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Bringing lead-user innovations to the market: research and management implications.

Article Excerpt
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The high failure rates of a substantial number of innovations in the marketplace are of concern to both researchers and managers. These failure rates represent a multi-billion dollar waste of scarce economic resources. One possible reason for these failure rates is the difficulty of evaluating the factors associated with accelerating the rate of diffusion. Another possible reason is the inappropriate application of innovation diffusion models. Consequently, a better understanding of factors and models influencing innovation diffusion is becoming a high priority for researchers and managers, particularly those in high-tech firms.

Some diffusion researchers have long maintained that a particular set of factors, such as innovation attributes and opinion leadership variables, were the best predictors of diffusion rates. Other researchers have championed lead-user characteristics as the most effective method for evaluating the innovation development process. The introduction of innovations is influenced by a complexity of factors both construable and uncontrollable by the firm. This paper presents a conceptual model for accelerating innovation diffusion rates in the marketplace. This model synthesizes concepts from key research traditions and concludes with a discussion of the research and managerial implications of accelerating innovation diffusion rates.

A number of researchers have theoretically and empirically investigated the role of lead-users in the innovation process as they modify existing products to be later developed into commercial products (Morrison et al, 2000). It is argued that this lead-user innovation approach helps the firm to minimize the risk associated with introducing new products to the market (Henkel and von Hippel, 2005; Luthje and Herstatt, 2004). This lead-user-based innovation process offers greater advantages over the manufacturer-centric innovation development systems that have been the mainstay of commerce for hundreds of years (von Hippel, 2005). As a result, the possibility of an accelerated rate of diffusion is far greater than the traditional innovation method. However, only a few researchers have comprehensively evaluated the influence of lead users' innovations on the rate of diffusion (Morrison et al, 2000).

The purposes of this paper are (1) to introduce an integrative model of innovation diffusion that evaluates the lead users influence on accelerating rate of diffusion by highlighting the link with opinion leadership, and (2) to discuss possible directions for future research and managerial implications for accelerating diffusion rates.

Nature of Innovation Adoption

Innovations are defined in this paper as the new products, services, application methods, processes, and tools that facilitate problem solving for potential adoption. Different adopters perceive and assess innovation in a variety of ways. Rogers (1983) suggests that innovations should be analyzed in the context of the potential adopter's own perspective and situation, which emphasizes the subjective nature of innovations.

Seminal research on innovation diffusion found that adoption decisions followed a hierarchy-of-effects model that led to the cognitive assessment of costs and benefits associated with innovations (Rogers, 1962; Rogers and Shoemaker, 1971; Rogers 1983; Rogers 2003). Investigations of adoption decisions gained broader recognition when marketing researchers became concerned about the acceptance of innovations. Consequently, the new product adoption process is most often viewed as a hierarchal sequence from knowledge and awareness and evaluation to full adoption (Robertson, 1971). It is argued that communicating information about new products is essential to create positive perceptions of their benefits and favorable attitudes toward them. Traditional diffusion models (Rogers, 1983; Rogers, 2003) are based on the assumption that making consumers aware of innovations will produce positive attitudes and facilitate acceptance. It is assumed that consumers will act on their perceptions once they become aware of the desirability of a particular innovation. Once the consumer becomes aware of a need and possesses the means to satisfy the need, he or she begins a process of innovation evaluation.

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