a result account to spread of innovation The company can accounts with organising contest that helps in identifying customers who are being loyal to the company and accounts with the building favourable image of the company. CONCLUSION From the above report it is being understood that innovation is vital for the company and plays a very important role in meeting up various challenging tasks and supporting various business dynamics. It is being understood that innovation in products and services helps to attract the large number of potential customer and dose not account to loosing the same inn terms of its competitors who can weakened the company position. It has laid to the understanding of definition, process and principals of innovation theory where by it has also accounted with its advantages and disadvantages. It has accounted with the application of theory of diffusion in the context of historical development which accounts with how services and products of the company developed and evolved. It has also accounted with the innovation theory in context of future development which accounts to managing the future plans and creative ideas which assist the theory of diffusion.
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REFERENCES Books and Journals Cirus, L. and Simonova, I., 2020, August. Rogers' Diffusion of Innovation Theory Applied on Primary Education: Case Study of Czech Teachers. In2020 International Symposium on Educational Technology (ISET)(pp. 33-37). IEEE. Daim, T.U., and et.al., 2016.Anticipating future innovation pathways through large data analysis. Springer International Publishing. Farmer, J., and et.al 2018. Applying social innovation theory to examine how community co- designed health services develop: using a case study approach and mixed methods.BMC Health Services Research.18(1). p.68. Joyce, A. and Paquin, R.L., 2016. The triple layered business model canvas: A tool to design more sustainable business models.Journal of cleaner production,135, pp.1474-1486. Kahn, K. B., 2018. Understanding innovation.Business Horizons,61(3), pp.453-460. Lartey, J.O., 2019. A Review on the Historical Development of Services and Concepts in Service Encounters. Leitner, K.H., Warnke, P. and Rhomberg, W., 2016. New forms of innovation: critical issues for future pathways.Foresight. Lien, A. S. Y. and Jiang, Y. D., 2017. Integration of diffusion of innovation theory into diabetes care.Journal of diabetes investigation.8(3). p.259. Mull, A.A.,and et.al., 2020. Pathways: An innovation in the delivery of college counseling services.Journal of College Student Psychotherapy.34(1). pp.40-58. Qazi, W., Raza, S. A. and Shah, N., 2018. Acceptance of e-book reading among higher education studentsinadevelopingcountry:themodifieddiffusioninnovationtheory. International Journal of Business Information Systems.27(2). pp.222-245. Woo, J.J., 2016. Historical development. InSingapore as an International Financial Centre(pp. 25-41). Palgrave Macmillan, London.