Managing Innovation: Diffusion Theory and Tik-Tok Case Study

This report provides a comprehensive overview of the diffusion of innovation theory, explaining its principles, processes, and evaluation. It delves into the definition of innovation, highlighting its role in creating competitive advantages. The report examines the core principles of diffusion theory, including the need for innovation, effective communication channels, and the time-dependent nature of diffusion. It outlines the stages of the diffusion process, from knowledge and persuasion to decision-making, implementation, and confirmation, while also categorizing adopters based on their innovativeness. The report then evaluates the theory's advantages, such as its ability to predict adoption rates, and disadvantages, including its potential biases and limitations in considering cultural and economic factors. Finally, the report uses Tik-Tok as a case study, examining the company's background, historical development, and the application of diffusion theory to its success. The report covers the company's evolution, highlighting its innovative features and market expansion strategies.

Managing Innovation
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Definition, Principals and processes of diffusion theory.............................................................3
Evaluation of Diffusion of innovation theory.............................................................................6
Company background and historical development.....................................................................7
FUTURE DEVELOPMENT.......................................................................................................9
CONCLUSION ............................................................................................................................10
REFERENCES..............................................................................................................................12
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INTRODUCTION
Innovation is bringing any change by adding new value and turning the idea into product
or service. It involves development of new product with the aim of improving the efficiency and
effectiveness. By innovation the goal is to gain a competitive advantage. Innovation is the result
of creativity and commercialization. Innovation includes bringing something different, better,
new, cheaper. Innovation can be done in context of product, process, ways of organizing
business etc. By undertaking innovation in the organization better quality of products can be
produced at lower cost and will also lead to production of luxurious products and leads to higher
standard of living. Diffusion theory explains the time period in which the new idea or the
innovation made spreads. This theory is also a medium of analysis in which the marketers find
out about the likeability of the product and the acceptance of the same by the people. It shows
the pathways in which the new product and service will go viral in the society.
MAIN BODY
Definition, Principals and processes of diffusion theory.
The diffusion theory of innovation explains the rate at which the new product and
services gets accepted and gets viral. This theory was given by E.M. Rogers in1962 and tells the
time period in which the new idea or new product or new services is communicated or diffused.
The objective of diffusing the new product or service into the society is to make people adopt the
new product or service. For successful diffusion of innovation in the society the people must
perceive the idea and reason behind bringing the new product or service (Bouhouita-Guermech,
Mostefai. and Gouffi,2018). For diffusing the innovative product or service a process has to
carried out and it does not happen simultaneously.
The principals of diffusion theory of innovation are :
There needs to be an innovation – The first and basic principle of diffusion theory of
innovation is that there should an innovation or new product or service which needs to be
diffused. It relates to the new idea or practice which needs to be adopted and can give
competitive advantage.
The innovation must be communicated through channels – The next principal is that the
innovation done should be communicated through certain channels and the channels can be
social networks or mass communication. The social networks include the internet and the online
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platforms. These channels are the source of transferring communication and these channels must
be established in order is diffuse.
And it must be undertaken over a time – The next principal is that the diffusion must be taken
over a period as it is not a simultaneous but takes a series of process and takes time ( García‐
Avilés, 2020).
The new product spread among the members of the society – The last principal is that the new
product or service must be spread among the members of the society as they are users of the
innovation. The social system are the combination of various external factors which include
organizations, people, government etc.
The process of diffusion innovation theory starts with knowledge and ends till confirmation
diffusing the innovation into the society the first step is spreading the knowledge about the
innovation. The marketers will make efforts to increase the awareness about the new product or
service as the people are getting the knowledge about the innovation. The second step is
persuasion in which the marketers will make efforts to influence the decision of the people
regarding the purchase of the new product or service. Also, the marketers will convey the
features and benefits of the innovation that the company has made as the individual is interested
in innovation and also interested in seeking out related information about the same.
The third step is taking decision by the people and the people make decision based on their
perception, feelings therefore the marketers should make an effort to understand the decision-
making process of the people. There are three basic types in which the decision is taken such as
optional innovation decision which is made by the people who are different from others in some
ways. The second type of decision is collective innovation decision in which the decision is
made collectively by many people. And the last one is authority innovation decision which are
made for the whole society.
The fourth step is implementation of innovation in which people identify if the product is
actually useful for them or not.
The last step is confirmation stage in which the people who have purchased the product decides
whether they will continue using the product or will drop the idea in the future.
The social system consist of various categories of adaptor which are as follows:
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the first category of adopter is innovators these are people who are risk takers and love to try
new ideas (Mirvis. and Googins, 2018). These people have greater financial resources and have
high liquidity and high social status.
The next category is of early adopters, these people have high social status and these people have
a high degree of opinion, and they suggest and give advice. They are being respected by others
and these people are very comfortable in adopting to the changes (Sääksjärvi. and Hellén,
2019).
Early majority are those people who wait for the other people to test the innovation and try it
after certain period.
Late majority comparatively have lower social status and these people also have low financial
liquidity. They use the new products and services after most of the society have adopted the
innovation.
The last category is Laggards these are people who are the hardest and most resistant to change
as they are very conservative (Saha. and Sasidhar, 2020). These people are the last one to adopt
the changes as these people are risk-averse. They use the new products and services because of
the fear, pressure of friends and family members.
As per this theory the diffusion or adoption follows a standard pattern and the innovation is done
is a specific format. There are certain factors that affect diffusion such as innovation
characteristics which are observability, relative advantage, compatibility, trialability and
complexity. Also, factors like marketing strategy applied, social environment of diffusion,
innovativeness degree of individual etc.
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Illustration 1: Diffusion of Innovation Theory

Source : Reinventing Green Building –Jerry Yudelson,”The Godfather of Green”, 2018
Evaluation of Diffusion of innovation theory
There are both advantage and disadvantage of the diffusion innovation theory such as:
Advantage
It defines the time period and the rate at which the society will accept the innovation and
will make it viral.
The theory helps the marketers in knowing and understanding the trends and analysing
whether the new product is being liked by the society and people or not.
One of the benefit of theory is to the firms to know what type of consumers buy the new
product or service and by understanding mindset of that segment the firm can frame an effective
marketing policies accordingly.
The firm undertaking this diffusion of innovation theory can get a competitive advantage
from the other competitors as the firm diffusing the innovation is the first one to do so compared
to the competitor.
Various loopholes are detected and also advise and recommendations are also made to
launching the new product.
Through creating awareness beforehand by the firms to the customers it is easy for the
customers to adopt the new product and services.
Disadvantage
This theory does not consider the matter of equality which means that the negative aspect
of this theory are not considered. It means that by applying this theory there are various
consequences which are ignored such as increase in unemployment, inequitable distribution of
income etc.
The theory is also sometimes bias and is in favour of wealthier section of the society and
ignores the poorer section of the society.
The theory does not encourage participatory approach.
Various categories of the adopters have not specifically originated from this theory.
The biggest limitation is of culture, in the sense that the firm when launching the
innovation in the market they do not consider culture but this aspect affects the success and
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failure of the innovation as some things which are accepted in one culture may not be accepted
in the other.
This theory provides a roadmap to success but does not guarantee it as the consumers are
the risk averse therefore it is a great risk whether the customer will accept the new product or
not.
Economic differences is also limitation of this theory as there are many societies which
lack infrastructure and networks through which the new product and services can be promoted.
Company background and historical development.
Company background: -
Tik-tok started in 2016 and launched in china for the first time as the company is a Chinese
product and services. It is a video streaming app which is promoted on the google play stores
and the apple istores and is one of the most trendiest brand application in the recent time as the
boom of the product is to the top in the covid-19 situation as people utilised it to promote there
strength and talent into the market with others in the covid-19 pandemic situation and got a good
fame and money through the product. It also provide a good privacy features as there are
thousand of people who are working and promoting there talent in the Tik-tok with best of
innovative and cringe talent promoted into the company product (Zhu and et.al., 2020). The
company is working in the best of promoting the new talent into the market and there are a lot of
people who are using the app into the best for there future as the company is providing the
business features into the application by which the users can use the best of the features and
there talent in promoting the talent and earning a good amount of money.
Historical development: -
from the launch of Tik tok in 2017 the company has undergone various innovations and is the
most viral content apps. It is the video sharing app which is owned by ByteDance. They founded
that China consist of one-fifth of the internet users as compared to the globe. Therefore, they
decided to expand their market and Tik Tok was launches in September 2017 and after launching
this video sharing app it ranked on first position among other free apps on play store in 2018 in
several countries. Also in the same year Tik Tok merged with musical.ly to create a larger
community of the video makers but the title was kept of Tik Tok. In 2018 it entered into
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different markets and was available in 75 different languages. In 2019 Tik Tok announced a
partnership with National Football League which was a multi-year partnership. It was done to
capture the new marketing opportunity such as hashtag challenge, sponsored videos etc. In 2020
a deal was done between Tik Tok and Oracle in which Oracle will provide cloud hosting to it.
Also, Walmart intended to invest in Tik Tok and also the company has signed a deal with Sony
Music. There were many features that were added by the company such as allowing the users to
create a short video and also they can feature music in the background and sounds of their own.
There is a provision of adjustment and filtration before uploading. The company also added a
feature to “react” which allows users to react on certain videos and also they added a duet feature
in which a video can be filmed aside another video. The company has also included the live
feature for the influencers which have at least 1000 followers. In the pandemic situation also
they especially added the “small gesture” feature. After adding this feature many beauty
companies and brands can on this platform to promote and advertise their products (Han, 2020).
Also a campaign was launched to create a sense of support and encouragement along with the
Tik Tok community.
Tik Tok has also infused artificial intelligence to understand the taste and preferences of their
users in the way they interact with the content.
FUTURE DEVELOPMENT
Future development is one of the most important factor of all the tools and innovation product
and services. It is important for Tik-tok to make different innovation in the future so that they
can control the growth and make the best use of innovation in there product and services. It is
crucial for the organization and the brand to make the best use of future development in there
product and services so that the Tik-tok can use the market trend and policies in the best ways.
Future development is important as the brand is working in the latest trend and technologies of
the market and is one of the most loved and downloaded app from the google app store. It is
important for the tick-tock to make new changes rapidly so that they can make the best use of
future services and earn more of productivity and profitability of the market.
Future development is helpful for the organization and the brand as it work in the youth people
and are promotion the talent of the people through short clips of videos and songs which is
acceptable by all the people and are in latest trend.
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Diffusion theory of innovation for future development : -
Diffusion theory : - Diffusion theory refer to the process which explain the importance of the
innovation of product and what are the chances that the product will success in the market or fail
in the market. It is the process of all the adoption of the product and innovation of the company
to the customer. It is the process of adoption of the new ideas, behaviour and the product by the
organization into the market which is accepted by the people are the adoption into the diffusion
of innovation Gruber, 2020). There are different categories of the adopter into the market for
Tik-tok. Here are five established adopter categories: -
 Innovators : - the are people who are ready and want to be the first person to try and
adopt the innovation produce into the market and want to achieve all the process of
development and innovation. There are people in the market who wanted to try all the
new innovation and ideas which are launched into the market and want to be the first
person to use and utilise the innovation. These are the people who are willing to take the
risk and are the people who often develop new ideas.
 Early adopters : - these are those adopters who are represent as a leader in adopting the
changes and accepting the change of the market innovation into the business and market.
They are those who are using the first and making the change go fluently into the market.
Early adopter always promote the product into the market as they provide the feedback
into the market and also provide the positive impact of the product and services. It is
important for the organization to make such efforts by the leaders as it promote the
product and services into the market (Al-Rahmi and et.al., 2019).
 Early majority : - they are just as the leaders and they are the people who promote the
[product and use it before sending into the market as they want to see the changes and the
innovation of try product and services offer by the organization into the market. They are
those who check and see all the changes and the innovation which take part in the
management and use the product and promote the adoption and acceptance of the ideas
and innovation. They help the normal people and the average people before utilisation
and the use of the product about the feedbacks of the products.
 late majority : - these are the people who use the product and the services after the use
and only adoption after the product and services adopt by majority into the market. Then
only they utilise and promote or the use the product and services. they are the main
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segment on which the brand is looking as they are high in numbers and are those who
support the product and services. Late majority of the [people are those who gave
strength to the organization in increasing the productivity and profitability as the use of
application gets increase and give the profit to the organization (Yuen and et.al., 2020).
 Laggards : - these people are those people of the market and the people whit tradition
bound and the very conservative to the innovation. They are the people who only adopt
product and services after checking all the necessary information and the optional use of
the application.
CONCLUSION
It can be concluded that innovation is bringing something new to the market which gives
the firm a competitive advantage compared to others. Diffusion of innovation theory is being
chosen as the innovation theory for Tik Tok in which it is found out the rate at which the
innovation gets viral and accepted by the society. The principals of this theory are there needs to
be an innovation, the innovation must be communicated through channels, the innovation must
be undertaken over a time and it must be spread among the members of the society. The process
of innovation includes first of all spreading the knowledge, then persuading, decision-making,
implementing and lastly the confirmation stage. There are also different categories of adopters of
innovation such as innovators, early adopters, early majority, late majority, laggards. Also, the
theory was evaluated by highlighting the benefits and disadvantage of the theory. A brief
background of Tik Tok was given and a brief historical development was also defined in the
sense that how the product and service of Tik Tok has developed over years. Lastly future
development of Tik Tok was also elaborated like the future plans of the company.
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REFERENCES
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IFIP TC 5 International Conference, CIIA 2018, Oran, Algeria, May 8-10, 2018,
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García‐Avilés, J.A., 2020. Diffusion of Innovation. The International Encyclopedia of Media
Psychology. pp.1-8.
Gruber, M., 2020. An evolutionary perspective on adoption-diffusion theory. Journal of
Business Research.
Han, Y., 2020. Advertisement on Tik Tok as a Pioneer in New Advertising Era: Exploring Its
Persuasive Elements in the Development of Positive Attitudes in Consumers. The
Frontiers of Society, Science and Technology. 2(11).
Hantman Kollén, S. and Manhem, R., 2019. Characteristics of Early Adopters and Early
Majority Adopting a Vertical Social Network: A case study of the applicability of the
Diffusion of Innovations theory in a Vertical Social Network.
Mirvis, P. and Googins, B., 2018. Engaging employees as social innovators. California
Management Review. 60(4). pp.25-50.
Sääksjärvi, M. and Hellén, K., 2019. Idea selection using innovators and early
adopters. European Journal of Innovation Management.
Saha, D. and Sasidhar, P.V.K., 2020. Unit-2 Innovativeness and Adopter Categories. Indira
Gandhi National Open University, New Delhi.
Yuen and et.al., 2020. Factors influencing autonomous vehicle adoption: An application of the
technology acceptance model and innovation diffusion theory. Technology Analysis &
Strategic Management, pp.1-15.
Zhu and et.al., 2020. How health communication via Tik Tok makes a difference: a content
analysis of Tik Tok accounts run by Chinese provincial health
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Online
Reinventing Green Building –Jerry Yudelson,”The Godfather of Green”. 2018 .
[Online].Available
through:<https://www.reinventinggreenbuilding.com/news/2018/11/15/a-marketer-
looks-at-climate-change-part-1>
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